Week 3: Forecasting & Planning — Turning Numbers Into Strategy

Terrell A Turner
Jul 2
6 min read

Updated: Sep 19

By Terrell A. Turner, CPA

Let’s say your law firm—Law Firm Bottled Water, PLLC—has the chance to grow by 75% in the coming year. That level of growth sounds exciting, but it’s going to require real investment: hiring more staff, upgrading technology, expanding office space, and likely increasing your monthly overhead. The big question becomes:

Can we afford this?
When should we make these investments?
What’s the financial roadmap to get there safely?

That’s the role of forecasting and planning—using numbers not just to look back, but to look forward and lead with intention. This week, we’re showing you how to use financial data to build a plan that aligns with your firm’s vision and helps you grow confidently.

Forecasting Isn’t Complicated — You Already Do It

You may not call it “forecasting,” but you already make forward-looking decisions every day. Here are a few relatable examples:

You check your weather app before leaving the house.
You’re using short-term predictive data (temperature, chance of rain) to choose your outfit, bring an umbrella, or plan your route. In the same way, financial forecasting helps you prepare for what’s ahead.
You plan vacations around high-volume times at work.
You know when your caseload peaks. You avoid PTO during trial season or tax deadlines. That’s basic forecasting—using patterns to reduce disruption.
You scan your calendar before prioritizing tasks.
You’re allocating time and energy today based on what’s coming tomorrow. That’s the essence of strategic planning.

Leadership Insight:

Forecasting for your firm isn’t about having a crystal ball. It’s about using the best available data to shape a better future. You’re already doing it instinctively—this week’s focus is on doing it intentionally and at scale.

Types of Forecasting: Choose Your Level of Detail

There’s no single “right” way to forecast. The key is choosing the method that matches your data, time, and the decisions you need to make.

1. Detailed Forecasting (Bottoms-Up)

What it is:A granular forecast built line by line. You project individual cost centers—like hiring an associate, increasing marketing spend, adding software subscriptions—and estimate how each change affects revenue or expenses.
Best for:Planning major strategic changes: hiring, expanding practice areas, launching a new service, or investing in infrastructure.
Leadership Insight:This approach requires the most effort but provides the greatest accuracy. It’s ideal when you’re presenting to partners or making high-stakes decisions that affect profitability or cash flow.

2. Semi-Detailed Forecasting

What it is:You break down revenue and expenses into major buckets like payroll, marketing, operations, and technology. You don’t project every single line item, but you categorize meaningfully.
Best for:Annual budget planning, setting departmental budgets, and aligning team goals with top-line firm strategy.
Leadership Insight:Use this method when you want a structured, flexible approach that still gives you useful insight. It’s great for firm retreats or department-level planning sessions.

3. Summarized Forecasting (Benchmark Budgeting)

What it is:
A quick way to build a forecast based on historical percentages of revenue. For example, if you usually spend 30% on payroll and want to hit $1M in revenue, budget $300,000 for staffing.
Best for:
Early-stage firms, firms with limited historical data, or busy leaders who need fast guardrails for decision-making.
Leadership Insight:
This isn’t about precision—it’s about momentum. Use this method to get started quickly and identify red flags without over-engineering your numbers.

How to Build a Forecast: A Simple Step-by-Step

Let’s walk through a marketing forecast for 2025, using a revenue goal of $1.2 million.

Step 1: Decide What You're Forecasting

You’re asking: “How much should we invest in marketing to support our revenue goals?”
Be specific about your goal. Forecasts that are too vague (“Let’s grow revenue!”) don’t lead to actionable plans.
Keep the scope tight: one category, one strategy, one decision at a time.

Step 2: Identify the Drivers That Impact the Outcome

Revenue doesn't grow by accident. In most law firms, growth comes from:
- Client acquisition through marketing or referrals
- Conversion rates at intake
- Average case value
Marketing impacts the front end of the revenue engine. More leads and higher quality leads mean more potential clients.
Leadership Insight:Don't just assume "more marketing = more revenue." Understand what drives that connection. Is your intake team converting well? Are your leads qualified? That’s what you’re forecasting.

Step 3: Review Historical Performance

Pull the following data from your last 12 months:
- Average revenue per case or client – How much value do you get per matter?
- CAC (Cost to Acquire a Client) – Total marketing spend ÷ new clients acquired.
- Lead-to-client conversion rate – What percentage of inquiries become paying clients?

