Professional services
Law Firm Overhead Calculator
Totals firm overhead, where cost per attorney is the comparison that works.
Result
Overhead is what the business costs whether or not you work. Wages for people who are on jobs belong in job cost instead, and counting them here overstates overhead and underprices everything.
Get a Free Business AuditHow the calculation works
The monthly total of what the firm costs regardless of billing: premises, support salaries, malpractice and other insurance, library and research subscriptions, practice management and document systems, and professional dues. Divided by attorneys it gives cost per attorney, which is the comparable figure across firms of different sizes.
What moves the number
- Premises, historically the largest line and now more variable.
- Support salaries and the ratio to attorneys.
- Malpractice insurance, which varies by practice area.
- Research and practice management subscriptions.
Where this one goes wrong
Timekeeper compensation is not overhead, and including it makes the overhead rate meaningless for pricing. Overhead is what the firm costs when nobody is billing. The line most worth examining is premises, since space was historically sized for everyone present full time and much of it is now underused, and it is also the hardest to change quickly because of lease terms. Research subscriptions are the quiet one: they renew automatically and frequently exceed what the firm's actual usage justifies.
Before you quote
- Keep timekeeper compensation out of overhead.
- Compare cost per attorney rather than totals.
- Audit research and software subscriptions against actual use.
Questions
About this calculator
What belongs in law firm overhead?
What the firm costs when nobody is billing: premises, support salaries, insurance, research and practice management subscriptions, and professional dues. Timekeeper compensation is not overhead, and including it makes the overhead rate useless for pricing.
Where does overhead usually hide?
Premises and subscriptions. Space was often sized for everyone present full time and is now underused while the lease runs on, and research and software subscriptions renew automatically at levels the firm's actual usage no longer justifies.
How should overhead be compared across firms?
Per attorney rather than as a total or a percentage of revenue, since revenue-based ratios are distorted by rate differences between markets. Cost per attorney is the figure that actually compares, and it is also the one that drives pricing.
The formula
overhead rate = monthly overhead / monthly revenue
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How to use this calculator
- Premises per month ($). Enter your own figure; the page starts at $1,800.
- Office and management wages ($). Enter your own figure; the page starts at $5,200.
- Library, research and subscriptions ($). Enter your own figure; the page starts at $2,400.
- Insurance and licensing ($). Enter your own figure; the page starts at $900.
- Software, phones and internet ($). Enter your own figure; the page starts at $450.
- Marketing and advertising ($). Enter your own figure; the page starts at $1,500.
The result updates as you type, so you can try a figure, see what it does to overhead per month, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Premises per month | $1,800 |
| Office and management wages | $5,200 |
| Library, research and subscriptions | $2,400 |
| Insurance and licensing | $900 |
| Software, phones and internet | $450 |
| Marketing and advertising | $1,500 |
| Everything else | $700 |
| Monthly revenue | $68,000 |
What comes out
| Result | Value |
|---|---|
| Overhead per month main result | $12,950 |
| Overhead per year | $155,400 |
| Overhead rate | 19.0% |
| Cost of opening the doors | $588.64 |
Overhead runs $12,950 a month, 19.0% of revenue. Every working day costs $588.64 before anybody turns a wheel.
How sensitive the answer is
Holding everything else steady and changing only premises per month, this is what happens to overhead per month. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Premises per month ($) | Overhead per month |
|---|---|
| $900 | $12,050 |
| $1,350 | $12,500 |
| $1,800 example above | $12,950 |
| $2,700 | $13,850 |
| $3,600 | $14,750 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Premises per month ($)
- A money amount, starting at $1,800.
- Office and management wages ($)
- A money amount, starting at $5,200.
- Library, research and subscriptions ($)
- A money amount, starting at $2,400.
- Insurance and licensing ($)
- A money amount, starting at $900.
- Software, phones and internet ($)
- A money amount, starting at $450.
- Marketing and advertising ($)
- A money amount, starting at $1,500.
- Everything else ($)
- A money amount, starting at $700.
- Monthly revenue ($)
- A money amount, starting at $68,000.
What the results tell you
| Result | What it is |
|---|---|
| Overhead per month | The headline result. A money figure. |
| Overhead per year | A money figure. |
| Overhead rate | A percentage. |
| Cost of opening the doors | A money figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.