Let us guess: you’re a lawyer, you own an office, you want to grow in your career, you have bills to pay, and of course, you want to know how to improve law firm profitability?
Well, when we talk about increasing the firm’s revenue, the first thing that comes to mind is increasing the number of clients. While this reasoning isn’t wrong, it’s not that simple.
The thing is, you can have a good number of clients and great revenue, but if your costs and expenses are also high, your firm’s profit margin will be very low.
In the worst-case scenario, many partners “take money out of their own pockets” to keep the business afloat.
So, to increase your revenue, you also have to take into account all the direct and indirect expenses necessary to generate it, such as office rent, energy and internet costs, coffee, payroll, taxes, and even marketing for law firm.
In other words, increasing revenue doesn’t just mean getting more clients, but also finding the balance between income and expenses, and from there, developing strategies to make your office profitable , which is the goal of every business. In today’s article, Assistant for Lawyers listed these tips to help you increase your revenue and profits. Read on!
1. Start from your current reality.
You can only increase your firm’s revenue if you have a clear view of your current situation. Gathering key financial data is the first step. Based on this data, you will know your revenues and costs, whether there is a balance between them or not, the default rate among your clients, and what resources are available for you to invest and grow your business.
Many firms fail due to a lack of control over this information, but it is extremely important for developing a plan that will increase their revenue.
2. Identify what can be improved in the short and long term.
To increase your revenue, you can charge higher fees. That’s a logical strategy, of course. However, given the competition, a higher price than other firms requires a strategy that offers differentiating factors and adds more value to the client, which may not happen overnight.
In any case, while you develop this competitive advantage, you can start by reducing expenses, so that your operations become cheaper and, consequently, your office more profitable. Reducing expenses is something that can be improved in a short period of time. For example, instead of travelling to another city just to attend a hearing, you can hire a correspondent lawyer to handle the matter.
The expense can be much lower, and you optimise the time that would be spent travelling. You can also identify team members who are not performing well and consider redistributing tasks according to each person’s skill level. This will improve workflow within the office and, consequently, productivity.
3. Define goals
Make no mistake: “increasing the firm’s revenue” is not a goal. It’s an objective. The objective is the desire to accomplish something – in this case, to increase the firm’s revenue – while the goal quantifies that objective, organizing it in time and defining the necessary steps to achieve it. Your goal should be clear and objective.
For example: by how much do you want to increase your office’s revenue? What is the timeframe? Is this achievable within your current reality? How will this revenue increase affect your office? How much will it cost? What do you need to achieve your goal? What parameters will you use to measure your performance and know if you are on the right track?
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4. Do more with less.
Every recipe has a cost, doesn’t it? So, if you can increase it by producing more with lower costs, you’re on the path to success. Technology is your greatest ally in this process, because with it you can monitor processes, organise documents, keep an updated schedule, add tasks, monitor your team’s activities, and best of all, do all of this in the palm of your hand.
The idea is to let a simple tool manage the operational side of the business, while a leaner team gains time to do what it does best: think.
5. Improve your firm’s value proposition.
Within the concept of marketing, a value proposition is a package of benefits that a company offers to a customer who hires its services. Simply stating that your service has value isn’t enough; the customer needs to recognize it.
With over a million lawyers practicing in the market, it’s very likely that your potential clients will have difficulty deciding which legal services option deserves their money and trust, and this choice can be even more complicated if the client doesn’t know what differentiates your firm from another.
It’s up to you to prove it!
Your firm’s value proposition needs to not only explain how your services can solve the client’s problem or improve their situation, but also make it clear why they should hire you and not the “competition”.
6. Specialize in what reinforces this value proposition.
Once you’ve identified your value proposition, it’s time to specialize in it.
For example, does your firm offer solutions for clients mired in bank debt?
Great! Show them that you’ve taken numerous courses in negotiation and financial planning, have published several articles on the subject, and have participated in finance events, mainly as a speaker.
All of this shows that you truly understand the subject matter and are capable of delivering what you promised to the client.
7. Know the profitability per client and per case.
Have you ever heard of the 80/20 rule? Also known as the Pareto principle , it states that 80% of your business revenue comes from 20% of your customer base.
In other words, few clients bring a significant return to your law firm, and if you don’t know who those clients are, you risk losing them. Wouldn’t it be worthwhile to invest time and energy in building customer loyalty?
8. Use legal marketing to attract more of these clients.
By identifying these most profitable clients and their respective fields of activity or operations, you can direct your legal marketing strategy to acquire more clients from this niche.
Now, if you know where the biggest fish are, why waste time “casting your bait” somewhere else, right? Therefore, take advantage of the experience these clients have given you and use it as a differentiator to win over others with effective marketing strategies.
Conclusion
As you can see, increasing your firm’s revenue isn’t just about getting more clients. While that’s essential, it’s also necessary to balance revenue with costs, establish clear and objective goals, add value to your services and optimize them, and prospect for clients strategically and consistently.
This is the path to ensuring your law firm remains strong in the market, not only with higher revenue each month, but also by generating good profits.