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What is revenue per fee earner and how is leverage calculated?
Revenue per fee earner is total fee revenue divided by the number of fee earners, ideally in full-time equivalents. Leverage is the ratio of junior staff to senior staff (or partners) working on the same work. Both describe how the firm uses its people.
It matters because firms with higher leverage can earn more per senior person, if juniors are well supervised and fully used.
Commonly misread:
- Counting part-time staff as full-time.
- Reading revenue per head without costs; high revenue with high pay may not earn more profit.
- Assuming more leverage is always better. Too much can reduce quality and increase rework.
Compare revenue per fee earner with profit per fee earner and utilisation to see how effectively capacity is turned into earnings.
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