How is margin calculated?
- Take revenue actually collected in the period.
- Subtract all business expenses: rent, insurance, software, marketing, staff, professional fees and licences.
- The remainder is profit before your own pay, or after it if you pay yourself a salary.
- Divide by collected revenue to get the margin.
Decide up front whether your owner's pay counts as an expense; otherwise comparisons with other firms mislead. Your accountant can help you set the method.
Where margin leaks
| Leak | What it looks like | First fix |
|---|---|---|
| Unrecorded time | Work done but never logged | Capture time as you go, by matter |
| Write-downs | Bills reduced after the fact | Agree scope and fees in writing up front |
| Slow collection | Invoices sitting unpaid | Bill promptly; follow up on a schedule |
| Underpriced work | Fixed fees that ran long | Compare quoted fee with actual time |
| Overhead creep | Subscriptions you rarely use | Audit every recurring cost twice a year |
| Admin time | Hours spent on non-billable chores | Standardise routines and templates |
Measure what you can control
Track three ratios monthly: utilisation (billable hours over available hours), realisation (amount billed over the value of time recorded) and collection (amount collected over amount billed). Each points to a different fix.
Billable hours and revenue calculator
Work out how many billable hours a year you can realistically bill, and what each hour of work is worth once write-downs and slow payment are counted.
- Hours worked per year
- 1,840
- Billable hours per year
- 1,012
- Value of time recorded
- $202,400
- Amount billed
- $172,040
- Amount collected
- $158,277
- Collected per hour workedWhat an hour of your working time actually earns.
- $86
- Billable hours needed for your targetAbout 16.7 billable hours a week.
- 767
An estimate from the figures you enter. Defaults are illustrative, not benchmarks. Fixed fees, trust money and tax are not modelled.
Practice software cost over time
Compare what you pay now with a Notion-based setup over several years. Enter your own prices: nothing here assumes any vendor's pricing.
- Current setup over 3 years
- $7,920
- Notion setup, including template and your setup time
- $2,679
- DifferenceIn favour of the Notion setup on these numbers.
- $5,241
Cost is only one factor. Check what each option includes: Notion does not provide trust accounting, court-rules calendaring or integrated billing.
Use the calculators with your own figures. They show what a change would be worth; they do not predict your results.
Using MatterOS for this
MatterOS logs time by matter, links invoices to clients and matters, and can surface unbilled time on a dashboard. That helps with the unrecorded-time and collection leaks. It does not do accounting, so your margin figures should still come from your books.
Frequently asked questions
- What is a good profit margin for a solo lawyer?
- There is no reliable universal figure. Track your own margin over time and compare like with like, with your accountant.
- Should owner pay count as an expense?
- Pick one method and stay consistent. Ask your accountant how to treat it.
- What is the fastest way to improve margin?
- Usually capturing unrecorded time and collecting what you have already billed, before cutting costs.
- Is software a big expense for solos?
- It is often a modest line, but it is easy to audit. Compare it with revenue per hour.
- Can Notion calculate my margin?
- It can track time and invoices, but use your accounting records for the official figure.
About the author
Raghav Handa trained as a lawyer, then spent years building legal technology, from enterprise legal products to custom systems for law firms.
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