Matter Profitability Calculator
Find out whether a matter actually makes money. Enter a few numbers to see its margin, profit, effective hourly rate, and the true cost per hour behind the work — no signup.
Your numbers
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This matter
This is one matter, by hand. The Hammer Lex calculates margin like this automatically across every matter, client, practice area, and timekeeper — live, as time is logged.
See it on your firm's numbersHow matter profitability is calculated
Most firms know their billing rate but not their margin — what's left after the fully-loaded cost of the people doing the work. A high rate can still lose money if realization is low or the timekeeper's cost per hour is higher than you think. This calculator makes the gap visible.
The math behind the numbers:
- 1Collected revenueHours × billing rate × realization rate. Realization captures write-downs, discounts, and time you never collect.
- 2True cost per hourSalary × (1 + overhead %) ÷ annual billable hours. Overhead folds in rent, software, admin, and benefits.
- 3Labor costTrue cost per hour × hours worked on the matter.
- 4Profit & marginCollected revenue − labor cost, then divided by collected revenue for the margin percentage.
A useful gut check: many well-run firms aim for a 30–50% margin per matter after fully-loaded labor cost. Consistently thin margins usually point to one of three fixable causes — a rate that's too low, realization leaking through poor time capture, or the wrong staffing mix on the work.
Why partners track this
Looking at revenue alone hides which matters and which people actually drive profit. When you can see margin by matter, client, and timekeeper, you can reprice unprofitable work, staff matters with the right cost mix, and double down on the clients that pay. That's the difference between a firm that's busy and a firm that's profitable.
Frequently asked questions
What is a good profit margin on a legal matter?
It varies by practice area, but many well-run firms target 30–50% margin per matter after fully-loaded labor cost. Below ~15% is a signal to revisit your rate, realization, or staffing.
What's the difference between realization and collection?
Realization is the share of billed value you keep after write-downs and discounts; collection is the share of invoiced amounts clients actually pay. Both erode the revenue you ultimately bank — this tool uses a single realization input to keep it simple.
How do I find true cost per hour?
Salary plus overhead (as a %), divided by the billable hours a timekeeper actually delivers in a year. That fully-loaded number — not salary alone — is what you compare against your rate.
Does The Hammer Lex calculate this automatically?
Yes. Instead of doing this matter by matter in a spreadsheet, The Hammer Lex computes margin live across every matter, client, practice area, and timekeeper as time is logged. Book a demo to see it on your numbers.
Stop guessing which work is profitable
The Hammer Lex turns daily time entry into live P&L by matter, client, and timekeeper — no spreadsheets.
Book a demo