Growing firms don’t fail for lack of legal talent—they stall on finance. If partner comp turns political, trust accounting feels risky, and realization is leaking margin, you don’t need a full-time CFO—you need the right fractional one.

TL;DR

  • What it is: Senior CFO leadership for law firms, delivered part-time (typically 15–25 hrs/mo).
  • Why it matters: Law firms with formal financial systems see +12% profitability (Clio 2024). Many 5–35 attorney firms can’t justify a $225K+ full-time CFO—fractional bridges the gap.
  • Core wins: IOLTA/trust compliance, partner comp design, realization + cash flow, matter/practice profitability, investor-grade reporting.
  • Typical cost: $6k–$12k/mo (60–70% less than full-time) with ROI often inside 3–6 months.

The Scenario

Lisa runs a 14-attorney employment boutique ($4.9M revenue). Partners argue over comp. Bookkeeper “does” trust accounting but can’t defend three-way reconciliation for a bar audit. The firm bills $5.8M and collects $4.5M (78% realization). Full-time CFO at $225K+ doesn’t pencil. Fractional CFO does.

Stat: Only 31% of small–mid firms employ dedicated financial leadership—yet firms with formal finance systems are 12% more profitable (Clio Legal Trends Report 2024).

What a Fractional CFO Does (for Law Firms)

Same capability as full-time—right-sized to your needs.

  • Legal industry specialization: Trust/IOLTA rules, realization dynamics, law-firm economics.
  • Trust accounting oversight: Policies, three-way recs, bar-audit readiness, internal controls.
  • Partner compensation design: Clear formulas, incentives that reduce friction, transparent reporting.
  • Systems & integrations: Clio, MyCase, PracticePanther, Tabs3, PCLaw, QuickBooks (legal), and billing stacks.
  • Strategic finance: Realization improvement, matter/practice profitability, KPI dashboards, scenario modeling.

How Engagements Work

Month 0–2: Onboard & Stabilize

  • Comprehensive financial review + trust accounting audit
  • Map systems/workflows; interview partners; surface risks
  • Implement controls, three-way reconciliation, dashboard/reporting

Month 3+: Run & Optimize

  • Monthly closes, KPI reporting, and realization tracking
  • Administer partner comp; facilitate data-driven discussions
  • Strategic advisory (pricing, hiring, mergers, office expansion)
  • The best relationships feel in-house: regular partner meetings, clear ownership, rapid response.

Why Firms Choose Fractional Over Full-Time

Access CFO Expertise Without $200K+ Overhead

Full-time CFO (first year): $229K–$394K (salary, benefits, taxes, recruiting, space/equipment).
Fractional: $6k–$12k/mo (≈ $72k–$144k/yr) → 60–70% savings with:

  • No benefits/payroll tax
  • No recruiting/onboarding lag
  • Immediate productivity
  • Scales up/down with firm needs

Legal-Specific Knowledge (Not Generic Corporate Finance)

  • IOLTA compliance & jurisdiction-specific controls
  • Matter economics vs. unit economics
  • Realization & collections levers unique to legal
  • Partner comp mechanics for partnership harmony
  • Fluency with legal tech stacks

Flexible, Scalable Capacity

  • Dial up hours for comp season, bar audits, mergers; dial down in steady months.
  • Add project work (office launch, platform migration).
  • Transition to full-time at ~40–50+ attorneys—with continuity support.

High-Impact Deliverables

1) Trust Accounting & IOLTA Compliance

  • Segregation of duties, approvals, anti-commingling safeguards
  • Monthly three-way reconciliation (bank ↔ trust ledger total ↔ GL)
  • Bar-audit documentation & readiness pack
  • SOPs + staff training; discrepancy resolution protocols

2) Partner Compensation Structure

  • Formula design mixing originations, hours/realization, leadership/citizenship
  • Draw/distribution forecasting + tax planning (K-1)
  • Clear reporting for transparent discussions
  • Buy-in structures for new equity partners
  • One 18-attorney firm reduced comp disputes from quarterly blowups to rare edge cases; satisfaction rose 4.2 → 7.8/10 in 12 months.

3) Realization Rate Lift

  • Granular realization by attorney, client, matter, practice
  • Billing narrative training; cycle discipline; scope/discount controls
  • Collections workflow (30/60/90), assignments, escalations
  • Pricing strategy (AFA, value-based, contingency vs hourly)

Litigation boutique improved realization 81% → 92% in 18 months; +$480k collections on the same work—vs $132k in fractional CFO fees.

