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Three law firm characteristics drive profitability: behavior, strategy and culture. This idea is conveyed in a presentation published by the BTI Consulting Group: 8 Habits of Highly Profitable Law Firms.
The presentation is this week’s Friday Share. The eight profitable habits are as follows:
1. Fewer, but Larger Clients. The presentation says that profitable firms have fewer clients, but those clients tend to be large. “A small number of mega clients creates deep understanding of each client, forces teamwork and cross-selling generates economies of scale, and offers an opportunity to mentor junior staff on the team.”
2. Continuous Client Dialogue. This means maintaining a conversation and lines of communication even when a client does not have an active matter. “Dialogue drives business instead of business driving the dialogue.”
3. Concentrated in Fewer Practice Areas. The market research firm finds law firms that focus on specific practice areas tend to be more profitable than firms that attempt to offer broad services. “These firms go narrow and deep. They don’t worry about not being in all practice areas; they worry about missing lucrative opportunities in key practice areas.”
4. Proactive Legal Problem-Solving. “Clients, both existing and new, flock to fresh, easy-to-read and truly insightful thoughts which bring them benefit,” wrote Michael B. Rynowecer in a blog post on thought leadership earlier this year. His ideas arguably extend to these eight habits. “These firms invest in solving problems before they get hired instead of waiting for clients to ask.”
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Law Firm Business Development Survey Results
Law Firms in Business Development Transition
Navigating a Competitive Environment
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5. Advancing Law Firm Relationships. According to LexisNexis© InterAction© data, when clients know five or more law firm partners, the risk of losing that client drops to less than 10%. The fifth habit may place this static into context. “Socialization creates the trust to make sharing work and cross-selling a natural part of daily life. Key people know each other, trust each other and openly share.”
6. Uniform Client Experience. Uniformity across offices and practice has multiple benefits, efficiency notwithstanding. “Clients see uniformity in delivery as a risk management tool and a vehicle to save time. Clients are willing to pay dearly for extra time.”
7. Superior Client Service. The research firm calls out client service especially in the context of change. “Telling clients about change early in the process or when it occurs adds extraordinary value to clients.” The firm elaborates in describing eight factors in superior client service.
8. Steady Stream of Work. Profitable law firms target clients with “a large number of continuing matters,” according to the presentation. “This translates into a long and reliable stream of business, reducing the cost of acquisition and deliver and demanding the ability to deliver multiple services.”
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The complete presentation is embedded nearby:
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Photo credit: Flickr, Nick Are, Money (CC BY-SA 2.0)
