Small law firm revenue growth is encouraging for last year

Being the start of a new financial year in Australia, it is a great time to see how your firm has performed.

What I am seeing in the profession, is that small law firms have generally performed very well over the last year and the outlook for the next 12 months is also bright.

In reviewing results hot off the press for the 12 months ended 30 June, billings for many small firms have significantly increased over the year before.

20% increases are not unusual and some firms have achieved significantly more than that.

The really exciting thing about that ( remember I’m an accountant by training, so I find this sort of thing exciting), is that for many firms, most of this increase have gone straight to the bottom line and principal profits have increased by most of this.

This has meant that in some cases principal profits are increasing by 50% and more over the prior year.

Of course I am looking at firms that I deal with, but never the less , while they are all small firms, they represent a good spread of Australian states and both metropolitan and regional firms.

I think it is fair to say, that for firms that have planned to produce a good result, the last 12 months have been very kind.

Why is this?

Of course the economy has helped. Interest rates are at historically low levels and firms in certain areas such as Sydney are experiencing a significant boost in property type work with a property boom well under way.

I think though the main reason is that they planned to do it ( Refer to another article “Law firm profits for the next financial year – What are you planning on earning?”)

What is the outlook then, for the next year?

In reviewing budgets for next year, I am finding that well established small firms are generally budgeting for an increase in billings of around 20% for the next year.

This will translate into increases in profit of generally significantly more than that, due to the leverage effect ( Billings will increase, but costs won’t increase by as much)

This level of confidence has often come about because they took a leap of faith and recruited in the last year and found that the extra capacity simply turned into increased billings.

In other words the work was always there, it’s just that the firm didn’t have the capacity to do it before, whereas with more “bums on seats”, they now do.

These new staff now have another years’ experience and will be much more productive in the next year and quite rightly firm’s are planning on producing more from them.

I think it really is a purple patch right now for small law firms, so make sure that your firm takes advantage of it while it lasts.

If you found this interesting,you might also find this interesting:

Law firm profits for the current year – What are you planning on earning


Colin Ritchie passionately believes in the future of the legal profession and knows that helping firms to dramatically improve profits and practice valuation is his way of ensuring that the legal profession has a bright future.

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