Running a successful law firm requires more than being a skilled attorney. Law firm owners must also understand their finances, manage cash flow, maintain accurate records, and build operational systems that support sustainable growth.
In a recent episode of Lawyers in the Wild, hosts Lindsey E. Egan and Robert J. Hartigan welcomed CPN Legal owner and co-founder Peggy Gruenke, for a practical conversation about one of the most important—and frequently overlooked—parts of operating a law firm: the money.
Why Lawyers Need to Stay in Their Lane
Lawyers are trained to analyze legal issues, advocate for clients, negotiate claims, draft agreements, and present cases in court. Most attorneys, however, are not trained to manage bookkeeping systems, reconcile financial accounts, or interpret detailed financial reports.
During the episode, Peggy explains why law firm owners must recognize when a responsibility should be delegated to someone with specialized experience.
Revenue Does Not Always Mean Profitability
A law firm can generate substantial revenue and still experience financial difficulty.
Revenue is only one part of the firm’s financial picture. Payroll, rent, marketing, technology, case expenses, owner compensation, taxes, and the timing of collections all affect profitability and cash flow.
Before even looking at profit margin, CPN looks at percent of expenses to income. And the first number that is analyzed is payroll because it is the biggest expense and the first number that affect the percent of expenses to income. And if that number is above 50%, then the payroll figure needs to be closely examined.
Choosing the Right Clients and Cases
Peggy also discussed how important client and case selection is. Just because a client comes to you with a case that you think you could help with, doesn’t mean you should take the case. And if you take a case that you’re not well equipped to handle, then you risk an unhappy client at the end of the day which could hurt the firm.
Also, if you have a client who is difficult to work with and is rude to your staff, you’re better off terminating that relationship early on.
Financial Reports Should Guide Business Decisions
One thing that Peggy sees with lawyers and law firms who decide to come to her for help is that those law firm owners are typically not reviewing their financials closely. When CPN takes on a new client, CPN is delivering profit and loss statements. Some firms have never even reconciled their bank accounts before coming to CPN.
Watch the Full Episode
Watch “Law Firm Money Mistakes Lawyers Keep Making | Peggy Gruenke of CPN Legal” on the Lawyers in the Wild YouTube channel.
To learn more about Peggy and the financial services available to law firms, visit CPN Legal or contact the CPN Legal team.
About the Lawyers in the Wild Hosts
Lindsey E. Egan
Lindsey E. Egan is the founder of Poppy Legal Group a boutique law firm serving clients on the North Shore of Massachusetts, with a focus on family law and estate planning.
Website: poppylegalgroup.com
Email: lindsey@poppylegalgroup.com
Phone: (978) 526-0485
Robert J. Hartigan
Robert J. Hartigan is the founder and managing attorney of Lionhart Injury Law, a personal injury law firm representing injured clients in Massachusetts, New Hampshire, and Georgia.
Website: lionhartlaw.com
Email: rob@lionhartlaw.com
Phone: (855) 343-0997
Lawyers in the Wild® features candid conversations with attorneys, legal professionals, business owners, and industry leaders about building law firms, improving legal operations, using technology, developing professional brands, and navigating life inside and outside the legal industry.