Every PI firm has a cost per case. Most of them do not know their break-even cost per case — the number that tells you exactly how much you can spend to acquire a case before that case stops being profitable.
Without that number, you are managing your marketing budget without a floor. You know how much you are spending. You do not know whether that spending is generating profit or destroying it. This article walks through how to calculate your firm's break-even cost per case — and what to do with the number once you have it.
Related guide: See our definitive guide to cost per case for PI firms — calculation formula, benchmarks by firm size and lead source, and step-by-step tracking methodology.
What Break-Even Cost Per Case Actually Means
Break-even cost per case is the maximum you can spend to acquire a signed case — including marketing spend and intake costs — while still covering your fully-loaded cost to work that case and generate the minimum acceptable profit margin on the contingency fee.
This is not the same as average cost per case. Average cost per case tells you what you are spending. Break-even cost per case tells you what you can spend. The gap between the two is your margin. When that gap narrows or inverts, your marketing operation is destroying firm value even if it is generating signed cases.
The Formula
Break-even cost per case = Expected contingency fee revenue per case − Case operating costs − Target profit per case
Let's build each component.
Component 1: Expected Contingency Fee Revenue Per Case
Start with your average contingency fee per case. This is your average settlement amount multiplied by your fee percentage, adjusted for your historical collection rate.
Example: Average settlement $22,000 × 33% contingency = $7,260 gross fee. If 5% of cases are withdrawn, dismissed, or otherwise uncollected, multiply by 0.95 for a net expected fee of $6,897.
Segment this by case type if you handle a mixed portfolio. A trucking case and a slip-and-fall have very different expected settlement distributions. Using a single blended average will produce a break-even number that is wrong for most of your cases individually.
Component 2: Case Operating Costs
These are the costs your firm incurs to work a case from signing to settlement — independent of acquisition cost. They typically include:
- Hard case costs: Medical record retrieval, filing fees, expert witnesses, deposition costs, court reporter fees. For a simple motor vehicle case, expect $1,200 to $2,500. Complex litigation can run $8,000 to $20,000 or more.
- Attorney time allocation: The opportunity cost of attorney time per case. If an associate attorney earns $150,000 annually and works 120 cases per year, the allocated cost per case is $1,250 before benefits. Some firms include this; others treat attorney compensation as overhead.
- Paralegal and support staff allocation: Support staff time to manage each case file. Typically $300 to $700 per case for routine matters.
- Case management software and tools: Per-case cost of your CRM, case management platform, e-sign tools, and document management.
Example total case operating cost: $1,800 hard costs + $1,250 attorney allocation + $450 support staff + $75 software = $3,575 per case.
Component 3: Target Profit Per Case
This is what your firm wants to earn per case above all costs. Setting a target profit margin forces discipline into the break-even calculation — you are not just covering costs, you are earning a return on your invested capital.
For PI firms, a reasonable target profit margin per case is 20–35% of expected contingency fee revenue. At $6,897 expected net fee, a 25% target profit equals $1,724 per case.
The Calculation
Net Expected Fee
$6,897
Avg settlement × 33% × 95% collection
Operating Costs
$3,575
Hard costs + attorney + support + software
Target Profit
$1,724
25% of expected fee
Break-Even CPC
$1,598
Maximum sustainable acquisition cost
Break-even acquisition cost per case = $6,897 net fee − $3,575 operating costs − $1,724 target profit = $1,598
This means that at this firm's average settlement and fee structure, spending more than $1,598 to acquire a signed motor vehicle case produces a below-target return. Every dollar above that threshold is eroding margin.
Now compare that to a blended cost per case of $3,200. The firm is not just above break-even — it is spending more than twice its maximum sustainable acquisition cost.
Why Most PI Firms Are Surprised by Their Break-Even Number
When PI managing partners first run this calculation, the typical reaction is one of two things: “That seems too low” or “How are we still profitable at our current cost per case?”
The first reaction happens because firms have been absorbing above- break-even acquisition costs without measuring them. Their marketing is generating cases — some of them profitable, some not — and the blended profitability has been masking underperformers.
The second reaction happens because high-value cases in the portfolio are cross-subsidizing low-value ones. Average settlement values are pulled up by a small number of high-settlement outcomes, making the blended break-even look more favorable than the median case justifies.
How to Use Break-Even Cost Per Case to Make Budget Decisions
Once you have your break-even number by case type, it becomes a hard ceiling for vendor evaluation.
Setting Vendor Cost-Per-Case Thresholds
Every vendor in your portfolio should be evaluated against your case-type-specific break-even. A vendor delivering motor vehicle cases at $1,400 cost per case is operating comfortably within your break-even and earning target profit. A vendor at $2,200 cost per case for the same case type is above break-even and reducing firm profitability.
Set escalation thresholds:
- Green: Cost per case is more than 20% below break-even. Expand budget.
- Yellow: Cost per case is within 20% of break-even. Monitor and optimize.
- Red: Cost per case exceeds break-even. Renegotiate or exit within 90 days.
Evaluating New Vendors Before Committing Budget
Before allocating significant budget to a new vendor, use the break-even calculation to set test parameters. Set a minimum signed case output for the test period that keeps the vendor's effective cost per case within your green threshold. If they cannot hit that minimum, you have a pre-defined exit condition without the politics of a subjective evaluation.
Communicating ROI to Partners
The break-even framework is also the right language for partner-level budget conversations. Instead of presenting marketing spend as a line-item cost, present it as a capital allocation decision: we have identified that our break-even acquisition cost for motor vehicle cases is $1,598. We are currently at $3,200. Here is the plan to close that gap.
That framing converts a budget conversation into a financial performance conversation — which is where it belongs.
| Vendor | Cost Per Case | vs. $4,800 Break-Even | Action | |
|---|---|---|---|---|
| Vendor A | $2,800 | 42% below | Scale budget | |
| Vendor B | $4,200 | 13% below | Maintain | |
| Vendor C | $5,500 | 15% above | 90-day improvement plan | |
| Vendor D | $7,200 | 50% above | Renegotiate or exit |
Recalculating When Market Conditions Change
Your break-even cost per case is not static. It changes when average settlement values shift, when fee structures change, when case complexity increases, or when operating costs rise.
Recalculate it at minimum annually, and whenever you observe a significant shift in your average settlement distribution. PI firms that track this number quarterly find they can identify margin erosion earlier — before it shows up in firm profitability — and make budget adjustments proactively.
That early warning is the financial management discipline that separates firms that grow profitably from firms that grow busily.
RevenueScale's Financial Intelligence framework calculates your break-even cost per case with actual settlement and cost data — built specifically for the PI business model and the 6–18 month settlement lag.