Busy But Not Profitable - Why Solo Lawyers Stay Busy Without Making Money
Whenever lawyers say they’re busy, my question to them is - are you making any money?
It is very easy in law to be busy, but still not make a profit.
Solo lawyers often confuse workflow and cashflow, but they are not the same thing.
If your law firm is always busy but you are not paying yourself properly, not making a healthy profit, and not clear on what you are billing, spending, and keeping, that is not just part of practice - it is a business problem that needs attention sooner than later.
Whenever I ask lawyers how they are, they usually say the same thing - busy, busy, busy.
My response is usually - are you making any money?
It is important not to confuse the two.
Workflow and cashflow are mutually exclusive things.
Being busy does not necessarily mean being profitable.
Busy Does Not Mean Profitable
It is important as a recognition of effort, and obviously for your own livelihood.
Working hard day to day without giving yourself a living income, as well as making a healthy profit, probably means there is no clear strategy in respect of your law firm.
Even worse, everyone else around you is being paid well, such as your support staff, but you are not.
That can lead to becoming bitter and resentful and you can end up feeling like you are supporting everyone, running a business, being a lawyer but yet really not having much to show for it.
Workflow And Cashflow Are Not The Same Thing
We all experience purple patches in legal practice.
The peaks and troughs, ebbs and flows, of any law firm are well known.
Here however I am talking about being consistently busy, but not yet being profitable. Constantly busy, but not showing the profit next to it.
As I have said before, busy but almost always feeling like you are about to go broke is a real problem in a law firm, and it needs urgent attention.
Why Paying Yourself Matters
All of the above needs a focus on what you are doing every day.
If you are saying that you are busy and not making money, you should at least be able to answer some basic questions.
How much are you billing every day?
How many hours are you billing?
How many hours are going into administrative tasks?
What administration tasks are you doing that you could probably delegate or else automate?
What are you not charging clients for?
What is built into your hourly rate?
When was the last time you reviewed your hourly rate?
What sort of matters do you do on fixed fees as opposed to hourly rates? What model works for your firm?
The Busy Trap In A Solo Law Firm
Continuing on from the above:
Are you taking on every client who walks in the door? Why?
Are you following up your leads until they say yes or no? Why not?
Have you got time to network? Even when you are busy?
What is your ideal client profile? Why? Where do you get this work from?
Are you tracking time on your matters, even occasionally, so you can validate your fees?
Are you feeling lonely, isolated, procrastinating, or in a procrastinated state when it comes to making decisions?
How much use are you making of AI?
Often, as I said, lawyers we advise cannot tell us these things regularly.
Call it the busy trap.
There is no point being busy if you are not ultimately productive.
You can be busy as much as you like, but if you are neither productive, profitable, nor enjoying it, seriously, you have got to have a question mark over the whole thing and bring it to a head in some way, shape, or form, at least by seeking some sort of external validation, support, or advice.
What To Measure If Your Law Firm Is Always Busy But Not Making Money
How much are you making?
What are your expenses?
What are you making net?
You should know what your margins are.
You should know what percentage your expenses are.
Those things should be clear.
There is no way you can grow a sustainable and profitable practice if you cannot get ahead on these issues.
Why This All Needs Urgent Attention
At some point, busy but not profitable has to be brought to a head.
For some lawyers, that starts with a Solo Practice Tune-Up - a practical review of how the practice is working, where the money is going and what needs attention.
