Professional services
Law Practice Client Lifetime Value Calculator
Works client value over a relationship, where staying in contact is the whole mechanism.
Result
Gross profit, not revenue, because revenue you spend delivering the work is not available to spend winning customers. Referrals are the least reliable input here; measure yours rather than assuming.
Get a Free Business AuditHow the calculation works
Average matter value times matters per client times years retained, with margin applied, plus referred clients. Legal needs recur unpredictably rather than on a schedule, so the value depends on being the person they think of when something happens, which is a function of contact rather than of the quality of the last matter alone.
What moves the number
- Years retained and whether contact is maintained.
- Whether the client type generates recurring needs.
- Referrals, which dominate value in one-off matter types.
- Average matter value and margin.
Where this one goes wrong
A satisfied client who has not heard from the practice in three years will call whoever they find when the next need arises, and legal needs arrive without warning. Periodic contact that is useful rather than promotional is what keeps the practice in mind, and it costs very little. For matter types that genuinely do not recur, the value is entirely referral, which means asking for referrals explicitly matters more than retention activity does.
Before you quote
- Maintain periodic useful contact rather than waiting.
- Ask for referrals explicitly after a completed matter.
- Separate recurring from one-off matter types.
Questions
About this calculator
How do practices lose clients they satisfied?
By disappearing. Legal needs arrive without warning, and a client who has not heard from the practice in three years calls whoever they find. Periodic contact that is useful rather than promotional is cheap and it is the whole mechanism.
Does lifetime value apply to one-off matters?
Through referrals rather than repeat work, since a completed matter of that type will not recur. That makes asking for referrals explicitly the main value-capturing activity, and most practices never ask at all.
Which clients are worth most over time?
Business clients with recurring needs, and individuals whose circumstances generate repeated legal questions. They are also the clients most sensitive to responsiveness, which is what they leave over far more often than competence.
The formula
lifetime value = average matter x matters per year x years x gross margin
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How to use this calculator
- Average fee per matter ($). Enter your own figure; the page starts at $2,600.
- Matters per client per year. Enter your own figure; the page starts at 1.4.
- Years they stay. Enter your own figure; the page starts at 6.
- Gross margin (%). Enter your own figure; the page starts at 58%.
- Clients they refer. Enter your own figure; the page starts at 0.4.
The result updates as you type, so you can try a figure, see what it does to lifetime gross profit, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Average fee per matter | $2,600 |
| Matters per client per year | 1.4 |
| Years they stay | 6 |
| Gross margin | 58% |
| Clients they refer | 0.4 |
What comes out
| Result | Value |
|---|---|
| Lifetime gross profit main result | $12,667 |
| Lifetime revenue | $21,840 |
| Including referred clients | $17,734 |
| Gross profit per year | $2,111 |
One customer is worth $12,667 of gross profit over 6 years, or $17,734 once the people they refer are counted. That is what you can afford to spend winning one.
How sensitive the answer is
Holding everything else steady and changing only average fee per matter, this is what happens to lifetime gross profit. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Average fee per matter ($) | Lifetime gross profit |
|---|---|
| $1,300 | $6,334 |
| $1,950 | $9,500 |
| $2,600 example above | $12,667 |
| $3,900 | $19,001 |
| $5,200 | $25,334 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Average fee per matter ($)
- A money amount, starting at $2,600.
- Matters per client per year
- A number, between 0 and 60, starting at 1.4.
- Years they stay
- A number, between 0 and 60, starting at 6.
- Gross margin (%)
- A percentage, between 0 and 95, starting at 58%.
- Clients they refer
- A number, between 0 and 20, starting at 0.4.
What the results tell you
| Result | What it is |
|---|---|
| Lifetime gross profit | The headline result. A money figure. |
| Lifetime revenue | A money figure. |
| Including referred clients | A money figure. |
| Gross profit per year | A money figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.