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How to Know If You Can Afford That New Hire at Your Law Firm



Hiring is exciting—but it’s also one of the riskiest financial decisions you’ll make as a Law Firm owner.

Whether you’re bringing on a new attorney, paralegal, or legal assistant, the big question is this:

“Can we actually afford this hire?”

Too many firms guess. Or they say yes based on gut feeling, not clear financial logic.

That’s why we created a Compensation ROI Calculator to help Law Firm owners make confident, data-driven hiring decisions—without needing a finance degree.


The Mistake Most Firms Make When Hiring

Firms often hesitate to grow because:

  • They’re unsure how to set performance targets.

  • They fear they’ll run out of money.

  • Or they’ve never done the math on what makes a hire financially viable.

Here’s the truth: If you don’t run the numbers, you can’t scale sustainably.

And yes, the math can get complicated—which is why we simplified it.


Introducing: The Compensation ROI Calculator

This tool helps you:

  • Calculate the true cost of a new hire (salary, taxes, benefits, on-boarding).

  • Set the right billable hour or case targets for that role.

  • See whether your pricing structure actually supports that hire.

  • Make real-time decisions in negotiations or interviews.

Let’s break it down.


Part 1: Total Cost of a New Hire

Before setting any performance goals, calculate what the employee will actually cost the firm.

Here’s what to include:

  • Base salary.

  • Employer payroll taxes.

  • Benefits (health, bar dues, tech, etc.).

  • One-time startup costs (computer, on-boarding, licensing).

Once entered, the calculator instantly shows the true annual cost.


Part 2: ROI—Return on Investment

Now that you know the cost, it’s time to determine how much that hire needs to bring in to make financial sense.

A good rule of thumb:

Each employee should produce 3x their total cost to cover:

  • Their compensation.

  • Firm overhead.

  • Profitability.

  • Taxes.

The calculator shows:

  • Total revenue they need to generate annually.

  • How many hours or cases they need to hit that number.

  • What that breaks down to on a weekly basis.


Hourly Billing Example


Let’s say you’re hiring an attorney at $175,000/year with a billable rate of $350/hour.  To hit a 3x ROI, they’d need to bill around 1,818 hours per year—or roughly 38 hours per week.

What if that’s too high?

You could:

  • Adjust their salary.

  • Increase the billable rate.

  • Set a lower ROI target (not ideal—this cuts into profit).


Flat Fee Example

Not billing hourly? No problem—we included flat-fee functionality too.

Just enter:

  • The person’s salary.

  • Your average case value.

Example: If a paralegal earns $65,000/year, and your average case brings in $4,500, they’d need to support around 101 cases annually to hit your 3x ROI target.

Higher-value cases = fewer needed to break even. Lower-value cases = more needed to make the math work.


Firm-Wide Planning Tip

Want to look at your entire team?

Just:

  1. Add up the salaries of your legal staff.

  2. Set your average case value.

  3. Let the calculator show you how many cases your whole firm needs to stay financially healthy.

Result: You now have a clear target to hand to your marketing team: “We need 58 cases this quarter to sustain profitability.”


What If the Numbers Don’t Work?

That’s where smart CFOs come in.

If your staff can't realistically meet the needed targets, the issue might not be effort—it could be your pricing.

We help Law Firms:

  • Evaluate whether their billable rates are aligned with firm costs.

  • Adjust case fees or billing structures.

  • Restructure staffing plans around financial reality.


Final Thought: Stop Guessing. Start Calculating

Whether you’re making your first hire or scaling your team, financial clarity gives you the confidence to grow.

Our Compensation ROI Calculator makes it simple to:

  • Know your numbers.

  • Set realistic expectations.

  • Plan with confidence.

Ready to try it out? 👉 Click here to get the calculator : https://www.tlturnergroup.com/compensationnegotiator


Or book a free call with our team to learn how we can help you create a smarter hiring and compensation plan.


Need more help managing Law Firm finances?  If you're looking for a partner who understands the unique demands of your practice and can help you grow with clarity and confidence, we’d love to support you.



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