Law Firm Profitability Insights: Learning From Others

June 18, 2014

Report reviewAs attorneys, we tend to think of ourselves as members of a special breed.  We’ve worked hard to get here!  We also tend to think that running a firm is different than running a business.  In a very practical sense, it is, but we can never forget that a big part of being successful in the practice of law is being successful in the business of law.

Since leaving practice to join the corporate world three years ago, I have learned more about business than I could possibly express here.  Those lessons have come not just from observing and working with law firms, but also from other industries and how businesses in those fields find success.

A couple of interesting articles recently caught my attention for the business lessons they can impart to law firms, even though the businesses in the articles aren’t run by lawyers (at least, presumably).

The first, “The Many Advantages of Defining your Firm’s Value,” comes from the American Institute of Certified Public Accountants.  In determining what his firm’s value was, the author “settled on an approach in which participants answer questions about who they are, what they do, how and why they do it, what sets them apart and why clients should do business with them.”  These are things that attorneys at your firm should be able to include as part of an elevator pitch.

After better defining what value his firm delivered, the author writes that the firm was able to raise rates, billings, and collections because everyone was on board with the value of the product they were selling. Would that we all had such problems!

Another industry I thought had a fascinating lessons, but arguably couldn’t be further from the practice of law, was highlighted in an article from “Redefining Retail.”  The author talks about a small mom-and-pop bike store where a missed opportunity with a customer didn’t just impact its ability to do business with that one customer, but set off rings of influence throughout that customer’s social circle and beyond.

The article boiled down three takeaways that can be helpful in fostering law firm client relationships.  To quote, with my reinterpretations:

  1. Forecast, forecast, forecast:  Tell me what is going to happen so I can plan.  (Ed. Give me predictability).
  2. Become the Babysitter:  If I bring the kids in with me, give me the gift of freedom so I can hear why you are adjusting my bike.  (Ed. It may not literally involve kids or bicycles.  The bottom line, anticipate my needs.)
  3. Free Marketing:  No matter who is coming into your store, they instantly become your free advertising.  It is up to you to keep your promises.  In this case, “over-promise, under-deliver” is the perception now that a lot of people have of this well established store.  (Ed. Substitute Firm for Store, and this one clicks).

Happy clients are more likely to be repeat clients.

There are a lot of successful business models on the market.  Who’s to say that law firms can’t pick and choose the best of what works from different industries and make it work for us?  We’re already doing it with Lean Six Sigma through Legal Process Management.  There’s no reason it can’t apply to the larger picture of how we do business.