Personal Injury Law Firm Break-Even Analysis: $138K/Month

Fixed costs $19.5K/mo Monthly overhead base

Contribution margin 71% After case costs

Break-even revenue $27.5K/mo Revenue to cover base

Break-even timing Month 3 Cash turns positive

Break-even calculator

This calculator tests monthly revenue against variable expenses and fixed monthly costs to show break-even.

Lean Base Full

Monthly revenue Monthly revenue is the top line that creates room for fixed costs. $ Lower revenue Higher revenue Variable expenses These are direct case costs that rise as revenue and caseload grow. $ Lower direct Higher direct

Money available to cover fixed costs $1,601,833 $2,224,750 revenue - $622,917 variable expenses

Margin ratio

72%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead base that contribution margin must cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed, and which move with case revenue?

Cost classification

At first-year revenue of $10.181 million, variable case costs total 29% of revenue before payroll and fixed overhead. Classifying them correctly keeps the Month 3 break-even target grounded.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Use $12,000 per month in fixed overhead.	Spreading rent across cases instead of monthly capacity.
Professional Liability Insurance	Fixed	Use $3,500 per month as required operating overhead.	Leaving it out because it does not attach to one case.
Payroll	Semi-fixed	Use first-year wages of $825,000 per year, then step up as headcount rises.	Treating all labor as variable with each new client.
Online Marketing	Semi-variable	Use the first-year budget of $120,000 and test volume against $1,200 CAC.	Calling the full budget fixed when intake volume changes.
Expert Witness and Investigation Fees	Variable	Apply 12% of revenue in the first year.	Treating case expenses as fixed overhead.
Court Filing and Process Service Fees	Variable	Apply 5% of revenue in the first year.	Ignoring filing drag until cash is already tight.
Case Management Software Subscriptions	Variable	Apply 4% of revenue in the first year.	Modeling software as flat even when matter volume scales.
Referral Fee Payouts	Variable	Apply 8% of revenue in the first year.	Assuming fee revenue is immediate before payouts clear.

How does break-even shift across lean, base, and full plans for a personal injury law firm?

Scenario table

Break-even gets easier as the firm scales. The lean case sits close to the line, the base case has a solid cushion, and the full case adds profit but also more cash risk from settlement timing.

Planning assumptions, not guarantees; settlement timing can still shift cash.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case	$138K	$40K	$82K	71%	$16K	Near break-even, so keep overhead tight.
Year 1 base case	$848K	$246K	$109K	71%	$494K	Clear of break-even with a strong cushion by Month 3.
Year 2 scale case	$1,637K	$452K	$124K	72.4%	$1,061K	Well above break-even, but collections can still lag.

What breaks the break-even plan if intake slows or case costs rise?

Stress test

The plan breaks fastest if intake slows, CAC moves above $1,200, or case spend rises faster than fees. With Year 1 revenue near $848K a month and break-even around $1.38M, the firm starts with a wide gap to close.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1.38M	$536K gap	Year 1 revenue stays below break-even.
Revenue shortfall	Monthly fee collections fall 15% to about $721K.	$1.38M	$663K gap	Slower intake widens the cash gap fast.
Fixed-cost increase	Monthly overhead rises 10% to about $1.08M.	$1.52M	$668K gap	Rent, insurance, or payroll creep lifts break-even.
Margin pressure	Variable expenses rise from 29% to 34%.	$1.49M	$642K gap	Expert, filing, software, and referral costs eat more margin.
Combined pressure	Collections fall 15%, overhead rises 10%, and variable expenses rise to 34%.	$1.64M	$918K gap	Month 2 cash need can move past the $722K floor.

Can you cover the fixed load until fee collections catch up?

Founder checklist

Don’t sign the lease or scale paid intake until the Month 2 cash trough of $722,000 is covered. Month 3 break-even only works if the $12,000 rent, $3,500 insurance, $825,000 Year 1 payroll, and $120,000 marketing runway all stay funded.

1CAC Runway$1.2K CAC

Verify paid intake can stay near the $1,200 acquisition cost while the $120,000 first-year marketing budget still brings in qualified cases.

2Fixed Load$88.3K/mo

Check that $12,000 rent, $3,500 insurance, and the $825,000 Year 1 payroll base fit the first-year run rate before you commit to the office.

3Case Margin71% CM

Confirm direct case costs stay near 29% of revenue so contribution margin, the profit left after direct costs, stays around 71% and the Month 3 break-even date holds.

4Intake Coverage7 FTE

Make sure the opening team can answer calls and screen leads with 7 FTE before paid traffic scales, and delay expansion hiring if collections lag the Month 3 break-even point.

5Launch Buildout$235K launch

Fund the $215,000 launch equipment and buildout package plus the $20,000 software implementation budget before opening, because the firm needs those tools on day one.

6Cash Trough$722K

Keep the Month 2 cash trough funded at $722,000, because the launch spend lands before fees settle.