Slash and burn or build and prosper?
According to the Reuters 2018 Report on the State of the Legal Market, the legal industry has stagnated and struggles to remain profitable. Contributing to the decline in profitability is the loss of business to alternative legal service providers and the shrinking demand for law firm services. Unfortunately, solutions that helped counter the impacts of the last recession are proving to be ineffective.
In times when many firms are ill-prepared to face disruption and fast-changing competitive dynamics, how should the industry react? Do you fight or flee? What is the best way to deal with stagnation and declining profitability?
The answer is transformation.
Break away from traditional strategies and embrace technologies designed to build business development and streamline workflows. Prepare for future opportunities by taking control of your firm’s economic condition. The key is to manage your law firm as you would a business because it is a business, centering your focus on activities that drive profitability. Here’s how:
Sales and business development coaching
When the going gets tough, many firms revert to staff for cost-cutting. However, research shows that those who invest more in business development are the ones to turn times of struggle into times of prosperity. They engage the whole team by developing business development programs that enhance skills in lead generation, account penetration, upselling, cross-selling, consultative selling and negotiation.
It’s true that many lawyers aren’t keen on focusing their attention on sourcing clients to expand the firm’s client base. After all, that’s not what they signed up for when they chose this profession. However, when you build a culture that fosters business development success to achieve career growth and financial rewards, you encourage your lawyers to tap into their sales growth potential.
Client education
Put your clients first and attune with them about your firm, approach, and services. Create client panels to empower their voice. Develop client training programs, hold one-on-one coaching and conduct seminars. Clients rely on your legal counsel for more than legal advice, they want your insight. They expect to be inspired and guided by your thought leadership. The more you educate them about the pros and cons of their actions, the more valuable you become to your clients, growing the demand for your legal services.
Enhance client relationships
The key to building links to increase client loyalty is high-quality interactions. And the path to greater collaboration is by inviting clients to co-create, giving them the opportunity to shape the services they ultimately receive. Engaged clients are much more loyal and less likely to switch firms. Your long-term clients are also those who are typically the least price sensitive and open to cross-selling. When long-term clients are consistently satisfied, they are more likely to make referrals and serve as advocates for your firm.
When the going gets tough, the tough get going – and it’s heading in the right direction that is the key. Firms investing in process efficiencies, business development and education are those who will buck the downturn.
(Note that the Reuters Report is based on the US legal market. The findings provide learnings for those firms in Australia too).