Contingent fee attorneys often assume that law firm forecasting is out of reach. After all, how do you predict cash flow when you don’t even know when—or how much—revenue will come in?
But the truth is, with the right structure, plaintiff law firms can build reliable, dynamic forecasts using data they already have.
Why Cash Flow Forecasting Is So Challenging for Contingent Fee Firms
Contingency-based practices face a distinct financial reality:
- They often don’t know the total value of their active caseload.
- They can’t predict when—or if—revenue will be realized.
- They self-finance cases by contributing personal capital or taking on debt.
- Many don’t know how much cash they’ll need to cover case costs and overhead.
Still, reliable forecasting is possible—even for contingent fee firms. It starts with the data already sitting in your case management system (CMS).
Unlocking Forecasting Power Through Your CMS
Most firms aren’t using their CMS for financial forecasting—but they should be. By organizing cases by type and identifying key milestones, you can transform your CMS into a powerful forecasting engine.
For a deeper look into this process, check out our article on forecasting models for contingent fee law firms.
Step 1: Define Case Types and Milestones
Start by grouping your cases into standard categories like:
- Personal Injury
- Medical Malpractice
- Employment Claims
- Toxic Exposure
Each case type should have common milestones. For example:
- Client inquiry (include lead source)
- Intake process
- Investigation period
- Filing of the case
- Discovery period and expert work
- Settlement reached or trial set
You can also estimate how long it typically takes to move from one milestone to the next, enabling time-based forecasting.
Step 2: Assign Financial Metrics to Each Case
To make your forecasts useful, track key financial data within the CMS:
- Expected case value
- Firm’s share of fees (e.g., 40% of a $1M case = $400,000)
- Probability of success (helps with case selection and risk management)
- Referral source (direct lead vs. attorney referral—helps track marketing ROI and fee splits)
- Expected case costs
This structured approach supports both cash flow management and strategic planning. Here’s how to get started managing cash flow in your firm.
Step 3: Use the Data to Build a Forecast
Once your CMS is populated with complete, consistent case data, you can:
- Run reports showing total potential revenue
- Estimate cash needs by case type and timeframe
- Identify which referrals and marketing channels are most effective
- Analyze profitability and future cash gaps
Updating the forecast becomes a quick, 15-minute process—done weekly, monthly, or as needed.
Ready to Forecast with Confidence?
Our fractional CFO team specializes in financial strategy for contingent fee law firms. We work with your existing CMS and systems to create forecasts that support better business decisions—without guesswork.
Schedule a free consultation to learn how our legal industry CFOs can help.