4) Matter & Practice Profitability

  • True matter P&L (fees vs fully-loaded costs + overhead)
  • Practice comparatives to guide hiring/marketing focus
  • Client-level profitability to prune chronic under-payers
  • Resource allocation toward highest-margin work

5) Strategic Planning & KPIs

  • Budgeting/forecasting with practice/partner detail
  • KPI dashboards: realization, RPA, leverage, DSO, working capital, margins
  • Scenario models for laterals, offices, mergers, panel renewals
  • Cash management across 60–90+ day collection cycles

Pricing for Law Firms

Monthly Retainer: $6,000–$12,000

Entry ( $6k–$8k ) — 15–20 hrs/mo

  • Trust oversight & monthly recs
  • Financials + core KPIs
  • Partner comp admin
  • Strategic counsel

Comprehensive ( $8k–$12k ) — 20–30 hrs/mo

  • Everything above plus deep matter/practice analysis
  • Realization optimization programs
  • Strategic planning & scenario modeling
  • M&A advisory as needed

Adjusters: attorney count, billing volume/complexity, offices/practices, trust volume, integrations, strategic project intensity.

Apples-to-Apples Cost View

  • Fractional (avg $9k/mo): ~$108k/yr, no benefits/taxes, scales, legal expertise baked in
  • Full-time (≈ $225k fully-loaded): fixed overhead, 3–6 mo ramp, variable legal expertise
    → ~$117k annual savings (≈52%) for comparable strategic capability.

ROI Timeline (Typical 3–6 Months)

  • +5 pts realization on $5M billable value → +$250k collections (2× annual fractional cost)
  • Trust-violation prevention → avoids suspension/reputational & remediation costs
  • Comp conflict resolution → avoids $500k–$2M+ partner-turnover impact
  • Cut unprofitable work → margin lift without adding revenue
  • One good decision (skip bad lateral; invest in high-margin practice) can pay for years

Case Study Snapshot (15-Attorney General Practice)

Findings: 79% realization; PI defense low rates & heavy write-offs; opaque comp.
Actions: Exit poor panels; lateral EP hire; transparent comp formula; billing/collections upgrade.
24-Month Results: Realization 79% → 89%; margin 18% → 32%; +12% revenue (after pruning); disputes disappeared; satisfaction doubled.

Is Fractional or Full-Time Right for You?

Fractional ideal when you’re:

  • 5–40 attorneys, 1–3 offices
  • Straightforward economics (no massive contingency portfolio)
  • Need 15–25 hrs/mo senior finance
  • Prioritizing capital efficiency & distributions

Full-time when you’re:

  • 40+ attorneys, multi-office, complex ops
  • Need daily CFO managing finance/billing teams
  • Comfortable with $225k–$350k fully-loaded cost

Most firms ride fractional from ~10 to ~40 attorneys, then convert—with the fractional CFO helping recruit and transition.

Triggers That Say “It’s Time”

  • Partner comp debates every quarter
  • Bookkeeper can’t clearly explain three-way reconciliation
  • Realization stuck under ~85%
  • Bar audit notice / trust accounting uncertainty
  • Opening a new office, merger, or material lateral plan

How to Choose the Right Fractional CFO

Must-Have Legal Experience

  • 5+ years with law firms; jurisdictional IOLTA depth
  • Proven realization improvements, partner comp design
  • References from similar firms

Ask These:

  • How many law firms have you served as fractional CFO?
  • Walk me through your trust accounting compliance approach.
  • Show partner comp structures you’ve implemented.
  • Examples of realization lifts?
  • Three references from managing partners?

Tech Fit, Not Tech Forcing

  • Clio/MyCase/PracticePanther/Smokeball
  • PCLaw/Tabs3/QuickBooks (legal) + billing/time tracking
  • Integrate with your stack; don’t require wholesale change

Engagement Outline

Month 1 — Discovery & Assessment

  • Trust accounting audit; financial review; partner interviews
  • Access & integrations; process mapping; immediate risk flags

Months 2–3 — Implementation

  • Controls + reconciliation cadence; reporting + KPI dashboards
  • Partner comp design (if needed); SOPs + training
  • Quick wins (collections workflow, billing narratives, DSO)

Month 4+ — Ongoing Partnership

  • Monthly close & analysis; leadership meetings
  • Trust oversight; realization monitoring; strategic decisions
  • Continuous optimization

Next Steps

Fractional CFO services give law firms CFO-level leadership at 50–70% less than full-time—tightening trust compliance, ending comp drama, lifting realization, and turning finance into a competitive edge.

Exact Partners specializes in legal finance: IOLTA/trust mastery, partner comp systems, realization optimization, and practice profitability—integrated with Clio, MyCase, QuickBooks, Tabs3, and more.

Schedule a consult: getexact.com • (716) 249-6434