It seems sensible to assume that firm growth translates into profitability. But it turns out that’s not necessarily the case as this infographic reveals.
The infographic summarizes findings based on research by Thomson Reuters’ Legal Executive Institute and Peer Monitor. The research found that an aggressive growth rate can backfire. Consider these statistics. In 2015, the average law firm grew their rates by 2.7%. As of October 2016, firms that had grown their rates faster than the 2015 average saw their worked fees grow by an average of 2.4%. But the firms that experienced slower growth between 2015 and October 2016 saw their fees grow by an average of 3.2%.
Of note is that the firms driving the highest revenue spent nearly double on business development.
So how can your firm put this insight to good use? We culled our blog for words of wisdom from John Remsen, Jr., President and CEO of The Remsen Group. John is widely recognized as one of the country’s leading authorities on strategies for law firm business development, leadership, management and marketing. Read on for his sage advice.
Understand Business Development
While marketing and business development are often used interchangeably, they are two separate initiatives and practices. John describes marketing as “the stuff firms buy to enhance the overall image,” like a website, collateral, and sponsorships. Business development, on the other hand, is about “developing reputations and relationships with people in a position to hire your firm and refer clients.”
Cultivate Your Reputation
Due to tremendous changes in the competitive landscape for law firms of all sizes, your firm must not take anything for granted. Instead, it needs to establish and assert its position in the marketplace. In essence, your firm must develop a reputation as a go-to law firm. At the same time, your lawyers should be doing the same. As John reminds us, clients hire lawyers not law firms.
Pick a Niche
Rather than provide law-specific services, make your practice focus about industries your firm can serve, such as healthcare, real estate development and finance. Then get granular within your chosen industries about the areas of law you practice, such as employment or litigation.
According to John, the most efficient and effective way to become the go-to law firm for a specific industry is through industry practice groups. Set up industry groups focused on business development efforts by industry led by a strong leader who can jump-start initiatives, inject enthusiasm into the efforts, and maintain the energy over time.
Work Your Client Base
As is true across nearly every industry, it’s easier driving follow-on business from existing customers rather than trying to generate new clients. To encourage repeat engagements, figure out what your top clients value most and then equip everyone across the organization to deliver on that.
Empower the Business Development Lead
With so much riding on your business development efforts, it pays to instill the leader of these efforts with the authority, credibility and empowerment needed to get things done. John advises that the business development leader has direct connection to a powerful partner and “a dotted-line relationship” to your Chief Operation Officer. At the same time, fund business development adequately and give your business development lead the power to determine how those funds get spent. This will enable your lead to keep efforts moving along.
Adopt a Team Approach
Firms fare far better when they embrace a team approach to marketing and business development. That way the firm’s image and relationship-building efforts can work in concert to amplify the overall effect. With that in mind, it’s important for the firm’s lawyers to regularly meet with those focused on marketing and business development as they are working on drumming up more business for the firm. Lawyers can contribute to presentations being developed to pitch a new client, updating the CRM system with critical client details, and more.
One way to equip both business development and marketing to do their jobs effectively and efficiently is with the latest technology that makes work easier for themselves and the lawyers they serve.
One such technology includes automated relationship insights that automatically gather information from your communications and external data sources to create a complete, real-time profile of clients’ and prospects’ relationships within your organization. This helps your business development team do more business by understanding who has a relationship with prospects and clients and leveraging those insights to enable warm outreach.
Want to find out more? Schedule a demo.