Example Forecast:

Goal: $1.2M in revenue
Avg. case value = $6,000
Clients needed = 200
CAC = $400
Marketing forecast = 200 × $400 = $80,000

Step 4: Test Assumptions with “What If” Scenarios

Forecasting becomes strategic when you model multiple versions of your future:

What if CAC improves to $350?
Then marketing spend = 200 × $350 = $70,000
What if case value rises to $7,000?
Then you need only ~172 clients to reach $1.2M → 172 × $400 = $68,800 marketing budget
What if both improve?
You hit your revenue goal faster, with less spending—and may free up funds to invest elsewhere.

Leadership Insight:

This kind of thinking lets you plan with agility. The point isn’t to get it “right”—it’s to create multiple paths to success and know how to pivot.

Step 5: Clarify Your Action Items

Forecasts should always end with decisions and next steps. Ask:

How will we generate more qualified leads?
Consider better SEO, referral incentives, or strategic partnerships.
How do we lower CAC?
Focus on channels with the best conversion rates and optimize your intake process.
What’s our plan to increase case value?
Consider targeting higher-value practice areas or offering bundled services.

Benchmark Budgeting: Forecasting with Percentages

When you’re short on time, data, or experience, use percentage-based budgeting to set financial parameters.

Percent of Revenue Method:

Category	% of Revenue	Planned Budget (for $1M goal)
Payroll	35%	$350,000
Marketing	8%	$80,000
Software & Tools	5%	$50,000
Rent & Admin	10%	$100,000
Profit Target	15–20%	$150,000–$200,000

Use this as a baseline model to assess whether you're overspending in one area.
Compare your current actuals to these targets. Where are you off balance?
Use these percentages to build monthly or quarterly cash flow forecasts.

Leadership Insight:

This method doesn’t require exact math—but it does enforce healthy boundaries. Great for high-level planning, especially when scaling fast or trying to avoid cash flow surprises.

Tips for Successful Forecasting

To make your forecasts useful (not just theoretical), follow these best practices:

Start with goals
Forecasts are future-oriented. Begin by setting a destination: revenue growth, headcount expansion, or profit margin improvement.
Review regularly
A forecast created in January won’t help in June if it’s sitting in a drawer. Add a calendar event to revisit projections quarterly or monthly.
Question your assumptions
Are your numbers based on outdated data? Are you overestimating case value? Be willing to adjust when the environment changes.
Make it actionable
A good forecast ends with a leadership decision: Should we hire now? Should we delay software implementation? Should we shift our marketing strategy?

Modeling Behavior with KPIs

Your forecast sets the direction—but KPIs keep you on course.

Let’s say your forecast calls for $1.5 million in revenue, and your average attorney needs to bill 40 hours/week to make that happen. Then your KPI becomes billable hours per attorney. Track it weekly to ensure your behavior matches your forecast.

Other examples:

Forecasting increased profit? Track collections rate and write-offs.
Forecasting team growth? Track case cycle time and attorney utilization to ensure capacity is ready.

Leadership Insight:

Forecasting shows what should happen. KPIs show what is happening. When they’re aligned, you lead with power and precision.

Planning Is Leadership

Great leaders don’t just react to the numbers—they anticipate them. Forecasting shows your team (and your partners) that you’re not just surviving—you’re building with intention.

When your team asks:

“Can we afford another hire?”
“What’s the impact of taking on this new case type?”
“Are we growing too fast?”

You’ll have clear, confident answers—backed by logic, data, and strategy.

Reading Assignments

Wrapping Up: Look Forward with Confidence

Main Idea: Forecasting transforms uncertainty into actionable strategy. It helps you set goals, plan resources, and lead with evidence—not guesswork.

This Week’s Action Plan:

Choose one area to forecast (e.g., marketing, hiring, software).
Use the step-by-step guide to model a few “what if” scenarios.
Pair your forecast with KPIs that track execution.
Schedule a review 30–60 days from now to assess and adjust.

Final Leadership Insight:

Forecasting isn’t about being perfect—it’s about being prepared. When you forecast with intention and monitor execution through KPIs, you lead your firm like a strategist, not a firefighter.