How your law firm can break $2m

According to the Australian Small Business and Family Enterprise Ombudsman, only 7 per cent of businesses in Australia ever break through $2 million in annual revenue. Law firms are not immune to this statistic. The real challenge lies in the ability of the founding partner to make the shift from ‘expert’ to ‘leader’, and build and structure the firm differently as it grows.

Here’s what’s really going on behind the scenes of firms that stall and how you can ensure yours joins the 7 per cent.

What happens on the path beyond $1–2m?

Most firms are built around the founding partner. The reputation, the rainmaking, and supervision of all legal work sit with them. At under $1m, that model can work. However, as the client base grows and people are added, that structure starts to strain.

Law firm founders often reach a tipping point: they’re too involved in files, decisions, and operations. Staff look to them for direction. Clients expect personal attention. And the founder is left juggling fee-earning work and business growth, exhausted by both.

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The result? Plateaued revenue, eroding margins, and a business that can’t scale because it still primarily revolves around the founder.

The cost of complexity

Once a firm hits the $1.5 million range, hidden complexity starts to drag performance. More people require better systems and clearer structure. Service offerings may have expanded organically, but without a strategy, the firm ends up stretched across too many practice areas or low-margin matters.

It’s at this point that simplifying becomes essential. That means:

• Focusing on profitable client segments.
• Productising and packaging legal services where appropriate.
• Niching the focus to specific ideal clients, rather than trying to service everyone.
• Setting up processes to delegate work so it becomes less founder-heavy.
• Streamlining internal operations and matter management systems.

Firms that grow past $2 million do so by reducing complexity, streamlining, and, in the process, becoming more efficient and profitable.

You need to stop being the top biller

One of the biggest shifts I work on with lawyers is the founder-to-CEO transition. That means letting go of the idea that your primary value to the firm is your billables.

If you’re the top fee earner in the firm and also trying to drive growth, you’re holding the business back, no matter how productive you are.

Shifting into the CEO role means investing time in:

• Strategic direction and business development.
• Talent acquisition and development.
• Structuring the firm to operate without day-to-day dependence on you.

Leadership capacity is what will ultimately enable your firm to scale.

Why ‘more’ is not the strategy for growth

In many firms, growth is about more clients, which means employing more lawyers. But this linear approach can slow down growth – it becomes harder to manage and erodes profit.

Consider a focus on leverage instead, from existing resources, relationships, processes and systems, and technology, to achieve “more” but with less:

• Your best referrers. Don’t neglect them. They can be a big key to growth.
• Use AI-driven tools to automate low-value work, like document drafting or legal research.
• Develop systems and templates for recurring work.

It’s not about working harder. It’s about being intentional and strategic.

Final reflections

Growing a law firm beyond $2 million requires some significant shifts. These shifts move away from the approach that enabled the firm to reach seven figures in the first place and towards a new way of scaling, managing and leading.

The law firms that break through do so by focusing on structure, strategic value, and leadership. If you want to be in the 7 per cent, the time to lead differently is now.

Jenny Stilwell is a business strategist and the author of The 7% Club: How to be one of the 7% of businesses that make it beyond $2M in turnover.