More than eight in 10 lawyers say firm revenue is the most important financial metric for tracking the performance of their practice.
But most of them admit they don’t have a firm grasp of exactly how much money is coming in.
Those are two findings from the 2021 Clio Legal Trends Report.
Another finding: 56 percent of firms not only survived the pandemic but actually grew their revenue, with one in four reporting growth of 50 percent or more.
“The good news is that these figures indicate that many firms may have adapted to and overcome the challenges of the past two years,” according to the Clio report. “The bad news is that these figures might not be entirely accurate. We asked the same lawyers how confident they are about their knowledge of these revenue figures, and 40 percent reported being only somewhat confident, while a further 20 percent were slightly or not at all confident. Put simply, while many lawyers may believe that their firms are on the right track financially, some of them don’t truly know whether this impression is accurate.”
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2021 Clio Legal Trends Report
Here are some key takeaways from the Clio report:
- Many lawyers don’t think their legal education adequately trained them to run a law firm. Only 7 percent said law school prepared them to run the business side of things.
- 76 percent of lawyers feel overworked.
- A large portion of firm managers don’t have insight into their business’s revenue and spending, two key areas that determine a firm’s financial performance. When asked How confident are you that you know your firm’s revenue? only 40 percent said “very confident,” while another 40 percent said “somewhat confident.” The remaining 20 percent were either “slightly confident” or “not at all confident.”
- 54 percent of lawyers said they are very involved in their firm’s finances, while 17 percent were somewhat involved. The remaining 29 percent reported little or no involvement.
- 86 percent of lawyers who said they were very involved in their firm’s finances are managing partners, senior partners, or solo attorneys. Associates, legal support staff, and administrative staff reported only low rates of financial involvement.
- 51 percent of solo attorneys and managing partners said they are very confident about their firm’s financial status, while just 48 percent of senior partners reported being very confident about their knowledge.
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