It’s a Goal!: Developing Revenue Projections for Your Law Firm

January 12, 2021 - Law Practice Management

Law firms operate between ad hoc decision making and fire-putting-out. It’s the natural state of the law firm manager. That being said, humans have been improving on the state of nature since there have been humans. So, it’s maybe not the worst thing in the world if this is the year you decide to put together revenue projections for your law firm.

If you’ve never done it before, start now. (Don’t wait until January, and cram this in, like everything else in your life.). The reason you create revenue projections for your law firm is because you need goals, just like everybody else. If you don’t have revenue goals to strive for, you’re far more likely to accept the status quo (even if you don’t like it), and your law firm will begin to stagnate. Applying revenue goals applies pressure, gets you out of your comfort zone and (spoiler alert): will likely mean you actually make more money, even if you don’t ultimately hit your projections right away.

If you’ve never made revenue projections before, here are some basic tips to help you get started:

In order to know how much you need to make, you need to know what you have to cover. So, start with your overhead. (If you don’t have a budget, now would be a good time to build one.)
Determine how much profit you make on an annual basis right now.
Now comes the best part: decide how much more you want to make; and then, create three sets of revenue projections. Build out passive, moderate and aggressive models. Approach this like climbing a pyramid. Try to reach the passive (lowest) goal first, and then build up to the moderate and aggressive figures. If you can continue to get to aggressive figures year over year, it’s about the best incentive you can have in growing your practice.
To improve your chances for success, understand the concrete steps you need to take to reach your goals, at all levels. If you use flat fee billing, know how many more new cases you’ll have to take on this year to reach your goals. If you’re an hourly biller, figure out the number of additional hours you’ll need.

Revenue projections support positive business growth.

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If this is the year you decide you want to make more money, we can help.

The Wyoming State Bar offers free law practice management consulting services through Red Cave Law Firm Consulting.  To request a consult, visit the Wyoming State Bar’s law practice management page, and start running your law firm like a business.