Law Firm

How Profitable Is A Law Firm? (Updated for 2024)

Pat Walls

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Updated: October 5th, 2024

How Profitable Is A Law Firm? (Updated for 2024)

So you want to start a law firm?

And the first question that came to your mind was, “well, are law firms actually profitable?”

With a market size of $320B - there’s plenty of business to go around.

Especially considering:

You could start a law firm with as low as $200
Based on our data, law firms generate an average of $12.5M per year

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a law firm.

Let’s dive in!

Is a law firm profitable?

Yes, a law firm is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $12.5M per year with an estimated gross margin of 43%, you could expect to recover your investment within 9 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your law firm.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your law firm is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a law firm worth it?

If you’re wondering if a law firm is worth it, the answer is a big YES. With law firms, you have the potential to earn $12.5M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $320B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a law firm to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful law firms case studies.

Examples Of Profitable Law Firms

Here are a few examples of profitable law firms, and a few more details about them:

1. Attorney Brian White Personal Injury Lawyers ($60M/year)

Brian White, the founder of Attorney Brian White Personal Injury, came up with the idea for his law firm while working for a large international law firm defending cases. He observed that some plaintiff law firms were not fully working up their cases and accepting less than maximum settlements. Frustrated by lawyers leaving money on the table, Brian decided to start his own law firm focused on providing maximum results for clients through aggressive preparation and courtroom representation.

Is it profitable? Yes
How much money it makes: $60M/year
How much did it cost to start: $800K

How I Started A $5M/Month Law Firm Focused On Personal Injury Cases

A Texas law firm founded on the premise of extreme preparation and relentless advocacy for its clients captured tens of millions of dollars of market share per year as it grew from a boutique firm with a scrappy reputation to dominating the competitive Texas legal market.

Read this case study

Read by 6,881 founders

2. HMW Law ($3M/year)

Brandon Henderson, the founder of HMW Law, started the business out of his apartment in 2002 with no money. Through a direct mail campaign, sales skills, and a focus on client satisfaction, he built a strong reputation and grew the business into a multi-million dollar-a-year enterprise. Now, he has his sights set on reaching eight figures by 2025 and expanding the firm to other cities in Ohio.

Is it profitable? Yes
How much money it makes: $3M/year
How much did it cost to start: $200

We Are A Multi-Million Dollar Legal Service Business, Giving A Voice To The Bullied

This case study follows the growth from scratch of a Personal Injury and Criminal Defense law firm that started from direct mail campaigns and has now expanded into a multi-million dollar-a-year business with the goal of becoming an 8 figure firm, while maintaining a customer-centric approach and fostering a culture of innovation and excellence.

Read this case study

Read by 6,814 founders

3. SMB Law Group ($3.2M/year)

After realizing the daunting nature of Big Law workloads and missing family milestones, Eric Pacifici and Kevin Henderson started SMB Law Group in 2022. They've since closed over $1 billion in acquisitions for small businesses.

Is it profitable? Yes
How much money it makes: $3.2M/year
How much did it cost to start: $50K

Our M&A Law Firm Made $3.2M In Its First Year

Co-founders leveraged their Big Law experience to build SMB Law Group, a boutique M&A firm for small and medium-sized businesses, which has closed over $1 billion in transactions and generated $3.2M in revenue within their first year.

Read this case study

Read by 3,129 founders

Learn more about starting a law firm:

Where to start?

-> Law firm plan
-> How to finance a law firm?
-> How much does it cost to start a law firm?
-> Pros and cons of a law firm

Need inspiration?

-> Other law firm success stories
-> Marketing ideas for a law firm
-> Law firm slogans
-> Law firm names
-> Law firm Instagram bios

Other resources

-> Law firm tips

How much can you make with a law firm?

With a law firm, you can make an average of $12.5M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $200. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 9 months.

How much does a law firm make a week?

Based on our data, average weekly revenue for a law firm ranges around $260K. As such, you could see monthly revenues of $1.04M.

To know if your law firm achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your law firm.

How much do law firms owners make?

The income of a law firm owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established law firm is about $260K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a law firm owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Law Firm Profit Margins

Generally speaking, a law firm can expect profit margin of around 43%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a law firm, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, law firm owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, law firm owners can ensure long-term sustainability and profitability for their business.

Law firm owner salary

The salary of a law firm owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established law firm, in a prime position, might see an average weekly salary around the ballpark of $112K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a law firm may be a promising business to start - but the success of your law firm mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable law firm.

Part of

Starting A Law Firm: Everything You Need To Know

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