Profitability! It’s one of the most used and important factors for any business.

As always, we’re going to be super simple to explain the subject, Profitability and How do we calculate it. (No Bookish Language)

Suppose you’re spending X on any team member.
What you are making, X, 2X, 3X or 4X from him/her?

We’ve already entered into the subject!

The multiplier of x i.e., 1/2/3/4 is nothing but the Profitability Factor of your team member.

So, before we dive deep into this subject let’s become familiar with certain terms.

Revenue It’s the total amount of income generated by the sales of goods or services related to the organization’s primary operations.	Profit The amount that you make when you sell something for more than it cost you.
Loss At Legalxgen we’ve eliminated the term Loss from our dictionary. So, we’re not going to discuss it! 😁	Profitability The measure of an organization’s profit relative to its expenses.

How to calculate the Profitability?
Time and Money are the key factors to derive profitability.

Considering in a time range (say in a month) the details of cost, hourly rate, time spent, sales and recovery are as follows:

Timesheet, Sales and Recovery for the Period – October 2022

#	Fee Earner	Monthly Cost	Avg. Hourly Rate (Rs./hour)	Time	Sales Value	Recovery Value
1	Arpita Khanna	150,000.00	15,000.00	95.00	550,000.00	450,000.00
2	Kunal	70,000.00	8,000.00	120.00	350,000.00	250,000.00
3	Vishesh Kumar	60,000.00	7,000.00	85.00	315,000.00	220,000.00
4	Silky Mishra	45,000.00	5,000.00	140.00	325,000.00	200,000.00

From the above data we could easily derive the following statistics:

#	Fee Earner	Avg. Rate Receipt (Rs./hour)	Profitability (Sales)	Profitability (Recovery)
1	Arpita Khanna	4,736.84	3.67	3.00
2	Kunal	2,083.33	5.00	3.57
3	Vishesh Kumar	2,588.24	5.25	3.67
4	Silky Mishra	1,428.57	7.22	4.44

So, with the above, we could clearly see Profitability (on Recovery). And, Silky Mishra is the most profitable.

Mathematics Behind Profitability:

I know it’s too much mathematics but to run a successful and profitable law firm it’s needed. That’s how the most successful law firms differentiate themselves from others.

Too much Mathematics! 😟

Don’t worry, we’ve all these readily available just in a click.

Legalxgen is #1 in Law Firm Management Software. We’ve gone a couple of steps ahead from the traditional software, where it’s simply a data dumping yard. We help law firms in doing the best analysis of their data and use it for decision-making.

We’ve 150+ standard reports that simplify the life of our clients and let them focus on their core without worrying about Process, Productivity and Profitability.

If it’s something that sounds interesting to you, you could reach out to us by sending a ‘Hello’ to relationships@legalxgen.com, and we would love to walk you through it and show the magic.