Estimating the Cost of Legal Services

According to the latest Global Barometer poll, lawyers now spend about 30% of their working day on non-billable work, leaving approximately two thirds of their day essentially unproductive. This situation is troublesome because many lawyers have little or no time to focus on business-related activities that would help clients better understand the law. While it is important for lawyers to do their jobs, these types of activities do not require the lawyer to actually have an in-depth knowledge of the law. However, with the cost of litigation increasing, lawyers are increasingly taking on these types of non-business functions in order to meet their budgets.


One way to improve a lawyer’s performance is to create a more client-focused environment. Most lawyers are highly attuned to how their case is perceived by their clients and are skilled at using their social skills to overcome clients’ fears. If lawyers were more proactive in meeting their clients’ needs, they would be able to provide true value to their clients through effective communication. But because lawyers often cannot assess a client’s perception of their case based solely on communication features, lawyers must rely on other sources of information. Among these sources is research related to a lawyer’s prior cases.

Lawyers should also use their research skills to determine their client lifetime value. Lifetime value is the standard by which attorneys judge a lawyer’s worthiness to manage a particular case. This standard is also used to evaluate potential clients to ensure that they will not abandon their representation. The lifetime value of a client refers to the maximum amount of money that can be expected to be paid out in settlement if the case goes to trial. By closely analyzing client perceptions of their cases, lawyers can improve their practices and increase their client lifetime value.

Lawyers should also monitor customer lifetime value to ensure that they are meeting the goals of their clients. In terms of financial terms, a lawyer’s CLV can represent the value of a legal claim to a client if he or she wins the case, or the cost to pursue the case if the client loses. This amount is calculated according to the extent of damage or loss expected, as well as the time taken to resolve the dispute. It is important for lawyers to consider these factors when setting their rates.

Lawyers should also make accurate measurements of their CLV to get an accurate picture of its profitability. One way to do this is through gross profit per hour. This Metric is directly related to a lawyer’s fee because lawyers are compensated for the time it takes them to successfully resolve a case. The value of a metric is therefore directly proportional to the cost of a particular service or product.

Lawyers should also analyze the value of their client base to assess whether or not a law firm is making a profit on average. The current trend is that many clients are looking to use alternative methods of law practice representation due to perceived high costs of legal services. However, the true cost of legal representation for clients varies based on the type of clients they have, the complexity of cases they need representation for, and the location where they are represented. Lawyers therefore have to consider the overall cost of a typical case before determining the profitability of their practice.

In order to get a clear picture of lawyers’ overall profitability, lawyers should consider the cost of doing business in their local area or city. This cost is determined by the size of the firm, the local cost of living, and the number of competitors in the local market. These costs are then multiplied by the number of hours in a typical office day, to calculate the average cost of a typical client. Law firms should also keep track of their competition to get a good idea of what their clientele expects from them. Competitors will usually charge more than a law firm for certain services, so law firms should keep up with the competition.

Once a lawyer has determined their cost of business, they should determine the revenue they expect to receive from their activities. This involves looking at specific goals and services to determine whether the value of those goals outweigh the cost of doing business. Some important factors to consider are whether the clients they represent will be profitable enough to cover the cost of legal services, and if not, how much revenue the law firm can generate from these clients. Other factors to consider are the number of clients the firm represents, and the complexity of those clients. These factors help lawyers calculate their annual operating costs.