A Higher Cost Per Case Doesn’t Necessarily Mean You’re Less Profitable

Submitted by ram on Fri, 02/24/2017 - 09:02

Cost Per Case (CPC) is often used as the metric to compare marketing campaigns in the legal industry. While it’s a good metric to get a quick snapshot on how your marketing campaign is doing, you really should be looking at your Return on Investment (ROI) to get a true sense of how profitable your marketing campaigns are. Revenue on a case is not earned as soon as your firm retains the case, but rather when the case is settled. The likelihood of getting a settlement depends on the strength of the case that you have retained.

To illuminate the differences in CPC and ROI, let’s look at an example of a law firm that purchases Social Security disability (SSD) leads from two different lead companies. For the purposes of this example, we will assume that the law firm doesn’t win any cases at the initial application level and that all cases end up going to an Administrative Law Judge (ALJ).

Lead Company A

Cost Per Lead: $30 per lead
Signed Rate: 10%
Cases won at hearing: 50%

Lead Company B

Cost Per Lead: $30 per lead
Signed Rate: 7%
Cases won at hearing: 80%

Cost Per Case

Just purely using a cost per case metric, it is seems like Lead Company A has higher quality Social Security disability leads:

Cost Per Case (A): $30/0.10 = $300 per case
Cost Per Case (B): $30/0.07 = $428.57 per case

Return on Investment

Based on data directly from the Social Security Administration, the average attorney fee for an SSD case at the hearing level is $3000.


Lead Company A ROI

Average fee per case that goes to hearing: $3000 * 0.5 = $1500
Cost per Case: $300
ROI: $5 for every $1 invested in the campaign (1500/300)


Lead Company B ROI

Average fee per case that goes to hearing: $3000 * 0.8 = $2400
Cost per Case: $428.57
ROI: $5.60 for every $1 invested in the campaign (2400/428.57)


Despite having a higher cost per case, Lead Company B does appear to be a better investment for the law firm.

Take Away: Profitability is a long term metric

It takes about 1.5 to 2 years for an SSDI case to go to hearing. Larger law firms with a significant marketing budget will be able to invest in a marketing campaign for a year or two before deciding whether it is profitable or not.

However, it might not be feasible for smaller law firms or advocacy groups to invest in a marketing campaign for 2 years before determining if it’s profitable. Thus, it is very important for smaller law firms to take into consideration the quality of the cases you are retaining with a marketing campaign in addition the cost per case.

At eGenerationMarketing, we have been generating Social Security disability leads for Social Security firms of all sizes since 2009, helping clients retain cases at an attractive cost per case and ROI. Give us a call at 617.800.0089 to find out how we can help your firm with Social Security lead generation, or any of our lead services.