How Much Do Law Firm Owners Make? $180K Salary To $986K EBITDA
This planning view separates law firm revenue and profit from owner salary, draws, distributions, and after-tax personal income In the five-year model, the founding attorney salary is $180,000 per year, while EBITDA moves from -$388,000 in Year 1 to $986,000 in Year 5 It is not legal advice, tax advice, or a guaranteed salary estimate
Owner income$180kNet margin-579% to 51%Revenue for target pay$353kBusiness difficultyHard
Want the six law firm income drivers?
1
Fee Mix
$250-$385
Higher-rate work lifts collected cash per hour, so the mix between business, contract, and litigation work drives owner take-home.
2
Billable Load
12-25h
More billable hours per matter raise cash per client, while lean matters cap how much the firm can earn.
3
Collections
Month 32
Faster invoicing and tighter collection rules pull cash forward, which matters because breakeven lands in Month 32.
4
Team Leverage
$295K-$510K
Attorney and staff payroll scales capacity, but it also sets the biggest cash drag on owner income.
5
Client CAC
$850-$1.5K
Lower acquisition cost lets the firm buy more matters from the same marketing spend as budget rises from $25K to $100K.
6
Overhead
$10.25K/mo
Fixed costs start at $10,250 a month, so tight overhead and reserve control protect take-home cash.
Want to test your own law firm owner income?
Owner income calculator
Estimate owner take-home and the target-pay gap from revenue, margin, costs, reserves, and target pay.
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Planning note: Research-based planning estimate only. Actual owner income depends on case mix, collections, staffing, taxes, debt, and reinvestment. It is not guaranteed salary, tax advice, or owner distribution advice.
Want to check owner income in the Law Firm financial model?
The Law Firm Financial Model Template shows revenue forecast, EBITDA, breakeven, cash, and owner pay; open the model to see the scenario tabs and assumptions.
Owner-income model highlights
Year 1: -$388k EBITDA
Year 4: $463k EBITDA
Year 5: $986k EBITDA
Salary, distributions, reserves
Hourly rates, billable hours
CAC, marketing, payroll
Rent, software, insurance
What is a good profit margin for a law firm?
For a Law Firm, a good margin starts with knowing the right layer: gross margin is collected fees minus case-level costs, operating margin is profit after payroll, marketing, rent, software, insurance, and admin, and owner take-home is still separate. If you want the cost side first, see How Much Does It Cost To Open A Law Firm? because early EBITDA can run deeply negative before scale kicks in. Here’s the quick math: $986k EBITDA on about $193M in collected fees is roughly 0.5% EBITDA margin, and variable costs improve from 18% to 11% by Year 5.
Margin layers
Gross margin = fees minus case costs
Operating margin includes overhead
Owner pay is not margin
EBITDA can start negative
What improves it
Collections drive revenue quality
Staffing leverage lifts margin
Year 5 variable costs hit 11%
Reserves and taxes cut take-home
How much can a solo law firm owner make?
A solo Law Firm owner can model $180,000 in founding attorney salary, but cash profit can stay weak if the owner is the main biller; see What Is The Most Important Metric To Measure The Success Of Your Law Firm? for the core metric view. In this model, EBITDA stays negative until Month 32 because $123,000 in Year 1 fixed overhead and $295,000 in payroll absorb cash before owner income feels secure.
Income Drivers
Track collected hours, not invoices
Watch realization: billed work collected
Protect attorney billable capacity
Cut admin drag fast
Cash Reality
$180,000 salary is modeled
$418,000 payroll plus overhead
Negative EBITDA until Month 32
Collections lag can crush cash
How much revenue does a law firm need to pay the owner?
If the owner wants $180k in salary, a Law Firm needs about $540k in collected fees in Year 1 before reserves and debt service. Here’s the quick math: fixed cash costs are $443k total, and with 18% variable costs, each $1 collected leaves about $0.82 for fixed costs. So there’s no universal threshold; the target is driven by the owner pay, overhead, payroll, and marketing plan.
Fixed cash costs
$295k payroll total
$180k owner salary
$123k overhead
$25k marketing
Revenue math
82% contribution margin
$443k fixed cash cost
About $540k collected fees
Plus reserves and debt service
Key Takeaways
Collected fees, not billed hours, drive owner pay.
Utilization and staffing only help when demand is real.
Cash discipline matters as overhead and receivables build.
Civil litigation earns more, but costs and hours rise.
