As a Fractional CFO for small and mid-sized law firms, I’ve reviewed thousands of Profit & Loss reports, scrutinized countless budget line items, and rebuilt financial systems that were quietly draining profits. Here’s what I’ve learned: most law firm owners don’t have a spending problem; they have a visibility problem.
They don’t know exactly what’s being spent, why it’s being spent, or whether it’s driving results. And without visibility, even modest expenses can chip away at profits and cash flow.
If you’re ready to manage your firm’s money with more clarity and confidence, here are practical law firm expense management tips you can start using today.
Start with categorization that reflects reality
Many law firms rely on default expense categories in their practice management or accounting software. But those often fall short of showing you what you really need to know.
For example, “Office Expenses” might include everything from printer paper to Zoom subscriptions to a $9,000 copier lease. These don’t belong in the same category if you want to make good decisions.
What to do instead:
Create categories that mirror how you think about your business. Break expenses into:
Client service tools (legal research, document automation, e-signature tools)
Marketing (ads, SEO, website management, branded swag)
People and payroll (employees, contractors, benefits)
Facilities (rent, utilities, phone systems)
Professional services (bookkeeping, tax preparation, consultants)
Software subscriptions (case management, Microsoft 365, etc.)
Once you customize your chart of accounts to fit how your firm operates, you’ll be better equipped to spot overspending and make informed cuts.
Bonus tip: Work with your bookkeeper to use “parent” and “child” accounts (sections and sub-accounts) that make sense for your firm. This will format your financial statements, so you see a subtotal for the “parent” section without the need to grab a calculator.
Audit your subscriptions twice a year (Minimum)
One of the biggest silent spenders in most law firms? Auto-renewing software subscriptions and services.
Over time, your firm signs up for tools to solve specific problems, then keeps paying for them long after the need has changed or disappeared. Or worse, you have overlapping tools doing the same thing.
What to do:
Perform a subscription audit every 6 months. Review:
What it does
Who uses it
When you last used it
Whether it duplicates another service
Cancel or downgrade anything that is not actively supporting your operations or growth. And be cautious of free trials that turn into auto-billed subscriptions.
Use your budget as a monthly decision-making tool
Budgets shouldn’t be something you do once a year and ignore. If they are, you're missing out on one of the most powerful financial tools at your disposal.
Your law firm budgeting process should guide spending decisions month by month. It should reflect actual goals (like hiring, launching a new practice area, or opening a new office location), not just last year’s numbers with a slight bump.
What to do:
Work with your bookkeeper to build a 12-month budget that aligns with your goals
Ask your bookkeeper to provide you with a report showing your actual vs. budget every month with your financial reporting package
Investigate large, unexpected variances
Adjust proactively instead of reactively
Use this to reinforce spending discipline and stay accountable to the plan you set.
Clarify the ROI of every major expense
Every dollar your firm spends should serve a purpose. But not all expenses are created equal.
Some are overhead, necessary to keep the doors open (like rent, software, and admin payroll). Others are growth-oriented, intended to drive future profit (like marketing, training, or technology upgrades).
What to do:
Evaluate larger or ongoing expenses with two questions:
Is this driving value?
If I cut this today, would my revenue suffer in the next 30-90 days?
If the answer is no, consider reducing, renegotiating, or replacing it.
Don’t just cut costs, optimize them
It’s tempting to look at a profit-and-loss statement and start slashing expenses. But cutting costs blindly can create new problems, especially if it impacts client experience, staff morale, or your ability to scale.
Instead of asking “Where can I cut?” ask “How can I spend more effectively?”
Examples:
Don’t eliminate marketing; double down on what converts and stop what doesn’t
Don’t cancel your intake software; optimize the setup to improve lead conversion
Don’t fire an admin staff person who saves you 10 hours a week; can you reallocate their time to higher-ROI tasks?
Smart spending is about alignment, not discipline.
Use 8am™ MyCase tools to streamline spend monitoring
If you’re using MyCase as your law practice management system, you already have a solution that can help you manage expenses more efficiently.
Here are a few features that support better spend management:
MyCase Accounting: Track expenses by matter or category, link bank accounts, and reconcile monthly to ensure clean data.
Integrated time and billing: Compare expenses against case revenue to ensure profitability by matter.
Smart Spend: With optional free, add-on software, easily track every dollar spent in real time and gain financial clarity into your cashflows, using a credit card that integrates with expense and invoicing tools in MyCase.
With good bookkeeping hygiene and regular use of these tools, you’ll be able to make decisions based on current and accurate numbers.
Bonus tip: The Smart Spend will reduce a large portion of your profit leakage by capturing advanced client costs in real time and automatically adding them to the next invoice issued to the client. Efficiently billing 100% of your client's advanced costs as soon as possible…that’s solving a huge pain point for many firms.
Review spending in the context of profitability
It’s easy to fixate on cutting $200 here and there, but don’t lose sight of the bigger picture. The goal isn’t just to lower costs, it’s to increase profit because an increase in profit is the main cause of a larger, healthier bank balance.
You may need to increase spending in areas that directly lead to higher revenue or efficiency. For example:
Upgrading to a better case management tool
Paying more for a top-notch virtual assistant
Hiring a marketing firm that consistently brings in qualified leads
Ask yourself:
Does this spending help me grow profitably, or is it just helping me get by?
Don’t wait until year-end to fix spending problems
Too many firm owners wait until tax time, or worse, until cash is tight, to start paying attention to expenses. At that point, the money is already gone.
Expense management should be part of your monthly rhythm.
Set aside 60 minutes each month to review with your bookkeeper’s assistance:
Top 10 vendors by spend
Year-to-date spending vs. budget
Trends in client acquisition costs
Profit margins by practice area (if applicable to your practice)
You can’t change the past, but you can use it to shape better decisions going forward.
Bottomline: Your dream firm is within your reach
Effective spend and expense management for law firms isn’t about frugality; it’s about controlling the things that are within your control. When you understand where your money is going and how that spending impacts your profitability, you take back the power to grow your firm on your terms.
You don’t need to know everything overnight. But taking the first step, by auditing your subscriptions, reviewing your categories, and starting monthly reviews, can put you on the path to higher profit, better cash flow, and smarter growth.
And if you need help setting up these systems or creating a spend management strategy tailored to your law firm, connect with a financial expert who understands the legal industry. It’s one of the best investments you can make.
About the Author: Kelley Brubaker, CPA, is a Fractional CFO who has specialized in helping law firms improve profitability, cash flow, and financial clarity for more than 15 years. Through her firm, Profit Scale Thrive, she has advised hundreds of law firm owners across the United States, from growth-minded solo attorneys to multi-million-dollar firms with teams. Kelley combines deep accounting expertise with practical business strategies to help law firm owners make confident financial decisions and build thriving practices. She is the host of the Your Profitable Law Firm Podcast, leads a private community dedicated to empowering small law firm owners with the tools to scale sustainably, and has authored several books to support law firm owners.