Methodology
Legal Matter Profitability Planner methodology
Choose a fee arrangement and required fee that recover actual worked time, unrecovered disbursements and the entered margin. Reconcile a legal matter fee with role hours, write-offs, loaded labour cost, disbursement recovery and a target contribution margin.
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
1. Formulas and units
standardHourlyFeesExTax = sum(billable hours * standard rate)Where
- standardHourlyFeesExTax
- Standard hourly fees (currency units, ex tax)Source: Calculated output
writeOffExTax = standard hourly fees * write-off rateWhere
- writeOffRate
- Hourly fee write-off rate (decimal fraction of standard hourly fees written off)Source: Business record
- standardHourlyFeesExTax
- Standard hourly fees (currency units, ex tax)Source: Calculated output
- writeOffExTax
- Expected hourly write-off (currency units, ex tax)Source: Calculated output
realisedFeeExTax = fixed, hourly after write-off, or both according to arrangementWhere
- fixedFeeExTax
- Fixed or hybrid fee component (currency units/matter, ex tax)Source: Business record
- writeOffExTax
- Expected hourly write-off (currency units, ex tax)Source: Calculated output
- realisedFeeExTax
- Realised matter fee (currency units, ex tax)Source: Calculated output
labourCostExTax = sum(worked hours * loaded labour cost)Where
- labourCostExTax
- Worked-time labour cost (currency units, ex tax)Source: Calculated output
unbilledLabourCostExTax = sum((worked hours - billable hours) * loaded labour cost)Where
- labourCostExTax
- Worked-time labour cost (currency units, ex tax)Source: Calculated output
- unbilledLabourCostExTax
- Unbilled labour cost (currency units, ex tax)Source: Calculated output
netDisbursementCostExTax = disbursement cost - disbursements recoveredWhere
- disbursementCostExTax
- Matter disbursement cost (currency units/matter, ex tax)Source: Business record
- disbursementRecoveredExTax
- Disbursements recovered (currency units/matter, ex tax)Source: Business record
- netDisbursementCostExTax
- Net disbursement cost (currency units, ex tax)Source: Calculated output
contributionExTax = realised fee - labour cost - net disbursement costWhere
- disbursementCostExTax
- Matter disbursement cost (currency units/matter, ex tax)Source: Business record
- realisedFeeExTax
- Realised matter fee (currency units, ex tax)Source: Calculated output
- labourCostExTax
- Worked-time labour cost (currency units, ex tax)Source: Calculated output
- netDisbursementCostExTax
- Net disbursement cost (currency units, ex tax)Source: Calculated output
- contributionExTax
- Matter contribution (currency units, ex tax)Source: Calculated output
contributionMargin = matter contribution / realised feeWhere
- realisedFeeExTax
- Realised matter fee (currency units, ex tax)Source: Calculated output
- contributionExTax
- Matter contribution (currency units, ex tax)Source: Calculated output
- contributionMargin
- Matter contribution margin (decimal rate)Source: Calculated output
realisedRatePerWorkedHourExTax = realised fee / total worked hoursWhere
- realisedFeeExTax
- Realised matter fee (currency units, ex tax)Source: Calculated output
- realisedRatePerWorkedHourExTax
- Realised fee per worked hour (currency units, ex tax)Source: Calculated output
requiredFeeExTax = (labour cost + net disbursement cost) / (1 - target margin)Where
- disbursementCostExTax
- Matter disbursement cost (currency units/matter, ex tax)Source: Business record
- targetMargin
- Target matter margin (decimal fraction of matter revenue)Source: Business record
- labourCostExTax
- Worked-time labour cost (currency units, ex tax)Source: Calculated output
- netDisbursementCostExTax
- Net disbursement cost (currency units, ex tax)Source: Calculated output
- requiredFeeExTax
- Required matter fee (currency units, ex tax)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
The worked rows below are evaluated at render time by the same shared engine and visible default fixture as the interactive workflow.
