What is a normal overhead range for a firm making $3M to $5M?

Historically, firms tried to stick to a rigid 30% to 35% ceiling, but in today's environment, a healthy overhead range typically lands between 40% and 45% of gross revenue. For a firm bringing in $3M to $5M, that translates to roughly $1.2M to $2.2M in total overhead. Keep in mind, this number looks higher because well-managed firms now properly bundle nonbillable administrative salaries, advanced tech stacks, and specialized intake teams directly into their overhead data. If you are sitting below 35%, you may actually be under-investing in the infrastructure needed to scale.

We track expenses on spreadsheets but can’t seem to use the data to make decisions. How do we start?

Spreadsheets are a great place to capture history, but they are notoriously tough to use for real-time forecasting. The trick is to stop looking at your data as a static rearview mirror and start using it to run small, "safe-to-fail" operational experiments. Establish your baseline overhead metric this month, make one deliberate adjustment—like automating a piece of your intake pipeline—and watch how it impacts your bottom line over the next 90 days. Once you see the direct correlation between tracking adjustments and profit margins, your data stops being an administrative chore and becomes your primary strategic guide.

Our physical lease is locked in, so how do we cut hybrid office overhead?

When your space is fixed, look immediately to your variable and hidden overhead drains—specifically, your technology stack and your administrative workflows. Many firms suffer from "software creep," paying for duplicate features across multiple platforms. Streamlining your practice management software can yield immediate relief. Additionally, look at your billing workflows; reducing the time it takes to get an invoice out the door directly improves your cash flow, effectively mitigating the burden of that fixed rent check. For a deeper dive into optimizing these workflows, check out our guide on Law Firm Billing Leakage: You Are Giving Money Away Before the Invoice Goes Out .

How do I know how much of my own salary to move into overhead?

It comes down to an honest assessment of your time tracking. If you are still billing 20 hours a week and spending the remaining 20 hours handling firm logistics, marketing, and managing staff, your compensation should be split 50/50 on your Profit & Loss statement. Half stays in direct labor (the cost of producing the legal work), and half moves to administrative overhead. As you scale and hire associates to take over the caseload, that ratio will naturally skew until 100% of your operational compensation sits in overhead, reflecting your true role as CEO.

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