5 Ways To Raise Your Law Firm's Profit Margin

The Role of Profit Margin In Law Firm Profitability

Profit margin shows how much your firm keeps after paying all expenses. It’s one of the clearest ways to measure how well your business is doing financially.

Here’s the basic formula:

(Total Profit ÷ Total Revenue) × 100 = Profit Margin

For example, if your firm brings in $500,000 in revenue and spends $350,000 on salaries, rent, software, and other costs, your profit is $150,000. That gives you a 30% profit margin.

This metric helps you understand where your money’s going and whether your firm is running efficiently. A strong margin means you’re making good use of your time, staff, and resources. A weak one points to issues like high overhead, low productivity, or poor pricing.

Keeping an eye on this number helps you figure out if you’re pricing your services right, managing overhead well, or losing money on unproductive work.

What’s The Ideal Profit Margin For Law Firms?

Most small law firms aim for a profit margin between 25% and 35%, according to Irvine Bookkeeping. Falling below that range could be a sign that something’s off—maybe your overhead’s too high, or you’re spending too much time on non-billable work.

On the flip side, if your margin’s above 35%, that usually means your firm runs lean, prices smartly, and manages time well.

But it’s not always about being high or low. Your priority should be staying sustainable. A smaller firm with less overhead might hit a higher margin, while larger firms might accept slimmer ones due to scale.

The key is knowing your own numbers. If you’re consistently under 20%, it’s time to look at where the money’s going. Tightening up processes, improving time tracking, and pricing your services properly can push your margin in the right direction without adding more stress to your day.

Best Strategies To Increase Your Average Profit Margin

If your profit margin isn’t where you want it to be, the good news is you can fix it. It’s often less about working more and more about working smarter.

Here are some practical strategies to help raise your average profit margin without burning out your team or cutting corners.

1. Automate The Tasks Costing You Money

A successful law firm doesn’t waste time on repetitive work that doesn’t bring in revenue. Most law firms lose money every month by having staff spend hours on tasks that could be handled automatically. These small inefficiencies add up and eat into your profit margin without you even noticing.

If you’re aiming for higher profit margins, you need to take a closer look at your daily operations. Many parts of your workflow, regardless of your practice area, can be automated to reduce time and cut costs.

This helps you improve your cost structure while freeing up your team for billable work and client acquisition. Here are common tasks you can automate:

• Appointment scheduling with automated calendar links
• Invoice creation and payment reminders
• Document automation for contracts, letters, discovery documents, and more
• Client intake using online forms and auto-responses
• Follow-up emails after consultations or completed cases
• Time tracking and billing entries
• Data entry into case management systems

By automating these tasks, you reduce errors, speed up your workflow, and keep your team focused on legal work. Most law firms that invest in automation see better results without adding extra hours or headcount.

2. Consider Outsourcing

Not every task in your firm needs to be handled in-house. The legal profession puts a lot of pressure on firms to do more, but holding on to everything often leads to wasted time and higher overhead costs.

If a task doesn’t generate revenue or take advantage of your legal expertise, it might be better handled by someone else.

Outsourcing can help you protect billable hours and focus on the work that actually grows your firm. For example, instead of hiring a full-time marketing coordinator, many firms turn to agencies or freelancers who already know the legal space and can hit the ground running.

Even legal-specific tasks, like research, contract review, or admin work, can be outsourced to virtual legal assistants (VLAs) who’ve been trained with law school-level knowledge.

This setup lets you keep your internal team lean and focused, while still getting everything done on time, without stretching your resources.

3. Get Rid of Outdated Workflows

Old habits might feel safe, but they can quietly hold your firm back.

If you’re spending hours digging through email threads, chasing paper files, or juggling spreadsheets to stay on top of cases, it’s time to rethink how you’re working. These slow, manual processes don’t just eat up time. They cut into net income and hurt the client experience.

Whether you’re in family law or any other practice area, modernizing your workflow isn’t about making flashy changes. It’s about fixing the small things that keep piling up. Missed follow-ups, lost documents, or time entries you forgot to log? That’s real money slipping through the cracks.

For example, you can start replacing:

• Handwritten intake forms with online client submissions
• Manual case updates with automated status tracking
• Endless internal emails with built-in team messaging
• Post-it notes and legal pads with centralized task lists
• Loose billing notes with smart time-tracking tools

Prospective clients expect a smooth experience. If your tools slow you down, they’ll feel it too. Clean, modern systems help you work faster, bring in more money, and track key performance indicators without the hassle.

4. Invest In The Right Technology

Outdated tools slow you down, drain your team’s energy, and quietly cut into your profits. On the flip side, the right tech helps you handle more clients, reduce routine tasks, and bring in more money without adding hours to your day.

These are the legal tools that actually pull their weight:

• Practice management software: Track cases, deadlines, and tasks without bouncing between emails and sticky notes. Everything stays organized and easy to find.
• Document automation tools: Draft contracts, letters, and forms in minutes using templates that fill themselves in. No more rewriting the same thing ten different ways.
• Time tracking and billing tools: Capture hours as you work, generate invoices fast, and stop losing billable time. Helps you raise your hourly rate without lifting a finger.
• Client intake and CRM systems: Follow up with leads, collect details quickly, and onboard new clients without the back-and-forth.
• E-signature tools: Let clients sign from anywhere. No delays, no scanning, just done.
• Legal accounting software: Track expenses, revenue, and trust accounts in one place. Makes it easier to see what’s helping or hurting your bottom line.

The right setup lets you spend less time on admin and more time practicing law the way you want.

5. Fix Your Marketing So It Actually Pays Off

Marketing doesn’t need to be loud, but it does need to bring in the right clients. If you’re spending money on ads, SEO, or networking and still seeing the wrong kind of inquiries (or none at all), it’s a drain on your gross revenue and a roadblock to improving profitability.

Let’s say you charge flat fees for family law work. If your marketing brings in clients expecting full-scale litigation or daily hand-holding, you’re stuck doing more for less. That mismatch adds extra administrative work and cuts into your margin.

You don’t need to do everything, just what works. According to the American Bar Association, law firms should allocate 8–10% of their gross revenue to marketing, then track performance by case or client to see where the returns are.

For example, if digital ads consistently bring in new clients for less than in-person events, shift more of your budget online.

Boutique firms especially need focused strategies. A cybersecurity firm might find value in LinkedIn and trade shows, while an IP firm might lean into content marketing. And always ask new clients how they found you, as it’s the easiest way to measure what’s working.

Remember: Great service starts with the right match, and smart marketing gets you there.

Profit Margins Go Up When Busywork Goes Down

Raising your law firm’s profit margin doesn’t require a full overhaul. It comes down to cutting unnecessary work, improving how your team operates, and using tools that actually support your practice.

Whether it’s automation, outsourcing, or smarter tech choices, each step helps reduce overhead and protect your billable hours.

Briefpoint fits right into that effort. Thanks to its powerful AI, it handles routine discovery drafting, requests, and responses without the back-and-forth that slows firms down. Instead of spending hours on the same language for every matter, you upload, review, and download in minutes.

That means:

• Less administrative work
• More consistency across your firm
• And more time for the cases that need your attention

If you’re looking to improve profitability without adding pressure to your team, Briefpoint makes that possible.

Book a demo to see how much time your firm could be saving!