Compare lean, base, and high-performing law firm owner income scenarios
Owner income scenarios
Owner pay moves fast here because collections, staffing, and marketing costs sit against fee growth. Early losses are common; breakeven and scale only show up once utilization holds.
Low, base, and high owner pay paths for the first five years.
Scenario
Low CaseDownside
Base CasePlan case
High CaseUpside
Launch model
Slow collections and owner-led billing keep owner income low while fixed payroll and overhead stay heavy.
Collections and utilization stay on track, so owner income improves as the firm reaches breakeven around Month 32.
Stronger collections and fuller staffing push the firm into a Year 5-style scale case with much higher owner income.
Typical setup
The firm stays small, leans on the founding attorney for most billable work, and does not collect enough to cover payroll, rent, and marketing.
The firm runs with the founding attorney, one associate, one paralegal, and one office team, while fees and billing hours track the model.
The firm operates at Year 5 scale with about $193M implied collected fees, three attorneys, roughly $510k payroll, and $100k marketing.
Cost drivers
slow collections
owner-heavy billing
$180k founder salary
fixed overhead
tight reserves
Month 32 breakeven
Year 4 EBITDA $463k
steady fee collection
disciplined overhead
modeled staffing mix
Year 5 scale
$193M implied collected fees
3 attorneys
$510k payroll
$100k marketing
Owner income rangeBefore owner reserves
$0 - $75kCash tight
$150k - $463kBreakeven path
$700k - $986kScale upside
Best fit
Use this to stress-test the early years when EBITDA stays negative and cash pressure is highest.
Use this as the core operating case for budgeting, hiring, and cash planning.
Use this to test best-case capacity, but it is not typical or guaranteed.
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Planning note: Scenario ranges are researched planning assumptions, not guaranteed earnings, salary promises, tax advice, or distributions.
Law Firm Core Six Income Drivers
Practice Area And Fee Model
Practice mix
Practice area and fee model drive owner income because each matter type earns a different rate and uses a different amount of time and support. In this model, business law rises from $275 to $315 per hour, contract law from $250 to $290, and civil litigation from $325 to $385. Profit improves when the higher rate also stays collectible and does not add too much support labor or case cost.
Civil litigation can run 8 to 12 hours per matter, but court, deposition, and expert costs can drain cash fast. So the best fee mix is not “highest rate only”; it is the mix that matches case risk, timing, and staffing so the owner can still draw pay on time.
Price and staff it
Measure each matter by rate, hours, direct costs, and billing timing. Here’s the quick math: a higher rate only helps if collected fees stay ahead of labor and case spend. If fee timing is slow, even strong revenue can miss owner pay because cash gets tied up in work in progress and receivables.
Track collected hours by practice area
Separate court, deposition, expert costs
Review invoice aging every month
Staff repeat work with lower-cost help
Use staffing to protect cash. Business law and contract work can fit lighter support, while litigation needs tighter coordination. One clean rule: price for the case you are actually handling, not the case you hope it becomes.
Billable Utilization And Capacity
Billable Utilization
Billable utilization is the share of working time that becomes collectible client work. For a hourly law firm, owner income rises when more of the day turns into billed and collected hours, not just meetings, emails, and admin. If the calendar fills with intake, supervision, marketing, and client calls, the owner can be busy and still underpaid.
Case size changes the load. In the model, business law runs 3 to 5 hours per matter, contract law 25 to 35 hours, and civil litigation 8 to 12 hours. Bigger matters can lift revenue, but only if matter flow stays steady and collections hold. Weak utilization turns payroll into margin pressure fast.
Track Collected Hours
Measure billable hours collected, not hours worked, and review it by attorney and practice area. Here’s the quick check: compare active matters, billed hours, and cash collected each month. If utilization drops, fix intake speed, scheduling, and delegation before adding headcount. One clean rule: no new hire until current capacity is clearly tight.
Track collected hours by matter.
Separate admin from billable time.
Watch supervision and client calls.
Adding attorneys can raise revenue per attorney if matter flow and realization hold. But if utilization slips, extra payroll hits profit before it helps cash. The real test is simple: does the calendar keep turning into billed work after intake, follow-up, and case management time?
Attorney And Staff Leverage
Attorney and Staff Leverage
Leverage works when associates, paralegals, legal assistants, and intake staff free the founding attorney to spend more time on work clients pay for. In this model, payroll climbs from $295k in Year 1 to $510k by Year 5, so collected fees must rise faster than staffing. The hidden drag is supervision time, which cuts into attorney capacity.
