Law Firm Efficiency & Profitability: 10 Proven Strategies

Law firm profitability has always been essential to your legal practice’s success. But now, increasing your law firm’s profits is more important than ever. A more profitable law firm has the resources to serve clients better, ensure partners and staff are compensated, and attract high-level employees. 

In this post, we’ll provide tips for improving your law firm’s operations, increasing revenues, and making  more for what you bill. This way, you can learn how to grow your law firm’s profits and be more successful now and in the future.

Revenue vs. profitability

We focus a lot on revenue, which is essential for your law firm’s success. However, revenue alone is not the same as profitability for a law firm. Boosting law firm revenues helps, but you need to increase your firm’s net profits to be successful in the long term.

If you’re increasing revenue without increasing profitability, you leave money on the table. For example, if your revenues go up because you’re serving more clients, but the overhead and administrative costs of serving each client are high, that undercuts your profit margin. To maximise law firm profitability, firms must balance maximising revenues with minimising costs.

Learn more about improving your firm’s ROI, collections, billing, and setting law firm goals.

Consider the following 10 tips to improve your law firm operations, make more for what you bill, and be as profitable as possible.

1. Fire yourself from jobs you shouldn’t be doing

You went to law school to practise law—not to chase invoices or set up email marketing.

You have a limited amount of time and energy each day. To boost your law firm’s efficiency and profitability, you must focus your time, energy, and attention on high-impact billable work—and delegate, outsource or automate everything else. 

Unless it’s a task that you enjoy and only you can do, or there’s something that’s non-billable but leads to more profits, you need to let it go. Learning to delegate allows you to work more efficiently to your full capacity. This might mean leveraging technology and handing off work to non-lawyer staff within your firm. You could even outsource legal services to other local lawyers or freelance lawyers. 

When everyone at your firm is focused on their highest-value work, you maximise revenues while reducing overhead costs. This makes an excellent recipe for law firm profitability.

2. Use legal technology and AI

If your focus is on boosting law firm efficiency and profitability, using tools and legal technology can help your law firm be more efficient. At the same time, technology helps keep costs low and frees up your time to work on billable matters (to bring in more revenue).

Using legal technology increases law firm revenue by helping firms run more efficiently, streamlining processes, and making it easier to bill and collect on invoices.

Let the statistics speak for themselves

As the Legal Trends Report shows, law firms using technology brought in more revenue.

Firms using cloud-based legal practice management software

were 11% more likely (63% compared to 52%) to report strong revenue. These firms benefit from reduced admin, streamlined processes, and faster billing and collections.

All-in-one platforms reduce the need to juggle calendars, spreadsheets, and shared drives. The result? Less duplication, fewer errors, and improved collaboration—especially valuable for remote or hybrid teams.

These firms enjoy the profits of a successful business and have more resources to continue investing in new capabilities and adaptations, furthering their competitiveness and innovation. As these firms reap the rewards of running a successful business, they also provide a model for other firms to follow.

As helpful as legal tech can be for increasing law firm efficiency and profits, remember to do your due diligence. There are many technology options to choose from, and it can be tempting to jump into every software that crosses your path. 

AI is also accelerating law firm innovation. As noted in the Legal Trends Report, AI for law firms is being increasingly adopted to enhance efficiency and accuracy, with the top three solutions being:

• Generic non-legal AI tools (e.g., ChatGPT): These allow firms to perform tasks like high-level drafting work.
• AI-powered legal research platforms: allowing firms to quickly access legal research databases, predict case outcomes, and much more. 
• Document drafting tools: These enable firms to create legal documents in less time and with fewer errors.

Nearly half of clients would prefer to work with law firms that use AI, highlighting the importance of technology not just for internal efficiency, but also for client satisfaction and competitiveness.

As always, be strategic. Choose secure tools that address your firm’s specific needs. Avoid shiny object syndrome, focus on tech that delivers measurable efficiency gains and integrates well with your workflow.

To use technology to its fullest, however, you want to be strategic and choose tech that is as secure as possible and addresses the specific issues your law firm deals with. Start by reviewing this article that covers the tech your practice needs, and how to select the best software for your firm.

3. Automate what you can

If you’re spending a good portion of your day on non-billable tasks, then you’re missing out on potential revenue and undercutting your law firm’s profit potential. According to the Legal Trends Report, the average law firm collects only £748 for every £1,000 of billable work. This means these firms could collect up to 34% more revenue by optimising their realisation and collection rates.

