From Hours to Outcomes: How Law Firms Can Escape the Profitability Pressure Cooker
Litera recently sponsored the 2025 Global Momentum event where Amanda Mui, Senior Product Value Engineer, delivered a thought-provoking session titled “From Hours to Outcomes: The Profitability Pressure Cooker.” Her presentation explored one of the most critical issues facing law firms today: how to transition from reactive financial workflows to strategic, data-driven operations that maximize profitability.
The session drew on data from Litera and trusted industry sources like Thomson Reuters, AAC, Apperio, and Above the Law to show just how urgent—and solvable—these challenges are.
The Disconnect Between Pricing and Billing
The presentation began by illustrating a familiar but overlooked structural problem in many law firms: the separation of pricing and billing functions. While pricing strategy and billing execution are deeply interconnected, only 12% of firms have these teams operating within a unified department. The remaining 88% continue to run them independently, leading to misalignment, inefficiencies, and missed opportunities to capture revenue.
Even when collaboration occurs, it’s far from consistent:
- 42% of teams collaborate constantly
- 40% collaborate often
- 16% only occasionally work together
This disjointed approach directly affects the firm’s ability to manage matter spend effectively and forecast revenue accurately.
Time is Money—And Too Much of It Is Wasted
Mui emphasized the sheer volume of time billing professionals are spending on manual tasks:
- 5–10 hours per week on tracking matter spend
- 10–40+ hours per month on managing rate changes and proposals
This administrative burden not only drains resources but also increases the likelihood of human error and compliance issues. Compounding the problem is the fact that 60–80% of firm revenue now requires detailed client-facing spend tracking—meaning the stakes for getting it right have never been higher.
The Financial Impact: Real Numbers, Real Consequences
Failing to optimize spend management and budgeting isn’t just inefficient—it’s expensive. According to data cited in the session:
- The average gap between worked and collected rates is 9.5%
- 40–60% of write-offs stem from poor budget management or spend tracking
- Law firms with formalized budgeting processes experience a 13% reduction in write-offs
- Those same firms see 5–15% improvements in profit margins
- Automation tools cut matter spend management time by up to 50%
These statistics show that firms aren’t just losing time—they’re leaving money on the table.
Reporting Bottlenecks and the Manual Trap
The discussion then turned to reporting, which remains one of the most manually intensive functions in law firm operations. According to industry reports and Litera and Above the Law’s 2024 survey:
- 75% of law firms still rely on manual reporting solutions
- 30–60% of reports are created in Excel
- 50%+ of law firm reporting is handled by the billing team
- 10–30% of a billing team member’s time is spent on reporting
- Manual spreadsheet entry carries an 18–40% chance of error
This manual approach is not only inefficient—it’s risky. With 50–80% of clients now expecting regular reporting, firms must meet these demands without sacrificing accuracy or profitability.
The Business Intelligence (BI) Advantage
Fortunately, many firms are turning to business intelligence (BI) solutions to take control of their financial data. The results are compelling:
- 92% of BI users report increased confidence in their data accuracy
- Firms using BI solutions track significantly more key performance indicators (KPIs)
- Time spent on reporting drops by 50% on average
- BI systems drive measurable improvements across nearly every business metric
Mui stressed that investing in BI isn’t just about data—it’s about enabling faster, more confident decisions that help firms stay competitive and profitable.
From Simplified to Strategic: A Better Way Forward
The core message of the session was clear: firms must move beyond overly simplified, fragmented workflows and adopt more strategic, integrated approaches. A “fully realized” workflow unites pricing, billing, and reporting into a seamless process that empowers professionals to focus less on manual tasks and more on client service and business growth.
By adopting modern financial tools like Foundation Scoping and Foundation Finance, law firms can escape the profitability pressure cooker and position themselves for long-term success.
Want to learn more about how Litera’s financial solutions can help transform your firm’s workflow and profitability? Schedule a demo today.
