Avoiding the Number One Mistake When Growing Your Firm: Sunk Costs

In this blog, we focus on how to avoid making the number one mistake when growing your law firm: sunk costs.

Sunk Costs: How Self-financing Hinders Growth

As a young, law firm owner, Kevin Danesh first funded his firm’s growth through a cash advance on his credit card. After tying up finances continually in case costs, he learned a harsh lesson. “Self-financing your own growth is, from a business perspective, the number one mistake you can make,” noted Kevin Danesh, managing partner at BD&J.

When your money is tied up in case costs, it becomes a sunk cost. The opportunity cost is the inability to grow your business through spending on ads, hiring staff, or building systems to improve productivity. For many contingency law firms just starting out, it may seem impossible to get out of the cycle of reinvesting case fees back into more case costs.

Overcoming Traditional Bank Limitations

Financing case costs can be both a boon for your law firm and your clients. Although it may seem simple to approach any bank to finance the growth of your law firm, the unique business model of contingency fee law firms is not understood nor valued by traditional banks.

“I told them I need more money and I need it now. And I’ll explain to you why,” recalled Kevin Danesh. “Look at these five cases. These are monsters. But then, you know, dealing with a traditional bank, they don’t know how to evaluate a case and what the future value of the fees related to those five cases were.”

Finding a Strategic Banking Partner for Case Cost Financing

Seeking a strategic banking partner that would understand his core business and inventory, Kevin Danesh sought out Esquire Bank. Leveraging case cost financing, BD&J invested heavily in advertising and experienced growth double or triple within one year*.

“The greatest challenges in fighting for justice is, unfortunately, that you know, there is a finance and business component to what you are doing,” stated Kevin Danesh. “That’s why you need someone in your corner fighting with you. That’s when we go to Esquire Bank.”

For more insights into how to avoid sunk costs when growing your law firm, click above to watch this video about BD&J’s success story, featuring Kevin Danesh.

Download the “Typical Lending Options” Infographic

Learn about “Typical Lending Options for Contingency Fee Law Firms” and the value of Esquire Bank’s case cost financing solutions, click below to download


Meet with Esquire Bank

Learn how your law firm can finance its case costs and free up capital to invest in growth. Schedule a no-obligation consultation with an Esquire Bank Business Development Officer today at a time convenient to your schedule.


For more on Esquire Bank’s expertise in providing tailored solutions for law firms, please visit Esquire Bank’s resources portal, Lawyer IQ, where you can learn about growing your businessfinancing for law firmsmarketing strategy best practices, and more.

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* Results may vary by law firm.

** The information provided on (or accessed through) this email is provided for general informational purposes only and is not intended as, and should not be relied on for, law firm operations, tax, legal or accounting advice. Some of the information may not be applicable or appropriate for all law firms. Please consult your own tax, legal and accounting advisors as appropriate.

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  • Life Cycle Stage: Educated - Best Practices
  • Content Tier: platinum
  • Content Type: customer-testimonial

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