As law firms attempt to drive greater profitability, it is common for partners to talk about “firing unprofitable clients.” But few firms have the ability to distinguish the comparative profitability of clients, and even fewer have the discipline to take action.
The truth is that a large law firm’s client base goes a long way to determining its profit level, and improvement does not require a wholesale change of clients. The reason firms can’t measure client profitability is not because they lack the appropriate software or do not have access to the necessary data. Rather, firms have a problem coming up with a common definition of what constitutes profitability. The difficulty is that law firms are made up of partners who are prepared to vigorously defend their clients, regardless of their value to the firm.
