How to Set 2027 Revenue Targets for Your Law Firm From Your 2026 Numbers

In early November, a managing partner sits down to set next year’s revenue goal. She has a number in mind, because the firm has to grow. She does not have a way to say whether that number is a reasonable stretch or a hope. The hourly targets she set last January were never tied to what the firm actually collected.

Law firm revenue targets work when they start from last year’s actuals. Your 2026 numbers already contain three facts that decide 2027: how much time you worked, how much of it survived to an invoice, and how much of the invoice got paid. This post walks through using them, with one fully worked illustration you can copy into a spreadsheet.

Set law firm revenue targets from three 2026 numbers

Pull three totals for the same period, by timekeeper if you can:

1. Worked at standard: every hour recorded, multiplied by that timekeeper’s standard rate. This is the value of the time before any discounts or write-downs.
2. Billed: what actually went onto invoices.
3. Collected: what clients paid.

If you are reading this before year-end, use January through October and flag the months still open. In December, refresh the figures once your last billing run is posted.

Calculate realization and collection rate separately

These two rates answer different questions, and combining them hides where the money went.

Realization rate is billed divided by worked at standard. It tells you whether what you billed survived to the invoice. Write-downs, discounts, and time that was recorded but never billed all lower it. We cover the mechanics in our post on improving your firm’s realization and collection rates.

Collection rate is collected divided by billed. It tells you whether clients paid on what you sent them.

A firm with 95% realization and 80% collection has a different problem from a firm with 80% realization and 95% collection, even though both end up with the same share of worked value. The first firm should look at billing terms and follow-up. The second should look at write-downs and how time gets described and reviewed.

A worked illustration

Here is the arithmetic on a made-up firm. Every figure below is an assumption for illustration, not a benchmark and not a target for your firm.

Assumptions for 2026:

• Five timekeepers: two partners at 1,200 recorded hours each, two associates at 1,800 hours each, and one paralegal at 1,200 hours. That is 2 × 1,200 + 2 × 1,800 + 1,200 = 7,200 hours.
• A blended standard rate of $300 an hour.
• Worked at standard: 7,200 × $300 = $2,160,000.
• Billed: $1,944,000, so realization is 1,944,000 ÷ 2,160,000 = 90%.
• Collected: $1,749,600, so collection rate is 1,749,600 ÷ 1,944,000 = 90%.

Only 81% of the time worked at standard became cash (0.90 × 0.90 = 0.81). That is the figure your 2027 target has to respect.

Assumptions for 2027:

• The firm raises its blended standard rate 5%, from $300 to $315, and the increase applies to every hour. (If some clients have locked rates, adjust this.)
• Realization and collection rate both hold at 90%.
• The collected-dollar goal is $2,000,000.

Work backward. Divide the goal by both rates to get the value of time that must be worked at standard: $2,000,000 ÷ 0.81 = $2,469,136. Divide by the rate: $2,469,136 ÷ $315 = 7,839 hours. Round up to 7,840 hours as the firm-wide target.

Check it forward: 7,840 × $315 = $2,469,600 worked at standard. At 90% realization, that is $2,222,640 billed. At 90% collection, that is $2,000,376 collected. The goal is met.

That target is 640 hours above 2026, an increase of about 8.9%. The rate increase did some of the lifting, and the firm still needs more recorded time. If the firm had kept hours flat at 7,200, collected revenue would be 7,200 × $315 × 0.81 = $1,837,080, which is $162,920 short of the goal.

Rates matter as much as hours. At $315 and 7,200 hours, the firm works $2,268,000 at standard. One more point of realization adds $22,680 in billed revenue, or $20,412 once 90% collection is applied. One more point of collection rate on $2,041,200 billed is also $20,412.

Set targets per timekeeper, then check capacity

A firm-wide number gives no one a goal. Split the 7,840 hours across timekeepers, using what each person recorded in 2026 and what their role can realistically carry. In the illustration:

Timekeeper	2026 hours	2027 target
Partner A	1,200	1,300
Partner B	1,200	1,300
Associate C	1,800	2,000
Associate D	1,800	2,000
Paralegal E	1,200	1,240
Total	7,200	7,840

Then check capacity before you commit. Suppose an associate works 48 weeks a year after vacation and holidays. At 2,000 billable hours, that is about 41.7 billable hours every week, before any non-billable work such as training, firm meetings, or business development. If that looks out of reach, the target outruns the firm’s capacity. Your options are to hire, raise rates further, or lower the goal.

Our posts on how many billable hours are in a year and billable hours per month cover the hours side in detail. This post sits one step above them: It tells you how many hours the firm needs, so those posts can help you plan how to reach them.

Turn the target into a cash plan

Collected revenue is what pays salaries and rent, but it does not arrive evenly. Work recorded in March is often billed in April and paid in May or June. Once you have a collected goal, spread it across months with realistic timing, using the steps in building a 12-month cash flow forecast for your law firm. The time between work performed and cash received is your billing velocity, so a thin month in the forecast may point to billing timing.

What to review in December

A short list, worked through with your billing lead and your accountant:

• Final 2026 actuals. Confirm worked, billed, and collected totals after your last billing run.
• Both rates, by timekeeper. One timekeeper with low realization can pull down the firm number.
• Standard rates. Decide whether the rate increase in your plan applies to all clients or only some.
• Open work in progress and unpaid invoices. Decide what you expect to bill and collect from them in 2027, and keep it separate from new 2027 work.
• Capacity. Compare each timekeeper’s target with the weeks they can actually work.
• Which rate to improve. Pick the one that costs you more and set a specific goal for it.

Where the target moves the money

A revenue target built this way moves two of the four numbers that show whether the cycle is healthy. Realization tells you whether more of the time you work reaches the invoice. Collection rate tells you whether clients pay on what you earned. LeanLaw is built directly on QuickBooks Online, and the same worked, billed, and collected totals feed the plan whatever tool you use. Set the target on those numbers, and review them monthly so a gap in either rate shows up while there is time to act.