- Fee arrangement code
- 2 fee-arrangement selection
- Fixed or hybrid fee component
- 2,000 currency units/matter, ex tax
- Partner hours worked
- 10 hours/matter
- Partner billable hours
- 8 billable hours/matter
- Partner standard rate
- 400 currency units/billable partner hour, ex tax
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate billable hours
- 15 billable hours/matter
- Associate standard rate
- 200 currency units/billable associate hour, ex tax
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Disbursements recovered
- 300 currency units/matter, ex tax
- Target matter margin
- 0.25 decimal fraction of matter revenue
Calculation and outputs
Standard hourly fees
standardHourlyFeesExTax = sum(billable hours * standard rate)- Partner hours worked
- 10 hours/matter
- Partner billable hours
- 8 billable hours/matter
- Partner standard rate
- 400 currency units/billable partner hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate billable hours
- 15 billable hours/matter
- Associate standard rate
- 200 currency units/billable associate hour, ex tax
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Worked-time labour cost
- 3,100 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 6,200 money
Expected hourly write-off
writeOffExTax = standard hourly fees * write-off rate- Partner hours worked
- 10 hours/matter
- Partner standard rate
- 400 currency units/billable partner hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate standard rate
- 200 currency units/billable associate hour, ex tax
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Standard hourly fees
- 6,200 money
- Worked-time labour cost
- 3,100 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 620 money
Realised matter fee
realisedFeeExTax = fixed, hourly after write-off, or both according to arrangement- Fee arrangement code
- 2 fee-arrangement selection
- Fixed or hybrid fee component
- 2,000 currency units/matter, ex tax
- Partner hours worked
- 10 hours/matter
- Associate hours worked
- 20 hours/matter
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Standard hourly fees
- 6,200 money
- Expected hourly write-off
- 620 money
- Worked-time labour cost
- 3,100 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 7,580 money
Worked-time labour cost
labourCostExTax = sum(worked hours * loaded labour cost)- Partner hours worked
- 10 hours/matter
- Partner billable hours
- 8 billable hours/matter
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate billable hours
- 15 billable hours/matter
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Unbilled labour cost
- 700 money
- Net disbursement cost
- 200 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 3,100 money
Unbilled labour cost
unbilledLabourCostExTax = sum((worked hours - billable hours) * loaded labour cost)- Partner hours worked
- 10 hours/matter
- Partner billable hours
- 8 billable hours/matter
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate billable hours
- 15 billable hours/matter
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Worked-time labour cost
- 3,100 money
- Net disbursement cost
- 200 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 700 money
Net disbursement cost
netDisbursementCostExTax = disbursement cost - disbursements recovered- Partner hours worked
- 10 hours/matter
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Disbursements recovered
- 300 currency units/matter, ex tax
- Worked-time labour cost
- 3,100 money
- Unbilled labour cost
- 700 money
- Realised fee per worked hour
- 252.666667 money
Engine result: 200 money
Matter contribution
contributionExTax = realised fee - labour cost - net disbursement cost- Fee arrangement code
- 2 fee-arrangement selection
- Fixed or hybrid fee component
- 2,000 currency units/matter, ex tax
