Practice Management

Surveyed Law Firms Report Growth Strategies

By Tom Collins

Altman Weil?s Michael C. Ross wrote, ?Many successful businesses have learned that the first place to look for achievable top-line sales growth is to their existing customers.  They understand that because they already have relationships with these customers, there is a greater likelihood of generating additional sales with them and the cost of doing so will be less, compared to obtaining new customers. These lessons especially apply to law firms and their clients.?  Ross isn?t the only Altman Weil spokesman to beat this drum. Charles Maddock, an Altman Weil principal, has said, ?It is nine times more difficult to get a new client or new practice than to retain or grow your existing business."

Given the shared insight of experts like those above, it is striking that growth from existing clients is so undervalued as a growth strategy by midrange law firms.  In the most recent Juris Law Firm Economic Survey, only 5.8 percent of responding midrange law firms reported existing client growth as a specific strategy for expanding law firm revenues. Similarly, only 13.5 percent of firms have a specific strategy for new client acquisition through marketing programs.

If new client sales and expansion of services to existing clients are not key strategies, what are the top growth strategies?  Lateral partner hires came in as the top strategy among surveyed firms!  Starting a new practice area comes in at number two.  The anecdotal evidence certainly supports the survey findings.  Participate in a partner retreat or a law firm planning session and both lateral hires and practice area additions are usually the first thing voiced by participants in the opportunities portion of SWOT exercises. 

New revenue from a lateral partner addition seldom trickles down to increase the income of the firm?s existing partners.  Laterals tend to increase the pie but not the size of the individual slices.  Laterals frequently produce disappointing results and can be highly disruptive to the culture of an established law firm.  When firms were asked to indicate their most successful source of new hires, laterals with five or more years in practice rank at the bottom while new graduates come out on top.

The addition of new practice areas can be a meaningful strategy for firms faced with changing market conditions or where needed to support new emerging needs of existing clients in response to changes in laws, regulations or industry conditions.  On the other hand, growth through diversity of practice runs counter to the advice of leading consultants and business experts.  Their advice is to define your market and your service scope narrowly and then dominate that market for your service segment.

Lateral hires and new practice areas may appear to be the easy way to grow your law firm, but there is far  greater reward in doing it the old-fashioned way.

• Hang on to your existing clients

  • Grow with your clients

  • Grow by expanding the value of your services to those clients

  • Grow by showing your client where you can add value through legal services for which no need previously existed

  • Grow by expanding your services to fill new emerging needs of your client

  • Grow by expanding your targeted share of a client?s business

• Expand  your clients through deliberate marketing and ?sales? efforts

  • Clearly and narrowly define your market and identify your prospects

  • Understand your prospects? needs and their issues

  • Understand your firm?s value proposition

  • Tout it through marketing

  • Make contact, talk client talk vs. legal talk, build relationships, communicate value and ask for the business

The current addition of Law Firm Economic Survey from LexisNexis is provided to participating law firms without charge.  Others may purchase the 80-page report for $495.00 by calling 877.377.3740.  Additional copies for the same law firm are $50.00 each.

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 877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Full post as published by More Partner Income on December 06, 2007 (boomark / email).