The first topic in this series of recaps is finance. From decoupling earnings from the clock to navigating the nuances of the One Big Beautiful Bill Act, these finance-focused sessions provided actionable strategies to move firms from survival mode to best-in-class performance.
Redefining the Value of Legal Work
A central theme throughout the conference was the shift away from the traditional billable hour. In the session “Alternatives to the Billable Hour,” Steven Best, founding partner of Affinity Consulting Group, reframed the billable hour as an outdated measurement tool rather than a pricing strategy. He argued that traditional billing creates a lose-lose scenario by triggering client anxiety while capping firm revenue based on manual labor.
The alternative is value-based pricing through flat fee, milestone or subscription models. AI serves as a profit multiplier in these structures; unlike hourly billing where efficiency reduces revenue, AI in a flat-fee model allows firms to complete work faster and handle higher volumes without increasing overhead.
- Audit Your Matter Types: Identify practice areas with repeatable workflows and test flat fee or milestone models to improve cash flow.
- Deploy AI for Efficiency: Use document automation and AI time-capture to handle a higher volume of projects in the same amount of time.
- Shift the Financial Focus: Analyze revenue per lawyer under different models to see where AI-enhanced billing can provide exponential growth.
Moving from Fire Drill to Rationalized Operations
Operational maturity was another primary focus. In “How to Achieve Best-in-Class Financial Performance,” Gary Allen, founder of LeanLaw, introduced the Law Firm Profitability Matrix. This framework helps firms evaluate maturity across five pillars: people, process, product, tools and rules.
Allen emphasized that reaching a “rationalized” state — where operations are documented and predictable — is a prerequisite for AI success. AI cannot fix a broken process; it can only accelerate a functional one.
- Assess Your Maturity Pillar: Use the Profitability Matrix to move from manual, inconsistent processes to automated, documented ones.
- Implement Evergreen Retainers: Ensure trust accounts are consistently replenished to boost annual revenue and eliminate payment chasing.
- Empower Your “Operational Heartbeat”: Support firm administrators in shifting from survival mode to strategic leadership, allowing them to act as a chief operating officer.
Strategic Tax Planning Under OBBA
The legislative landscape saw a massive shift with the One Big Beautiful Bill Act (OBBA). Olga Blyweiss and Kelsey Campbell of Armanino detailed how this act retroactively reshaped the tax environment for firms, particularly through the reinstatement of 100% bonus depreciation.
Their session highlighted that tax planning is now a strategic lever for growth rather than a year-end administrative task. Firms can increase cash flow through Pass-Through Entity Tax (PTET) elections and research and development (R&D) credits for custom AI development.
- Review Recent Asset Purchases: OBBA reinstated 100% bonus depreciation for assets placed in service after January 19, 2025. Ensure you are expensing the full cost of 2025 and 2026 purchases in the first year.
- Optimize 199A for New Partners: Classify pay as Line 1 income rather than guaranteed payments for partners below the AGI threshold to capture the 20% tax break.
- Monitor Debt vs. EBITDA: For firms with large lines of credit, keep a close eye on interest expenses. Ensure they stay within the 30% of EBITDA limitation to avoid having to pass non-deductible interest through to partners.
Refining the Accounts Receivable (AR) Workflow
The “lockup” crisis — the gap between performing work and getting paid — was addressed by Matt Darner, Cofounder of CollBox. In “Practical Accounts Receivable Strategies to Unlock Profitability and Reduce Stress,” Darner noted that by day 90, past-due bills lose nearly half of their collectibility.
He argued that effective collections are rooted in process and psychology. By reframing AR as a client service check-in, firms can maintain relationships while securing revenue.
- Document Your Standard Operating Procedure for AR: Create a written policy dictating specific actions at day 15, 30 and 60 to ensure consistent execution.
- Adopt Text Messaging Cadences: Implement automated text reminders for overdue invoices, as they have significantly higher open rates than email.
- Separate Lawyering from Billing: Ensure attorneys are not making collection calls to avoid the “service provider death spiral” where clients dodge attorneys to avoid payment talk.
By integrating these strategies — from value-based pricing and operational rationalization to proactive tax planning and refined AR workflows — law firms can unlock new levels of profitability and stability.
For more financial insights from ALA, check out Legal Management’s recent issue on Financial Health and Billing! Interested in attending ALA’s Annual Conference & Expo next year? Save the date to join us in Milwaukee, Wisconsin on May 23-26, 2027!
