Calculating the Cost of Attorneyship

Most lawyers know the necessity to spend a portion of their time performing non billed work in order to retain and obtain new clients. Signing new clients up for the law firm is an integral part of the practice, and many of billed hours need to be invested in building a client base and working with new clients. But, how much time do lawyers spend on the telephone working with clients? Is it really worth the cost per hour? To answer this question, one must take into account the value of each potential hour that lawyers spend on the telephone.


Overall, lawyers spend approximately 90 hours per year performing contract law, and the majority of those hours are spent on the telephone. Those three hours translate to about thirty-five thousand dollars per year, or about two hundred dollars per hour. In order to calculate the value of each call made by lawyers to their clients, it is necessary to divide the total revenue per client by the total number of calls made to each client.

One of the most important factors that lawyers must consider in determining the value of a call is the importance of each case to the lawyer’s practice. In order to attract new clients, lawyers must perform work that helps them to resolve highly relevant cases that help to establish the lawyer’s expertise. Many times, lawyers have to acquire extremely complicated cases in order to decide the merits of a case. Because of that, lawyers may incur very high phone charges. In fact, they may spend up to eight times more on one calls than they would on obtaining the information needed to obtain a new client.

Other factors that lawyers consider when determining the value of a call include the number of new clients they can potentially acquire in a single day. If a lawyer is successful in obtaining new clients, he or she must be successful in retaining those clients as his or her future clients, or else the practice is effectively “caught off guard” and will experience a net loss. Similarly, if a client retires or decides not to retain a lawyer, the case does not lose its potential lifetime value, but the firm loses a potentially lucrative future business opportunity if it cannot retain the client. Therefore, a firm has to decide what percentage of its current client base it wants to retain over the course of its lifetime.

Another factor that determines the overall worth of an acquisition is the expected lifetime value of the retained client. The lifetime value of a customer, which is the average cost of acquiring the client over a five-year period, is used to calculate the overall acquisition cost. In order to calculate this average cost, firms must consider the number of years it takes for each new client they bring in, their age, how long it takes for each of those clients to disburse funds, and other factors. Lawyers use a variety of techniques to arrive at the lifetime value of a client, including variables such as whether the client makes payments in full over the life of the contract, whether he or she makes periodic payments, and whether he or she co-signs for any legal proceedings.

The third step to calculate the firm’s acquisition cost is to identify the cost of disbursement. Once the firm has identified the amount it plans to spend on acquiring a case, it must calculate the cost of procuring cases from competing firms. This step compares the cost of acquiring a new case from a different law firm to the price it would cost to hire the firm to carry out the same function. The calculation of this step involves determining the number of clients that a firm can realistically expect to acquire over the course of a year.

The fourth step is to calculate the average revenue realized over the life of a contract. This step takes into account the lifetime value of the retained client and the expected revenue that the firm will earn through the total number of cases it pursues. Lawyers must also calculate the average revenue earned per day over the course of a year. By calculating the average revenue per day, lawyers ensure that they are not underestimating their actual revenue, while still taking into account the lifetime value and the rate of return of their clients.

Lawyers can also use a time period to determine the firm’s acquisition cost. The first time period is the cost per hour, while the second time period is the cost per day. The third time period is the cost per transaction, while the fourth time period considers the cost of procuring new clients during that time. Before lawyers can make any firm purchase decision, they must determine the cost of each option, including the charges for hours worked. If a firm fails to acquire a specific case within a reasonable amount of time after making an offer, lawyers may be charged late fees. The most common penalties for failure to successfully complete a deal include financial penalties, but lawyers may also be forced to relinquish certain positions if they fail to close a case within a specified period.