Professional services
Law Firm Case Economics Calculator
Whether a contingency matter is worth taking, from the firm's side: hours invested, costs advanced and the chance of recovery.
Result
Business arithmetic for running a practice, not legal advice. Fee agreements, contingency limits, trust accounting and fee splitting are governed by the rules of professional conduct in your jurisdiction, and several of them are strict. Check the applicable rules before any of this affects a client agreement. This assesses the firm's economics on figures you supply. It does not and cannot value a claim: recovery depends on liability, damages, insurance limits, venue and facts, and the probability input is a professional judgement rather than a calculation. The decision to take a matter also involves duties to the client and the merits, which are not economic questions.
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About this calculator
Where does the probability figure come from?
Your own assessment of the matter. Nothing in this calculator estimates it, and treating a guess as data is the fastest way to a portfolio of bad cases.
Why include opportunity cost?
Because the hours are real whether or not you recover. A contingency matter that ties up 200 hours has displaced 200 hours of billable work, and ignoring that makes every case look better than it is.
The formula
expected value = probability x (fee - opportunity cost) - (1 - probability) x (opportunity cost + unrecovered costs)
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