In this episode, I take a closer look at a topic that many BigLaw lawyers misunderstand: profitability. Most partners focus on the firm's overall "profits per equity partner" (PEP), but that number tells only part of the story. There are other profitability numbers - internal, often unseen analyses that many attorneys don't focus on but in fact shape how practices and partners are viewed, rewarded, and resourced. I explain how these shadow numbers differ from the publicly announced firm metrics, how factors like leverage, write-offs, and politics distort perceptions of profitability, and why understanding these differences can make a difference to you at your firm. Knowing how your firm evaluates profitability in different ways and how to influence those numbers is a crucial career advantage.

At a Glance:
00:00 Introduction to the concept of firm profitability
01:20 Why PEP only tells part of the story and how shadow P&Ls work
02:05 How internal accounting and practice-level metrics shape profitability
03:27 Defining "shadow P&L" and how practice groups interpret performance differently
04:01 How leverage and write-offs impact profitability and risk across practices
07:14 Examples of approaches and how accounting treatments reshape profit
10:55 Why long-term relationship value can be less valued in firmwide numbers
12:18 How firms use both official and shadow P&Ls to evaluate partners and practices
13:30 How politics and perception influence profitability outcomes
15:17 How to challenge assumptions and advocate for your practice's true value
18:14 Final reflection and wrap-up
 

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Interested in doing 1-2-1 coaching with Laura Terrell? Or learning more about her work coaching and consulting?

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www.lauraterrell.com 

laura@lauraterrell.com  

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Show notes: https://www.lauraterrell.com/podcast