Most service industries do not believe that cost accounting applies to them, and believe that it is strictly for other industries such as manufacturing. How could you possibly have cost accounting for a law firm?
I am here to say that all law firms should implement a cost accounting system if they want to understand their own business. By implementing a cost accounting system, you will be able to determine if clients are profitable. You can tell if producers – attorneys or paralegals – are profitable. You can tell if divisions within the firm are profitable. If you have a firm with multiple offices, you can tell if each office is profitable. This information is valuable when considering mergers or acquisitions.