# Matter Profitability Calculator for Law Firms

A free, browser-based calculator from The Hammer Lex. It shows whether a legal matter actually makes money — its margin, profit, effective hourly rate, and the true (fully-loaded) cost per hour behind the work. No signup; nothing is sent anywhere.

URL: https://hammerlex.com/tools/matter-profitability-calculator.html

## Inputs
- Hours worked on the matter
- Billing rate (per hour)
- Realization rate (% of billed value actually collected)
- Timekeeper annual salary
- Annual billable hours (hours actually delivered per year)
- Overhead (% on top of salary: rent, software, admin, benefits)

## How it is calculated
- Collected revenue = hours × billing rate × realization rate
- True cost per hour = salary × (1 + overhead %) ÷ annual billable hours
- Labor cost = true cost per hour × hours worked
- Matter profit = collected revenue − labor cost
- Margin = profit ÷ collected revenue

## Benchmarks
Many well-run firms target a 30–50% margin per matter after fully-loaded labor cost. Margins below ~15% are a warning sign — usually a rate that is too low, realization leaking through poor time capture, or the wrong staffing mix.

## FAQ
**What is a good profit margin on a legal matter?** Often 30–50% after fully-loaded labor cost; below ~15% warrants attention.

**Realization vs collection?** Realization is the share of billed value kept after write-downs/discounts; collection is the share of invoiced amounts paid.

**True cost per hour?** Salary plus overhead %, divided by billable hours actually delivered per year.

**Does The Hammer Lex automate this?** Yes — it computes margin live across every matter, client, practice area, and timekeeper as time is logged. Book a demo: https://hammerlex.com/contact.html