Crescendo Accounting, a Canada-based financial services provider for law firms, has released insights on the 35% Rule, a crucial benchmark for legal practices seeking sustainable profitability and operational efficiency.
The 35% Rule is a financial guideline that ensures a law firm maintains a balanced revenue structure. According to Crescendo Accounting, law firms should allocate: 40% to salaries and labor costs; 25% to overhead and administrative expenses; and 35% to profit.
“By adhering to this framework, law firms can optimize their financial performance, improve cash flow management, and sustain long-term growth,” said Crescendo Accounting.
Law Firms struggling to meet targets are likely to face operational inefficiencies or an imbalance in resource allocation.
“The key to this model is that it can help you evaluate company performance in addition to optimizing your profits,” they suggested.
