How To Improve Firm Profitability

Many lawyers measure their firm's profitability the way a company does ' as a percentage of sales. However, the correct way to measure the profitability of a law firm, whether it is a partnership or a professional corporation, is the net income per equity partner (NI/EP) (or shareholder).

15 minute read June 29, 2005 at 02:50 PM
By
Robert W. Denney
How To Improve Firm Profitability

Let's begin with a short quiz. Two firms each have $20 million in revenues. One firm has 40 equity partners. Its cash-basis profit & loss statement shows a profit of $8 million, 40%.

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