This matters most on repeatable contract and business law work, where a $55k paralegal can handle drafting, file prep, and follow-up while the attorney stays on higher-rate tasks. A simple test: if added staff do not lift collected fees above their pay plus supervision, owner draw gets squeezed. More headcount without demand just raises burn.
Measure Staff Output Against Collected Fees
Track collected fees per payroll dollar, not just hours worked. Count what each role frees up: intake, drafting, scheduling, client updates, and billing support. If the team is busy but collections do not rise, leverage is weak. That’s the quick math: payroll up, cash in flat, owner pay down.
Set staffing to demand, not hope. Use the current mix of $180k founding attorney, $100k associate, $55k paralegal, $45k office manager/admin assistant, and $30k marketing coordinator only when matters are coming in fast enough to keep them productive. Watch supervision time closely, because it is real cost even though it does not show on a client invoice.
Client Acquisition And Intake
Client Acquisition And Intake
Marketing only lifts owner income when it turns into signed matters and collected fees. With annual marketing at $25k to $100k and CAC falling from $1,500 to $850, implied acquired clients rise from about 17 to about 118 a year. But leads still need fast intake and a strong consultation close rate to become revenue.
The key inputs are referral mix, local search, paid ads, consultation close rate, and cost per signed client. One clean rule: leads do not pay the owner; signed matters do. If response time slips, cash from new cases lags, and owner draw gets squeezed even when marketing spend is up.
Measure Signed-Client Yield
Track each channel by signed matter, not by lead. Here’s the quick math: marketing spend ÷ CAC = acquired clients, but income depends on signed matters × collected fees after variable costs and payroll capacity. A cheap lead source that never reaches consultation or retainers is dead spend.
Watch first response time.
Track consult booked rate.
Track consult show rate.
Track close rate by source.
If one channel brings volume but weak closes, cut it fast or tighten scripts, pricing, and follow-up. The goal is simple: more collected fees per dollar spent, so owner income rises without adding payroll pressure.
Overhead, Reserves, And Cash Discipline
Overhead, Reserves, And Cash Discipline
$10,250/month of fixed overhead cuts flexibility before the first invoice is paid: $5,000 rent, $1,200 professional liability insurance, $1,500 research subscriptions, and $700 case management software. Add $79k of capex across furniture, hardware, network, licenses, security, website, AV, and storage, and the firm needs cash, not just billed work, to protect owner income.
The cash risk is tight: minimum cash reaches $1k at Month 32. So owner draws should follow collected cash, not optimism. Reinvestment and tax set-asides also shrink distributable cash, which means paper profit can look fine while actual pay stays constrained.
Track Cash Before Owner Pay
Measure four inputs every month: fixed overhead, capex timing, reserve balance, and tax set-asides. If post-set-aside cash cannot cover the next 3 to 6 months of overhead, pause owner draws or trim spend. One clean rule: no reserve, no draw.
Rent and insurance
Subscriptions and software
Capex timing
Tax and reinvestment set-asides
What matters is cash after fixed costs, not revenue on paper. If collections slip, the owner’s pay slips too, because overhead keeps running while receivables age. Keep a monthly cash forecast, and update it before taking any draw.
Realization And Collections
Realization And Collections
Realization rate is the share of billed work that gets approved, and collection rate is the share that turns into cash. The owner’s pay should start with collected legal fees, not billed hours, because discounts, write-downs, unpaid invoices, retainers, slow-paying clients, and bad debt all cut take-home income.
That pressure gets worse near Month 32, when minimum cash can fall to $1k. With $10,250 in monthly fixed overhead, EBITDA can look fine on paper and still leave no cash for owner draw if accounts receivable grows faster than collections.
Track Cash, Not Just Invoices
Use collected fees as the base of the income model, then track billed fees, write-offs, retainers, aging, and bad debt. If billed work rises but cash does not, owner income is not actually improving. One clean number beats three optimistic ones.
Measure billed to approved fees.
Measure approved fees to cash.
Review 30, 60, 90 day aging.
Replenish retainers before work stalls.
Push out slow payers fast.
Collections discipline matters most when the firm is near breakeven. Tight follow-up on invoices and retainers protects cash flow, keeps overhead covered, and makes owner pay real instead of just reported.
