Facilitator Guide

Law Firm Economics: The Basics of Profitability

Facilitator Guide

Law Firm Economics: The Basics of Profitability

Topic: Business of Law

What’s covered

The basic business model
Leverage
Law firm metrics
Overhead

Before the session

Prepare the Attendees

Send the attendees an invitation for the session. Include this link, which has the videos and exercise they’ll need to prepare.

https://www.hotshotlegal.com/discussions/law-firm-economics-the-basics-of-profitability/attendee

Prepare Yourself

Watch the videos and read the exercise so you’re familiar with the Hotshot material.

Course

Law Firm Economics: The Basics of Profitability

Explains how large law firms make money and measure success as businesses. Covers the leverage pyramid and why firms hire associates, key profitability metrics like RPL and PPEP, and the overhead costs that drive firm economics. Helps associates understand the business model behind their workplace.
Exercise
PDF

During the session

Part 1: Knowledge Check

Ask attendees these questions to ensure they understand the topic:

How do most large law firms generate revenue?
What is the leverage pyramid, and how does it shape how work is distributed within a firm?
Why do law firms monitor utilization rates, and what can those rates signal about the firm’s business health?
How do metrics like PPEP, PPP, and RPL help law firms evaluate financial performance, and what does each measure?
What are some examples of overhead that law firms must cover? What are typically the big-ticket items?

Part 2: Group Exercise

Lead a group discussion based on the exercise. To encourage collaboration, divide the attendees into groups to discuss the exercise, then have a representative from each group summarize their views to the larger group. Call on people to share their thoughts and ask others to respond.

Tip for remote sessions: use your web conferencing system’s breakout room feature to divide people into groups.

Part 3: Firm Specifics

Share your own experiences and guidance, including:

Anecdotes
General practice tips (dos and don’ts)
Firm-specific guidance and practices

After the session

To continue learning, attendees can check out related courses in Hotshot’s Business of Law topic.

About Hotshot

Hotshot helps lawyers develop their legal, business, and technology skills through short videos, quizzes, and summaries, and we help law firms and law schools plan and deliver engaging training programs. Our customers include Am Law 200 firms, top law schools, and regional and international firms.