Automation isn’t about replacing people—it’s about a focus on higher capacity, reducing errors and eliminating manual processes. According to the Legal Trends Report, three-quarters of law firm hourly revenue could be automated by AI, freeing up time for higher-value work.

Efficient law firm document automation can shave hours off routine tasks. Using technology to automate the essential. But non-billable administrative tasks like client intake, practice management, time and expense tracking, legal billing, and more save you time and effort.

Top automation candidates include:

• Client intake forms
• Fee agreements
• Deadline reminders
• Email follow-ups

Tools like Clio Grow let you build reusable templates, so you’re not reinventing the wheel each time. With more time to focus on billable work and client strategy, your staff can shift from repetitive tasks to higher-impact contributions.

Automation boosts law firm efficiency, improves cash flow, and supports growth, all without burning out your team.

With more time towards billable work, you can raise your revenues and ultimately, law firm profitability. 

To learn more about how to leverage automation at your law firm, read our guide to law office automation here.

4. Set clear goals—and stay focused on them

It’s all good to set a general intention of “increasing law firm profits,” but vague goals are more likely to bring vague results. 

If you’re serious about growing your law firm’s efficiency and profitability, take the time to set strategic goals that are SMART. SMART goals are specific, measurable, achievable, relevant, and time-bound. This article on successful goal setting for lawyers can help show you how to set them.

Tracking only billable hours hides where your team’s time is really going. To get a true picture of your firm’s efficiency, encourage all staff to track everything for one week, including admin tasks, emails, internal meetings, and interruptions.

These insights help you spot inefficiencies, identify what can be delegated or automated, and realign your team’s efforts to focus on high-value work.

Firms that use time-tracking software recover more hours and improve their ability to scope projects and retainers accurately. Tools like Clio’s automatic time tracking make this process seamless across tasks and devices, helping you measure progress against your goals without disrupting your workflow.

Defined, SMART goals do more than give you and your team focus and accountability. Good goals also give you tangible targets against which to measure your progress and results, producing a law firm that’s not just busy, but efficient and profitable. This ties in with our next tip: tracking key metrics.

5. Track key metrics for law firm success

You can’t just assume that your efforts are working. From monthly revenue billed to net overhead, what gets measured gets managed—so track, evaluate, and adjust accordingly based on the data.

Tracking and intentionally monitoring key performance indicators (KPIs) related to law firm efficiency provides accountability, visibility and data that you can use to make more informed decisions. For example, if you uncover data that something isn’t working, don’t be afraid to change it. This data could be something like your law firm’s website landing page conversions. You can learn more and see examples of useful law firm KPIs with our guide.

When it comes to law firm profitability, it could be helpful to track KPIs like your firm’s:

• Utilisation rate (the number of billable hours worked divided by the number of hours in the workday)
• Realisation rate (the number of billable hours invoiced divided by the number of billable hours worked)
• Collection rate (the number of hours collected divided by the number of hours invoiced)
• Average case duration
• Time to invoice

While tracking KPIs is key to making data-driven decisions with law firm profitability in mind, manually tracking KPIs can be time-consuming and counterintuitive. Instead, use reporting tools to give you the metrics you need to know at a glance. Clio Manage’s Law Firm Performance Dashboard, for example, makes it easy to quickly access your firm’s key metrics in one central, easy-to-understand visual dashboard. These metrics include how many billable hours your firm has captured, billed, and collected.

Make metrics part of your monthly team rhythm, data doesn’t lie, and it can drive smarter, faster improvements.

6. Keep your cash flow healthy

Efficient law firm operations rely on steady, predictable cash flow.It is essential for your firm’s financial survival and profitability.

Without it, even the most profitable firms can struggle. Healthy cash flow ensures you have the flexibility to invest in tools, staff, and systems that enhance productivity and service delivery.

If your firm’s cash flow needs a boost, numerous options exist. For example, you can look for ways to reduce expenses, follow up on unpaid invoices, reduce unnecessary overhead through smarter resource allocation, automate billing and reminders to speed up paymentsor make it easier for clients to pay you with online and alternative payment options (more on that next).

Learn more about how to improve law firm cash flow.

7. Offer alternative payment options

To be profitable, you need to get paid. And a more efficient law firm gets paid faster. This means you need to bill your clients and make it easy for them to pay you with greater simplicity. Consider integrating different ways to bill and let clients pay into your law firm billing, such as:

• Credit card and electronic payments. Online options are strongly preferred by consumers. Online payments (66%) are the top choice. This includes credit cards, debit cards, or online payments like Clio Payments, PayPal, or Apple Pay. Accepting payments via credit card can also speed up the rate at which your firm gets paid.