- Partner hours worked
- 10 hours/matter
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Disbursements recovered
- 300 currency units/matter, ex tax
- Realised matter fee
- 7,580 money
- Worked-time labour cost
- 3,100 money
- Unbilled labour cost
- 700 money
- Net disbursement cost
- 200 money
- Realised fee per worked hour
- 252.666667 money
- Required matter fee
- 4,400 money
Engine result: 4,280 money
Matter contribution margin
contributionMargin = matter contribution / realised fee- Fee arrangement code
- 2 fee-arrangement selection
- Fixed or hybrid fee component
- 2,000 currency units/matter, ex tax
- Partner hours worked
- 10 hours/matter
- Associate hours worked
- 20 hours/matter
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Target matter margin
- 0.25 decimal fraction of matter revenue
- Realised matter fee
- 7,580 money
- Worked-time labour cost
- 3,100 money
- Matter contribution
- 4,280 money
- Realised fee per worked hour
- 252.666667 money
- Required matter fee
- 4,400 money
Engine result: 0.564644 percent
Realised fee per worked hour
realisedRatePerWorkedHourExTax = realised fee / total worked hours- Fee arrangement code
- 2 fee-arrangement selection
- Fixed or hybrid fee component
- 2,000 currency units/matter, ex tax
- Partner hours worked
- 10 hours/matter
- Partner billable hours
- 8 billable hours/matter
- Associate hours worked
- 20 hours/matter
- Associate billable hours
- 15 billable hours/matter
- Hourly fee write-off rate
- 0.1 decimal fraction of standard hourly fees written off
- Realised matter fee
- 7,580 money
- Worked-time labour cost
- 3,100 money
- Required matter fee
- 4,400 money
Engine result: 252.666667 money
Required matter fee
requiredFeeExTax = (labour cost + net disbursement cost) / (1 - target margin)- Partner hours worked
- 10 hours/matter
- Partner loaded cost per hour
- 150 currency units/partner worked hour, ex tax
- Associate hours worked
- 20 hours/matter
- Associate loaded cost per hour
- 80 currency units/associate worked hour, ex tax
- Matter disbursement cost
- 500 currency units/matter, ex tax
- Disbursements recovered
- 300 currency units/matter, ex tax
- Target matter margin
- 0.25 decimal fraction of matter revenue
- Worked-time labour cost
- 3,100 money
- Unbilled labour cost
- 700 money
- Net disbursement cost
- 200 money
- Matter contribution margin
- 0.564644 percent
- Realised fee per worked hour
- 252.666667 money
Engine result: 4,400 money
Example
The worked rows below are evaluated at render time by the same shared engine and visible default fixture as the interactive workflow.
- Standard hourly fees
- 6,200 currency units
- Expected hourly write-off
- 620 currency units
- Realised matter fee
- 7,580 currency units
- Worked-time labour cost
- 3,100 currency units
- Unbilled labour cost
- 700 currency units
- Net disbursement cost
- 200 currency units
- Matter contribution
- 4,280 currency units
- Matter contribution margin
- 56.5%
- Realised fee per worked hour
- 252.67 currency units
- Required matter fee
- 4,400 currency units
The exact engine-derived outputs are shown in the labelled rows below.
Interpretation
Matter contribution depends on the selected fee arrangement, time burden, write-offs and collections.
3. Validation and boundary checks
- All inputs must be finite and inside the visible validation boundaries.
- Rates are retained as decimal values and shown as percentages only at the presentation boundary.
- The worked fixture must expose every declared result: standardHourlyFeesExTax, writeOffExTax, realisedFeeExTax, labourCostExTax, unbilledLabourCostExTax, netDisbursementCostExTax, contributionExTax, contributionMargin, realisedRatePerWorkedHourExTax, requiredFeeExTax.
- Scenario comparison changes one declared driver while holding the remaining industry records constant.
