Lawyers can be an interesting bunch, especially when it comes to money issues. On the one hand, our profession is among the most open when it comes to compensation issues, whether in the form of Biglaw associate salaries or firms touting their profits per partner. On the other hand, lawyers can be very coy when it comes to revealing the true financial health of their firms, driven by the widespread fear that any sign of weakness will lead to dire consequences in the form of clients choosing to bring their business to busier — and hence, presumably better — outfits. It is unsurprising, therefore, that money issues can be complicated when it comes to law firms.

What this dynamic engenders as well is a willingness amongst many lawyers to ignore or delegate any financial analysis to others — in the name of focusing on the client service they provide. In my own career, I have seen colleagues up for partner who steadfastly refused to look at their own financial performance, perhaps in the hopes that if they ignored it, there would less of an emphasis on their numbers in the partnership evaluation. Similarly, I have been at many a partner lunch where the presentation of financial numbers was met with disinterest by a measurable cohort of the attendees. While the willingness of sophisticated lawyers to analyze the health of their livelihoods may be surprising, there is a strong undercurrent in our profession that focusing on the “numbers” can be an ignoble pursuit, best left to accounting types.

While a rank-and-file Biglaw partner could conceivably espouse such an attitude, law firm owners and Biglaw management do not have that luxury. Accordingly, this time of year often includes some level of analyzing last year’s financial performance, on both a firm and individual lawyer level. While most of the analysis focuses on the top-line performance — with questions asked about whether the firm’s revenue grew, or whether an individual partner’s originations were up to par — there is one area of analysis that is perhaps worthy of more attention. Especially for smaller firms, whose revenues may result from a mixture of fee arrangements, from the billable hour to contingency matters.

In short, firms (and individual lawyers, for that matter) could often benefit from careful consideration of what contributions the different types of fee arrangements they enter into made to last year’s bottom line. Moreover, the analysis should also take into consideration whether that distribution has changed over time, and whether one type of fee arrangement has been making an outsized contribution to financial performance. Once performed, the analysis can often lead to eye-opening conclusions. Firms that think they rely of contingency matters to boost revenue may notice that they are actually generating a lot of billable or flat-fee work. And firms composed of lawyers who fancy themselves as billable-hour mavens may realize that it actually the contingency work that is paying their bills. In fact, both lawyers and firms can make bad decisions based on their perception of whether certain revenue is better than other revenue — simply because that type of revenue fits better with their perception of themselves as lawyers or firms.

In contrast, smart firms take into account where and how the money is actually coming in — and adjust their businesses accordingly. Favorable examples in other industries abound. For example, I recently read about how the Ringer’s podcast network has been driving revenue for the company. Considering the Ringer’s roots as a quality-driven source of written and video content, it is a bit unusual that it is podcasts generating the money needed to operate the website. But that is where the favorable revenue stream is, and in response the Ringer has wisely doubled down on its podcast network, increasing the number and breadth of its podcast offerings to maximize its revenue generation. Sure, the Ringer hopes that all of its efforts will be profitable, including its website offerings. But it has also realized there is no need for stubbornness, and because podcasts are profitable then that is where attention will be given and investments made. At least until other elements of the business are just as profitable.

Ultimately, the Ringer’s experience should resonate with law firms. Sometimes we imagine that we make money offering a certain type of service. Or model ourselves on other lawyers and firms that have demonstrated an ability to generate money a certain way. We may even come to think that there is a “better” way to generate revenue. But that can be counterproductive and lead to missed opportunities. Better to be honest about where and how the revenue is actually coming into the firm — and investing the appropriate level of time and energy to grow that revenue accordingly. Once the main source of revenue is given the attention it needs, then the focus can shift to building out the revenue stream the firm’s owners think is ideal. We all have an idea of the best way for us to make money. Until those ideas become reality, however, lawyers must remember to take the money where it comes.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.