• Alternative ways to bill. The billable hour isn’t necessarily the best way to bill to optimise profits. Consider alternative billing arrangements. According to the Legal Trends Report, legal professionals billing with fixed fees are nearly twice as likely as those billing hourly to collect payments almost immediately, which saves firms from having to manage and follow up with these clients. 
• Payment plans. When set up correctly, implementing payment plans can let clients pay for your legal services in instalments. For clients low on funds, this allows them to pay overtime, so that you get paid, while making it more manageable for them, generating predictable revenue and streamlined invoicing.

Learn more about alternative payment options in our Guide to Law Firm Billing.

8. Leave no billable hour un-tracked

Did you know that, according to the Legal Trends Report, lawyers are opening more files and billing more than ever? On average, they are working over 40% more cases and billing 70% more compared to 2016.

This means that, on average, lawyers are capturing more billable time for every case they take. The increase in billable hours indicates lawyers are capturing more billable time, taking on larger cases that require more work, or that the average case requires more time to complete.

One simple way to leave no billable hour untracked and increase your law firm’s efficiency is to use technology to track your time more accurately. Clio Manage’s legal time tracking software empowers you to capture billable time, no matter where you’re working. By recording your working hours in real-time, you can reduce untracked and unbilled hours.

Even if you don’t use the billable hour at your law firm, you should still track your time to ensure your rates are profitable. This applies whether you use a flat-fee method, subscription model, or other billing methods. 

The more accurately you track time, the better you can optimise processes, staffing, and pricing—ultimately improving both efficiency and profit.

9. Streamline your collections process

You’ve done the work and you’ve billed for it. But are you actually collecting that revenue, or are you leaving money (and law firm profits) on the table? When it comes to law firm profitability, the key is to collect on more of what you bill—but without spending more time on it. 

By taking action to improve the collections process at your law firm, you can bring in more revenue (and, subsequently, improve your bottom line and generate more profits). For example, you can start accepting online payments to make it easier for clients to pay you.

Automating invoice reminders and follow-ups, and tracking payment trends to identify problem areas or bottlenecks can also help.

A streamlined collections process reduces admin time and increases realisation rates, freeing up staff to focus on high-impact legal work.

10. Take a client-centered approach

Efficiency isn’t just internal; it’s also about creating seamless, value-driven client experiences.

As Jack Newton’s bestselling book, The Client-Centred Law Firm, explains, providing a client-centred experience goes hand-in-hand with running a profitable law firm. Specifically, satisfying your clients and giving them a positive experience is critical to your law firm’s success, and thus, it impacts your law firm’s profitability. This means doing good legal work and providing the level of service that they want and need.

How can you know if your firm is doing a good job from a client’s perspective? The first step is simply to ask your clients for feedback. Once you have a system for regularly collecting client feedback, use that feedback to fuel improvement and fine-tune your firm’s services to give clients what they want. This is especially true as we all learn to adapt to a virtual world. 

By considering that and offering consultations via videoconference, lawyers can give clients a better experience, leading to a chain reaction of new business, revenue, and profits.   

This approach is not only ethical and empathetic—it’s an innovative and efficient business strategy.

Law Firm Efficiency & Profitability FAQs

How are law firms pursuing efficiency gains?

Law firms focus on more innovative operations by adopting cloud-based legal practice management tools, automating routine administrative tasks, tracking key performance indicators (KPIs), and optimising internal workflows. These steps reduce manual work, improve accuracy, and save time for higher-value client activities.

What’s the best place to start improving law firm efficiency?

Start with a simple time audit. Ask your team to track how they spend their time over a typical week. This helps identify repetitive or low-value tasks that could be automated, streamlined, or delegated, unlocking immediate efficiency gains without disrupting core legal work.

What is efficient law firm document automation?

Implementing document automation solutions means using legal tech, such as Clio Draft, for document generation purposes – automated document examples could include standardised contracts, forms, and client correspondence from templates. This reduces drafting time, improves consistency, and minimises errors, especially for high-volume or repetitive document workflows.

Can small firms improve efficiency without big budgets?

Absolutely. Many of the most impactful improvements, like better time tracking, using pre-built templates, or automating follow-ups, don’t require expensive software. Instead, they come from adopting more innovative tools, refining daily processes, and eliminating unnecessary tasks.

We published this blog post in May 2025. Last updated: May 27, 2025.

Posted in: Business