From Bright Skies to Gray Horizons: Why Strong Billing Isn’t Enough

Legal industry reports show a second quarter full of strong billing rates and surprising demand. But the horizon may not be as clear as it seems. Beneath the surface, law firms are beginning to feel pressure from softening collections, declining productivity, and rising overhead.

At Mattern, we see these patterns across firms of every size. Rate growth may lift revenue for a time, but without operational discipline, firms risk running lean on margin and tight on cash.

Growth at the Top, Gaps at the Bottom

Higher billing rates can mask deeper problems. When realization and collections do not keep pace, firms may report strong billables while still facing cash flow constraints.

That gap has become more pronounced in recent quarters. Invoices are going out at higher rates, but they are taking longer to get paid and more are being written down or written off. In our experience, healthy firms collect 90–93% of billings within 60 days. When that number slips into the low 80s, margin erosion accelerates quickly.

One Am Law 200 firm we worked with had year-over-year rate growth of 6%, yet its collection time stretched from 58 to 78 days. The additional 20 days tied up millions in working capital and forced leadership into a revolving cycle of short-term borrowing to cover operating expenses.

For firm leadership, the lesson is to monitor more than just top-line revenue.

Productivity Is More Than a Finance Issue

With more work coming in, it is easy to assume teams are running at full capacity. Yet many firms are seeing a drop in productivity even with strong demand. Some of that comes from growing workloads, uneven staffing, or inefficient support models.

We have found that when attorneys are pulled away from billable work to manage administrative tasks such as overseeing office services, chasing delayed records retrieval, or tracking down off-site storage invoices, the hidden cost is significant. One mid-sized firm saw an annual loss equivalent to 1,200 billable hours simply because attorneys were troubleshooting vendor issues instead of focusing on clients.

Strong operational support is essential to sustained productivity. That might mean restructuring mail services so urgent deliveries go directly to practice teams or consolidating vendor oversight into a single, accountable operational lead.

Cutting Costs Rarely Solves the Whole Problem

When financial pressure builds, leadership often looks for quick wins through cost-cutting. But not all cuts are created equal.

Strategic firms review not just the amount they spend but also how effectively those dollars are used. They evaluate whether outsourcing agreements still reflect current needs, whether vendors meet performance benchmarks, and whether operational roles are aligned with the firm’s growth strategy.

One firm we advised was prepared to eliminate on-site records staff to reduce its budget. Instead, we renegotiated the vendor contract, implemented service-level metrics, and improved retrieval workflows. The result was a 22% cost reduction with zero service disruption and faster turnaround times.

Cutting the wrong corners can damage performance. Optimizing support services and vendor contracts often produces savings without creating operational risk.

The Mattern Perspective

Strong billing numbers are a positive sign, but they are not the full story. To thrive in today’s market, law firms need control over the middle: collections, productivity, and operations.

In our experience, almost any capable service provider can deliver excellent results if they are managed well and held accountable. The firms that succeed in this environment are those that treat operational performance as a strategic lever rather than an afterthought.

At Mattern, we help firms find opportunities where others see risk. If your firm is feeling the pressure despite a strong quarter, let’s talk. Contact info@matternassoc.com.