Monday, June 17, 2024

Law marketing: The high cost of doing nothing

Last updated on July 30th, 2017 at 10:30 am

For as long as there has been law marketing, practitioners and firms have been stopping worthwhile business development initiatives cold for a whole host of reasons.

They raise questions about the cost of the project. They fret over how clients might react to what the lawyer thinks is a “too aggressive” effort. They worry about how undertaking a project will impact cash flow and the line of credit. Or they decide not to decide now — or later; sadly, this may be the biggest killer of potentially highly profitable ideas.

But there is an equally-important question that seldom gets asked: “What is the cost of doing nothing?” The answer is far higher than lawyers or firm management think.

In fact, when a firm sees the actual cost of doing nothing and the lost return-on-investment – whether it works mostly for consumers or for businesses – the typical reaction is “How can we not afford to go ahead?”

Conservative Model

We created a financially-conservative model that projects the ROI over a relatively short, 24-month period. The model uses the firm’s own numbers because lawyers don’t like hypothetical situations; after all, their entire training and experience is based on dealing with precedent that colour the here and now.

So, we begin by calculating the average, first-month value of a new client or a new file from an existing client. Against this we lay the cost of a proposed initiative and then make a basic assumption: Because the impact of law marketing is cumulative, we assume that it is unlikely that results will be seen in the short run.


The model makes the assumption that no new work can be traced back to the initiative for the first six months and then only a limited amount of new revenue during the next six months even though the cost continues. It isn’t until the 13th month that the model predicts results will begin to pay off. This is done so no one thinks we are “padding” the numbers or painting an overly-rosy scenario.

In reality, each time we’ve done this for a firm, practice group or lawyer, the initiative beats the model in terms of generating additional client work so the returns are seen much sooner than the lawyer believes they will come.

From Model To Real World

The chart with this article is drawn from two real-world situations, one involving a sole practitioner who handles consumer issues such as smaller residential and investment real estate deals and one involving a firm where the client base is entirely businesses. But in each case, the first-month value of a new client file was the same, in the neighbourhood of $7,500.

Moreover, while the specifics of the projects we were recommending the two firms undertake were different, each had roughly the same cost of approximately $2,000 per month.

While the project cost and revenue generated may vary between firms, the impact of doing nothing is roughly the same. Indeed, parallel findings were seen with larger projects in bigger firms, proving that size isn’t important but moving forward definitely is.

Return On Investment

We projected the effort would not generate any incremental fee growth in the first six months, and then a new file would be opened every other month for the next six months. Beginning in Month 13, assuming that the project continued, the model projected a new file would be opened every month thereafter. By the end of Year 2, the initiative would generate $112,500 in new fees – for an overall return on investment of 234-percent.

This includes getting back the $48,000 in marketing costs, plus earning an additional $64,500.

In other words, by subtracting the program investment ($48,000) from the new revenue generated, the cost of doing nothing was $64,500 over two years. The total revenue generated is $112,500.

It’s easy to overlook a reality of doing business: No decision is its own decision. In the case of undertaking a marketing initiative, usually there is a huge cost for doing nothing.


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Jim Bliwas
Jim Bliwas
Jim Bliwas has been helping law firms with a range of marketing, business development and management challenges for most of his career


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