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    CASE ANALYSIS - Don Masters and Assoicates Law Office

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    Melanie Samsona
    Don Masters and two colleagues plan to open an affordable law office that would be open long hours and serve low-income clients. A market study found they could expect 50 new clients daily with $500,000 in advertising. The office would charge $30 consultations and take 30% of settlements over $2,000 from 20% of consultations. To break even in year one, the office needs at least 17,500 new clients, as income from consultations and settlements is estimated at $525,000 while expenses are $525,000. The memorandum recommends proceeding with caution as just meeting break-even could be challenging.

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    CASE ANALYSIS - Don Masters and Assoicates Law Office

    Uploaded by

    Melanie Samsona
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    Don Masters and two colleagues plan to open an affordable law office that would be open long hours and serve low-income clients. A market study found they could expect 50 new clients daily with $500,000 in advertising. The office would charge $30 consultations and take 30% of settlements over $2,000 from 20% of consultations. To break even in year one, the office needs at least 17,500 new clients, as income from consultations and settlements is estimated at $525,000 while expenses are $525,000. The memorandum recommends proceeding with caution as just meeting break-even could be challenging.

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    Don Masters and two colleagues plan to open an affordable law office that would be open long hours and serve low-income clients. A market study found they could expect 50 new clients daily with $500,000 in advertising. The office would charge $30 consultations and take 30% of settlements over $2,000 from 20% of consultations. To break even in year one, the office needs at least 17,500 new clients, as income from consultations and settlements is estimated at $525,000 while expenses are $525,000. The memorandum recommends proceeding with caution as just meeting break-even could be challenging.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    628 views1 page

    CASE ANALYSIS - Don Masters and Assoicates Law Office

    Uploaded by

    Melanie Samsona
    Don Masters and two colleagues plan to open an affordable law office that would be open long hours and serve low-income clients. A market study found they could expect 50 new clients daily with $500,000 in advertising. The office would charge $30 consultations and take 30% of settlements over $2,000 from 20% of consultations. To break even in year one, the office needs at least 17,500 new clients, as income from consultations and settlements is estimated at $525,000 while expenses are $525,000. The memorandum recommends proceeding with caution as just meeting break-even could be challenging.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    CASE ANALYSIS - DON MASTERS AND ASSOCIATES LAW OFFICE

    Don Masters and two of his colleagues are considering opening a law office in
    a large metropolitan area that would make inexpensive legal services available to
    those who could not otherwise afford these services. The intent is to provide easy
    access for their clients by having the office open 360 days per year, 16 hours each
    day from 7 am to 11 pm. The office would be staffed by a lawyer, paralegal, legal
    secretary and clerk-receptionist for each of the two 8-hour shifts.

    In order to determine the feasibility of the project, Masters hired a marketing


    consultant to assist with market projections. The results of this study show that if the
    firm spent $500,000 on advertising the first year, it could expect about 50 new clients
    each day. Masters and his associates believe the estimate to be reasonable and are
    prepared to spend the $500,000 on advertising. Other pertinent information about
    the operation of the office follows:

    The only charge to each new client would be $30 for the initial consultation.
    All cases that warranted further legal work would be accepted on a contingency
    basis with the firm earning 30% of any favorable settlements or judgments. Masters
    estimates that 20% of new client consultations with result in favorable settlements or
    judgments averaging $2,000. Masters expects no repeat clients during the first year
    of operations.

    The hourly wages of the staff are projected to be $25 for the lawyer, $20 for
    the paralegal, $15 for the legal secretary, and $10 for the clerk receptionist. Fringe
    benefit expense will be 40% of the wages paid.

    Masters has located 6,000 square feet of suitable office space that rents for
    $28 per square foot annually. Associated expenses will be $22,000 for property
    insurance and $32,000 for utilities. The group will purchase malpractice insurance
    for $180,000 annually. The initial investment in office equipment will be $60,000,
    which will be depreciated over four years. The cost of office supplies has been
    estimated at $4 per expected new client consultation.

    Required:

    1. Determine the income the law office can expect if all goes according to plan

    2. Determine how many new clients must visit the law office for the venture to break
    even during its first year of operations

    3.Write a memorandum stating whether Masters and his associates should proceed
    with opening the law firm and state your justifications.

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