Recently, we wrote a blog post about expanding your firm. If you have decided to make that leap into a new service or area of law, how do you know if that was the right decision?
In this post, we will talk about the different factors that should be considered when evaluating your decision to expand.
The first factor to consider is sample size. You want to make sure that you have gathered enough data to make a sound decision. Without enough of a sample size, an unusually bad string of cases at the beginning can cause you to miss out on a profitable opportunity. Likewise, an unusually good string might convince you to keep a product around that is not worth your time and effort.
With a large enough sample, you will be able to notice those anomalies and make a general prediction of the case types that will come through your door, the work required for each case type, and the fees that you are able to generate with each new case.
Can You Generate Enough Leads?
Although it is pretty straightforward, you want to make sure that you are able to generate enough leads. Ideally, consistent flow of quality leads, means a consistent flow of cases, which results in consistent cash flow to cover your expenses.
The right number of leads will vary from firm to firm. For cases types that require intense litigation, and generate large fees, you might only need a few leads per month. For cases that generate smaller fees, having a high volume of leads can increase your profitability.
Can You Generate Enough Cases?
Having the right flow of leads is not enough on its own. You need to be able to convert those leads into cases. Cases are ultimately what generate fees. There will be costs associated with creating a lead, qualifying a lead, and then essentially selling your services to that lead. If you are unable to convert the leads into cases, all of the time and money spent on the leads is wasted.
When expanding into a new area of law, make sure that you are tracking your cost per case. A quick way to measure cost per case is the sum of your marketing expenses divided by the number of cases you were able to convert. This will tell you how much it costs to generate one case.
Next, you will then want to compare the costs to generate a case and the fees that you expect to make off of that case. If it costs you more to generate a case, then you know it will not be profitable.
The final consideration to make is your opportunity cost. This is a little harder to quantify and will depend on your situation. With each new area of law that you expand to, there will be both time and money spent.
You want to make sure that the same resources could not be better utilized elsewhere. For example, if you move an attorney and intake staff away from the most profitable part of the business, will the new area of law make up the lost value?
This value might not be measured in profits. An expansion can help with branding and open up future opportunities which is why it is important to consider both short term impact and long term value.
eGen Can Help
If you are in the process of expanding your firm, consider working with a lead generation service. Lead generation is one way to help set up a consistent stream of leads, evaluate case types and find new opportunities. We currently generate Social Security disability, workers’ compensation, personal injury, and employment law leads. Contact eGen today to learn more about how lead generation can help your firm.