Most law firm owners do not know what their firm earns after they are paid fairly for their own work. This calculator shows you. It takes your revenue, your expenses, what you took out, and what it would cost to hire someone to do your work, and it shows the profit left over as your return on owning the firm.
It runs in your browser and does not send what you enter anywhere. It does not give you a score or a grade, and it does not tell you whether your pay is “right.” It is a starting place, not legal or tax advice.
Before you start
Have these on hand. Your profit and loss statement for the last twelve months covers the first four.
- Annual revenue. Fees the firm has earned and collected.
- Annual expenses. Everything the firm spent to operate, not counting draws or distributions.
- Owner pay already inside expenses. For example, an S corporation W-2 salary and the payroll taxes and benefits paid on it.
- What you took out. Draws or distributions for the year.
- What it would cost to replace you. The hours per week you spend on lawyer work and on management work, priced at a market rate for those hours. Your two jobs together should add up to the hours you actually work, not to a full-time position for each.
- A return target, if you have one. A yearly dollar amount, or a percentage of revenue, for what the firm should earn on top of paying for your work. It is optional.
For where to find market-rate pay, and how the numbers fit together, read How Much Should a Law Firm Owner Pay Herself?