- Fee arrangement code minimum
feeArrangementCode ≥ 0 fee-arrangement selection— A lower value is rejected before calculation.- Fee arrangement code maximum
feeArrangementCode ≤ 2 fee-arrangement selection— A higher value is rejected before calculation.- Fixed or hybrid fee component minimum
fixedFeeExTax ≥ 0 currency units/matter, ex tax— A lower value is rejected before calculation.- Fixed or hybrid fee component maximum
fixedFeeExTax ≤ 10,000,000 currency units/matter, ex tax— A higher value is rejected before calculation.- Partner hours worked minimum
partnerWorkedHours ≥ 0 hours/matter— A lower value is rejected before calculation.- Partner hours worked maximum
partnerWorkedHours ≤ 100,000 hours/matter— A higher value is rejected before calculation.- Partner billable hours minimum
partnerBillableHours ≥ 0 billable hours/matter— A lower value is rejected before calculation.- Partner billable hours maximum
partnerBillableHours ≤ 100,000 billable hours/matter— A higher value is rejected before calculation.- Partner standard rate minimum
partnerStandardRateExTax ≥ 0 currency units/billable partner hour, ex tax— A lower value is rejected before calculation.- Partner standard rate maximum
partnerStandardRateExTax ≤ 10,000,000 currency units/billable partner hour, ex tax— A higher value is rejected before calculation.- Partner loaded cost per hour minimum
partnerLoadedCostPerHourExTax ≥ 0 currency units/partner worked hour, ex tax— A lower value is rejected before calculation.- Partner loaded cost per hour maximum
partnerLoadedCostPerHourExTax ≤ 10,000,000 currency units/partner worked hour, ex tax— A higher value is rejected before calculation.- Associate hours worked minimum
associateWorkedHours ≥ 0 hours/matter— A lower value is rejected before calculation.- Associate hours worked maximum
associateWorkedHours ≤ 100,000 hours/matter— A higher value is rejected before calculation.- Associate billable hours minimum
associateBillableHours ≥ 0 billable hours/matter— A lower value is rejected before calculation.- Associate billable hours maximum
associateBillableHours ≤ 100,000 billable hours/matter— A higher value is rejected before calculation.- Associate standard rate minimum
associateStandardRateExTax ≥ 0 currency units/billable associate hour, ex tax— A lower value is rejected before calculation.- Associate standard rate maximum
associateStandardRateExTax ≤ 10,000,000 currency units/billable associate hour, ex tax— A higher value is rejected before calculation.- Associate loaded cost per hour minimum
associateLoadedCostPerHourExTax ≥ 0 currency units/associate worked hour, ex tax— A lower value is rejected before calculation.- Associate loaded cost per hour maximum
associateLoadedCostPerHourExTax ≤ 10,000,000 currency units/associate worked hour, ex tax— A higher value is rejected before calculation.- Hourly fee write-off rate minimum
writeOffRate ≥ 0 decimal fraction of standard hourly fees written off— A lower value is rejected before calculation.- Hourly fee write-off rate maximum
writeOffRate ≤ 1 decimal fraction of standard hourly fees written off— A higher value is rejected before calculation.- Matter disbursement cost minimum
disbursementCostExTax ≥ 0 currency units/matter, ex tax— A lower value is rejected before calculation.- Matter disbursement cost maximum
disbursementCostExTax ≤ 10,000,000 currency units/matter, ex tax— A higher value is rejected before calculation.- Disbursements recovered minimum
disbursementRecoveredExTax ≥ 0 currency units/matter, ex tax— A lower value is rejected before calculation.- Disbursements recovered maximum
disbursementRecoveredExTax ≤ 10,000,000 currency units/matter, ex tax— A higher value is rejected before calculation.- Target matter margin minimum
targetMargin ≥ 0 decimal fraction of matter revenue— A lower value is rejected before calculation.- Target matter margin maximum
targetMargin ≤ 0.99 decimal fraction of matter revenue— A higher value is rejected before calculation.
4. Assumptions and source classification
- Costs, capacity, contract terms, tax rates and targets are supplied by the user.
- No provider default, jurisdictional rule or industry benchmark is embedded.
- The shared engine retains full precision and display formatting never feeds calculation.
This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.
5. Limitations
- Results are only as reliable as the timing, scope and basis of the entered records.
- The workflow does not predict demand or establish accounting, tax, contractual or legal treatment.
- The model compares entered commercial matter economics only; it does not determine recoverable legal fees, court scales, trust-account treatment, professional obligations or client entitlement.
- Fee arrangements and disbursement recovery must be confirmed against the applicable engagement and jurisdiction before use.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the Legal Matter Profitability planner and methodology.
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