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    How are law firms making money as businesses?

    Most people out there think about lawyers as money-hungry professionals but the truth is that in most cases the legal service providers have problems in making money. That is mainly because of the huge competition that exists in the legal industry at the moment. In many situations the attorneys group up under law firms. Countless law firms ended up bankrupt because of various different problems. In most cases there are not enough clients to make the firm profitable.
    Law firm business models

    A law firm traditionally starts as a partnership. Others are labelled as ABS (alternative business structures). Various business models exist. Each one has specific advantages and disadvantages that could be mentioned. The law firms can have their very own goals and individual strategies to generate income. Some may offer consultancy while others may receive money from the government. We even have law firms that make money through a percentage of the money that is gained from client cases.

    The bottom line is that law firms are specialised in various law types. Some will focus on home auctions while others will try to help clients deal with malpractice cases. No matter the case, specific models are used to generate income.

    Law firms making money

    What everyone should understand is that the law firm is basically just like all the other businesses. They will try to maximise all revenues as they minimise operation costs. Profit is the main goal for the law firm as the business. The main factors that are affecting the profitability of the law firms are utilisation, realisation, expenses, working capital, speed and leverage. Such factors need to always be controlled in order for law firms to make really good profit margins. Law firms usually report profitability with PEP (Profit per Equity Partner).

    The importance of standing out

    At first glance absolutely all law firms seem to be the same. Those that are like all the others generally do not make much on the long run. The firm needs to stand out of the crowd. What can differentiate a law firm in front of the competition? Agenda will always be important. Clients do expect the firms to reduce legal spend while offering affordable fee arrangements. The regular hourly rate is quickly disappearing in the legal world.

    Price is a very important factor for all people that contact law firms. This is what creates profit at the end of the day. However, many other reasons appear why people choose a specific law firm over the others. For instance, sectoral expertise or value-added services are often important in making a final choice.


    Law firms need to adapt to the growing needs of their clients in order to survive in the modern world that is filled with competition. Profits are very important but in many cases they are going to be strictly connected with reputation. A mix between promotion of services and investing in properly servicing clients is necessary for the modern law firm to be successful on the long run.

    About Boris Dzhingarov

    Boris Dzhingarov graduated UNWE with a major in marketing. He is the CEO of ESBO ltd brand mentioning agency. He writes for several online sites such as,,, Boris is the founder of and
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