How I think about — Matter Economics
Margin is a decision, not an outcome.
Most matters lose margin in the middle, not the end. Realisation gets blamed at write-off, but the damage is done in the weeks where leverage drifts, scope expands quietly, and nobody re-prices. Matter economics is the discipline of catching that drift in-flight.
Do
Practice- +01
Track worked-to-billed weekly, not monthly
Monthly cadence is too slow to course-correct a matter that's already 60% delivered. Weekly variance lets you renegotiate while you still have a relationship reason to.
Source — BigHand · In-Flight Matter Management
- +02
Watch leverage, not just hours
Partner-heavy weeks on a fixed fee burn margin faster than total-hour overruns. Staffing mix is the leading indicator.
Source — Thomson Reuters · Financial Insights Report
- +03
Hold a 'scope conversation' at 50% spend
Halfway through the budget is when the client is most receptive to a re-scope. Wait until 90% and it reads as a bill dispute.
Don't
Patterns- −01
Don't confuse realisation with profitability
A matter can bill at 100% realisation and still lose money if leverage is wrong. Margin is the only number that survives the year.
Source — Altman Weil
- −02
Don't write off in silence
Unexplained write-offs train the firm to under-price next time. Every write-off should generate a one-line lesson back into the pricing model.
- −03
Don't treat the budget as a forecast
The budget is a commitment to the client. The forecast is what's actually happening. Conflating them is how AFAs get a bad reputation.
Source — BigHand
§ References
Where this thinking comes from
- BigHandIn-Flight Matter Management
- Thomson ReutersFinancial Insights Report
- Altman WeilLaw Firms in Transition
Synthesised from publicly available reports and commentary. All views my own.