Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am an attorney in New Orleans who has been in practice for ten years. I practiced with a small firm for eight years as an associate and then opened my own firm two years ago. I primarily work from home supplemented with a virtual pay-as-you-go office. I do not have any staff employees. I have been approached by a 14-attorney firm that would like me to join their firm as a partner. Their offer includes a salary that I feel is low and a bonus based upon a percentage after covering my salary, other direct costs, and indirect firm overhead. The overhead allocations seem extremely high to me. In my practice, I am bringing in around $100,000 in gross fees and my overhead averages $10,000-$15,000 per year. My profit margin is around 90 percent. I feel like I am better off building up my practice rather than accepting their offer. What are typical overhead and profit margins for law firms?