KPIs for Lawyers: Measuring Your Law Firm's Financial Health, with Bernadette L. Harris (Remastered)

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Jan 1, 2026

Dive into the financial world of law firms with insights from a financial coach. Discover the importance of key performance indicators (KPIs) and how they can transform your practice. Learn about calculating your net profit margin and setting healthy benchmarks. Understand utilization rates to maximize productivity and realize the significance of collecting billed amounts. Explore strategies for managing accounts receivable and improving cash flow. Gain actionable tips for tracking revenue by practice area to make informed marketing decisions.

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INSIGHT

Net Profit Margin Reveals True Firm Profit

Net profit margin shows what portion of revenue the firm actually keeps after expenses.
Aim for roughly 20–30% but adjust if owners aren't paying themselves because that skews the number.

ADVICE

Account For Owner And Family Compensation

If owners or family work for free, record their compensation in expenses to avoid inflated profit margins.
Reclassify or pay those contributions so profit benchmarks reflect reality.

INSIGHT

Utilization Rate Indicates Capacity

Utilization rate measures the share of available work hours spent on billable tasks.
For attorneys target roughly 70–80%; under 60% signals unused capacity.

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In episode 595 of the Lawyerist Podcast, we’re revisiting Stephanie’s conversation with Lawyerist financial coach Bernadette L. Harris about the financial KPIs every law firm owner should understand as a new year begins. We’re bringing this episode back because it’s especially timely for firms setting their strategy, goals, and financial benchmarks for the year ahead. It’s important to continue finding a clear, practical approach to understanding the numbers that drive a healthy firm.

Unlock a clearer view of your law firm's financial health in the latest Lawyerist Podcast. Join host Stephanie Everett as she dives into the essential key performance indicators (KPIs) that can transform how you understand your practice, guided by the expert insights of Bernadette Harris, Lawyerist Lab's finance coach.

You'll gain practical knowledge about five crucial areas that directly impact your firm's success. Understand your net profit margin like never before – not just the surface numbers, but the true profitability that informs your strategic decisions. Explore utilization rate and discover how to optimize your team's time for maximum productivity. Learn the critical importance of your realization rate and practical steps to ensure you're capturing the revenue you've earned. See how mastering AR aging can directly impact your cash flow and create financial stability. Plus, uncover the strategic advantage of understanding your revenue by practice area, empowering you to make smarter choices about your firm's financial future.

For straightforward, actionable insights into these vital financial indicators – the kind that can immediately help you manage your law firm more effectively – tune in to hear Bernadette Harris share her expertise.

Listen to our other episode with Bernadette Harris:

#457: Healthy Profits: Understanding the Story Your Numbers Tell, with Bernadette Harris Apple Podcast | Spotify | Lawyerist

#523: Financial Red Flags: Are You Hiring Too Soon?, with Bernadette Harris Apple Podcast | Spotify | Lawyerist

#418: More Income, Fewer Taxes, with Bernadette Harris Apple Podcast | Spotify | Lawyerist

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Chapters:

00:00 Why We’re Remastering This Episode for the New Year
02:55 Law Firm KPIs and Financial Health
05:21 Net Profit Margin for Law Firms
09:38 Utilization Rate and Team Capacity
14:35 Realization Rate and Getting Paid
20:05 Accounts Receivable and Cash Flow
24:19 Revenue by Practice Area
27:16 Using Financial Metrics to Set Strategy