Weighted Fee Allocation and Ownership Net Fees Billed & Profit

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Overview

The Weighted Fee Allocation and Ownership Net Fees Billed & Profit module provides law firm decision-makers with a detailed view of how fees, costs, and profits are distributed across members (lawyers/partners) based on two dimensions:

• Working Member — the member who performed the work (time entries and fee allocation).

• Owner — the member assigned an ownership percentage at the client or matter level.

The module produces two companion reports that work together:

Both reports require Member as a mandatory grouping dimension.

Understanding This Report

What Problem Does It Solve?

In a law firm, a single matter may involve multiple members in different capacities — one member performs the legal work, while another member "owns" the client relationship. This report answers the question: "How should the firm's net income be shared among members, considering both the work they performed and the client relationships they own?"

How Does It Work?

The report combines three member-based measures and applies firm-defined weights to each:

1. Fee Allocation (Working Member) — How much of the billed fees are attributed to the member who did the work, based on the firm's allocation schema.

2. Net Fees Billed (Owner) — How much of the billed fees belong to the member who owns the client or matter, based on their ownership percentage.

3. Profit (Owner) — How much profit (fees minus costs) belongs to the owning member.

Each measure is multiplied by its assigned weight, and the weighted totals are summed to produce a calculated percentage for each member. That percentage is then applied to the firm's net income (from a designated income statement) to determine each member's share.

How Do the Two Reports Relate?

• The Supporting Measures Report provides the granular, invoice-level data that feeds into the calculations.

• The Share of Net Income Report summarizes those calculations at the member level and produces the final percentage share and dollar amount.

Think of the Supporting Measures Report as the "show your work" detail, and the Share of Net Income Report as the "bottom line" summary.

Prerequisites

Licensing Requirements

To access these reports, your organization must be licensed for all three of the following:

• Classic Cost Rate Model

• Ownership Role

• Weighted Fee Allocation, Ownership Net Fees Billed & Ownership Profit

Important: The Ownership Role license is mandatory because ownership percentage assignments are a core input to the report calculations.

Setup Requirements

Before running the reports, the following four components must be configured:

1. Member Cost Rates

What this is: A cost rate is the internal hourly cost the firm assigns to each member (lawyer/timekeeper). It represents what it "costs" the firm for that member to work one hour.

Why it's needed: Cost rates are used to calculate the profit metric. Profit = Fees Billed − (Hours Billed × Cost Rate). Without cost rates, the report cannot determine profitability.

How to set it up: Licensed organizations have access to member cost-rate management to create and maintain cost rates for all members.

2. Ownership Role Assignments

What this is: The ownership role defines which member "owns" a client or matter and what percentage of ownership they hold. For example, Partner A may own 60% of a client relationship while Partner B owns 40%.

Why it's needed: Ownership percentages drive the Owner Fees, Owner Cost, and Owner Profit measures. Without ownership assignments, these columns will show 0.0

How to set it up:

• Assign ownership roles at the client level, the matter level, or both — depending on the level selected in the Weighted Profit Distribution Variables form.

• Ownership is assigned during client/matter creation and can be updated as relationships change.

• To streamline data entry, you can set a default role as the 100% owner for new clients and/or matters.

3. Allocation Schema

What this is: The allocation schema is the firm's rule set that determines how billed fees are distributed (allocated) among the working members who contributed time to an invoice.

Why it's needed: The allocation schema drives the Working Member – Allocated Fees measure. Different schemas produce different allocation results, so the choice of schema directly affects each member's fee allocation figure.

4. Weighted Profit Distribution Variables

What this is: This is the central configuration form that controls how the report calculates each member's share of net income. It defines the weights, the ownership level, and the income source.

How to access it: From the main menu bar, go to Environment > Billing Requirements > Weighted Profit Distribution Variables.

Complete the following fields:

Best Practice: Before configuring these variables, ensure that stakeholders have a clear understanding of the desired reporting outcome. Different weight configurations and ownership levels produce significantly different results — each combination is designed to support different analytical and decision-making scenarios.

Running the Reports

Accessing the Reports

From the main menu bar, go to Reports > Management > Weighted Fee Allocation and Ownership Net Fees Billed & Profit, then select either:

• Supporting Measures Report, or

• Share of Net Income Report

The Preselect Tab

Applies to: Supporting Measures Report and Share of Net Income Report

Use this tab to define the reporting period and optional parameters:

• Date Range — Select the start and end dates for the reporting period.

• Requesting Member (optional) — If generating the report on behalf of another member, select their name here.

• Language (optional) — Change the report output language if applicable.

The Details Tab

Supporting Measures Report

The Details tab controls the level of granularity in the report output. By default, all available grouping dimensions are selected. You can deselect any dimension to produce a more summarized view.

Ownership Sub-Tab:

Within the Details tab, the Ownership sub-tab allows you to select the ownership level (client or matter) from the options configured on the Implementation tab. The default level is the one set in the Weighted Profit Distribution Variables form.

Share of Net Income Report

This report has Member as its lowest (and mandatory) level of detail. All grouping dimensions other than Firm, Entity, Practice Group, and Classification are disabled.

Classification Tab

Applies to: Both reports

The Classification tab allows you to group members by Main Classification and/or Reporting Classification, or filter results to a specific classification to limit the report to one reporting dimension.

The Additional Tab

Supporting Measures Report

The Additional tab offers the option to summarize results to the lowest reporting dimension selected on the Details tab. No other additional options are available.

Share of Net Income Report

The Additional tab for this report does not offer any additional options.

Page Breaks & Sort Order

Applies to: Both reports

When you click Run Report, the Page Breaks & Sort Order dialog appears. Use it to:

• Add page breaks on appropriate grouping dimensions for print formatting.

• Change sort order from numeric (by code) to alphabetic (by name).

• Change sort direction from ascending to descending (or vice versa).

Note: The grouping order for these reports is fixed and cannot be changed.

Click OK to generate the report.

Reading the Report Output

Supporting Measures Report — Columns Explained

Member totals at the bottom of each member's section include the weights for Allocated Fees, Owner Fees, and Owner Profit, and show each measure multiplied by its respective weight.

Share of Net Income Report — Columns Explained

Important Notes

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