Ever wonder how much you should charge for your legal services? That’s a tricky question. Sure, it can be tempting to just check what the competition is doing, but that’s just part of the picture. The key is to demonstrate the value of your services and set your rates accordingly, considering factors like your experience and the time sensitivity of your work. You also need to make sure your rates will allow you to run a profitable business. It can be complicated figuring out your rates, but it doesn’t have to be! In this CLE, you'll learn how to easily calculate two key profitability metrics for your law firm—customer acquisition cost (CAC) and customer lifetime value (LTV)—and how to use those metrics to set your firm up for long term financial success.

1. 1
Key Law Firm Profitability
Metrics Every Lawyer Should
Know
@tali_the_beaver @HeyTellTali @Tell_Tali @Tali

2. 2
About Matt
• CEO of Tali (www.telltali.com), a next-gen
timekeeping platform powered by voice
technology like Amazon Alexa
• Finance dork 🤓
• Wisconsin native (go Pack go!) 🧀 and
Berkeley MBA now living in Portland,
Oregon
• Married to a lawyer, father of two boys
Matthew Volm
volm@telltali.com
920-251-9122

3. Today, we’re going to talk about numbers…
No need to be a
financial wizard
Or even a
numbers person

4. So you can get answers you need
What should I
charge?
Billable hour or
flat fee?
Am I charging
enough? Too
little?

5. 5 steps for pricing your legal services
Think about the products you’re offering 🤔
Identify your revenue model 💸
Consider your customer acquisition costs (CAC) 📉
Determine your case value and customer lifetime value (LTV)
📊
Understand your fixed costs 🏢
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3
4
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6. Think about the product(s) you’re offering
Legal services
are a product
What is your
niche?

7. Identify your revenue model
Bill by the hour? Flat fee?
Contingency?
Market
demands
Operational
Requirements

8. Consider your customer acquisition costs
$15,000
$12,000
$5,000
$32,000
60
$533
$75
$608
Cost of your time
Digital ad spend
Targeted mailings
Total sales &
marketing
New clients
Subtotal
Cost to close lead
Total CAC
CAC represents the time, effort and marketing dollars you spend on
getting leads and converting those leads into paying customers

9. Determine your case value and customer lifetime value
$ 3,750
$ 1,500
$ 2,250
x 3
$ 6,750
Revenue (15hrs x $250/hr)
Labor (20hrs x $75/hr)
Profit margin (60% of revenue)
Number of cases per client
Client lifetime value (LTV)
$ 2,000
$ 750
$ 1,250
x 1
$ 1,250
Flat fee per case
Labor (10hrs x $75/hr)
Profit margin (63% of revenue)
Number of cases per client lifetime
Client lifetime value (LTV)
Customer LTV represents the amount of business value or gross
margin that is received over the course of a customers lifetime
Example: Real estate attorney that bills by the hour
Example: Traffic attorney that does flat fee billing

10. Understand your fixed costs
How much money you are spending to support
your law firm as a whole
Legal technology Office rent Support staff

11. Put it all together
Real estate lawyer,
expert in
environment
liability issues for
developers and
contractors
Cases are
unique and
complex, and
clients also
prefer the
billable hour
Your
Product
Revenue
Model

12. Put it all together
Customer
Acquisition
Lifetime
Value
Fixed
Cost
$15,000
$12,000
$5,000
$32,000
60
$533
$75
$608
Cost of your time
Digital ad spend
Targeted mailings
Total sales & mktg
New clients
Subtotal
Cost to close lead
Total CAC
$ 3,750
$ 1,500
$ 2,250
Revenue
Labor
Profit margin
Revenue = 15hrs billed x
$250/hr
Labor = 20 hrs worked x
$75/hr
Profit margin = 60% of
revenue
$ 12,000
$ 1,200
$ 500
$ 1,300
$ 15,000
Rent
Technology
Bar Dues
Other
Total fixed
cost

13. So what does it all mean?
You recoup
your CAC
quickly
You make money
over a customer
lifetime
You have a
scalable
business model
$ 608
➗$ 2,250
= 27%
CAC
Profit per case
CAC Recoup
You recoup your CAC by
the time your 27% of the
way through your first
case with that client
$ 6,750
➗$ 608
= 11.1x
Client LTV
CAC
ROI
A strong ROI on
customer acquisition,
indicating you could
spend more on
acquiring new clients
$ 3,750
x 60
$ 225,000
$ 90,000
$ 135,000
$ 32,000
$ 15,000
$ 88,000
Revenue per case
Cases per year
Annual revenue
Direct cost
Gross margin
Sales & mktg
Fixed cost
Income before tax

14. If you remember two things…
Customer
Acquisition Cost
Customer Lifetime
Value (LTV)
How much does it cost
you to get a new
customer?
How much money can
you make over the
course of a customer
lifetime?
Without favorable unit economics, you will not
have a sustainable law firm in the long term

15. 15
Key Law Firm Profitability
Metrics Every Lawyer Should
Know
@tali_the_beaver @HeyTellTali @Tell_Tali @Tali