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Matter profitability - What is it and how should you use it?

Posted by Jack Bostelman on Jun 17, 2015 | 0 Comments

My article on Matter Profitability published by ABA

My article on Matter Profitability was recently published in the American Bar Association's monthly e-zine for law practice matters. Here is the link: "Matter Profitability" in Law Practice Today.

A common metric for measuring financial success of a matter in large and

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medium-size law firms is realization rate (the percentage of standard rate fees actually collected, after discounts and write-offs). My article explains why profitability of the matter is a far better metric, and describes how it is calculated.

The article also addresses in some detail the critical issue of expense allocation in calculating matter profitability - and how allocation issues can be managed to retain the credibility of the matter profitability metric within the firm.

The article concludes by exploring whether partner compensation should be linked to profitability instead of realization (aka origination credits) and realization rate.

About the Author

Jack Bostelman

Jack Bostelman is the president and principal consultant of KM/JD Consulting LLC. Before founding KM/JD Consulting, Jack practiced law in New York for 30 years as a partner of pre-eminent AmLaw 20 firm Sullivan & Cromwell.

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KM/JD Consulting LLC renders impartial practice management advice to law firms on improving efficiency, increasing profits and reducing risk, emphasizing knowledge strategy.

Jack Bostelman, President

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Before founding KM/JD Consulting LLC, Jack practiced law in New York for 30 years as a partner of pre-eminent AmLaw 20 firm Sullivan & Cromwell.

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How a practice management technique called knowledge strategy can help law firm leaders achieve strategic goals – ideas from a former AmLaw 20 senior partner.