How to Improve the Profitability of a Legal Business?
Everybody knows that the main purpose of any for-profit firm is, well, profit! Everybody likes profit, whether it means more money to invest back into the firm or more cash in your pocket. Increased profit is achieved through taking on more clients and/or winning more cases.
It goes without saying that if your legal business is enjoying increased profitability, you have more money to spend! Besides, with higher profits, the firm is able to assume greater risk, improve brand image, and reward partners and associates.
While that all sounds great, how exactly do you achieve that? Here are some of my favorite tips that will help you improve profitability of a legal business.
This is a rather broad title, as many processes can fall under this category. Implementing systems means optimizing processes in order to increase efficiency and save time. In other words, have systems in place. For starters, you can use templates instead of drafting new contracts from scratch each time. That will save you lots of time and effort.
Time is the most valuable resource we have. If you can manage it well, you can reallocate some of it to more important tasks/high paying clients. One way to do that is to use legal software for law firms. Legal software can help you check your contracts quickly and easily, schedule meetings, invoice clients on time, set reminders, and so much more.
On top of that, if you use a cloud-based solution, all of your documentation will be stored in the cloud, where you’ll have access to it from multiple devices. That can save you hours of search time you would normally spend going through countless cabinets. With legal software, just type the name of the document you’re looking for in the search bar!
Bill your clients
That sounds easy, right? Believe it or not, many attorneys neglect this crucial step. As most attorneys are paid per hour, they have to bill their clients for the hours they spend on their cases. Since this is your income as an attorney, you have to make sure to bill your clients accurately and often.
If you’re in charge of a law firm, encourage your employees to bill their clients as often as once a month. Don’t forget about the time spent on the phone, writing emails, and communicating with clients. We live in the digital age, so it’s not just face-to-face meetings that count. Don’t fall behind on your invoices!
Attract new clients
One way, and maybe the only way, to improve profitability is to attract new clients. There are many ways you can do that. The obvious one is marketing. Invest some of your budget into marketing and advertising. It might sound counterintuitive to spend more money now. Shouldn’t you be cutting costs? That too, but you have to spend money to make money.
Social media and print ads are not the only tools at your disposal. You can showcase your attorneys at special meetings and events. Attend conferences and expos. Use these events, as well as social media, to network with potential clients and partners.
Alternatively, you can focus on word of mouth and ask your clients to refer their friends to you. If someone is seeking legal advice, they are more likely to trust a friend than a paid ad. With client referrals, you will be able to attract even more new clients than with social media.
This is controversial advice that nobody likes to hear. Clients find increasing prices unpleasant, so attorneys often shy away from that. It can be difficult to identify the value of your time in monetary terms, but you have to do it. You might be undercharging your clients, which is nice for them, but you’re robbing yourself and your firm.
One way to convince yourself to charge more is to ask for feedback from clients frequently. If they are satisfied with the quality of your services, then you deserve to charge a little more. There will always be someone cheaper, as well as someone more expensive. You have to find your niche.
Eventually, when you have too many clients, you will be forced to charge more anyway, as you won’t have enough time for everyone. Only serious clients will stay and they will be worth your time. Though changing your pricing policy is almost always uncomfortable, it is often a necessary step you have to take towards increased profitability. Don’t forget to ensure that the quality of your work is in line with the price!
Whether you’re using new software for lawyers or charging your clients more, you can find yourself in an uncomfortable situation. Change is hard, but standing still doesn’t encourage movement. Whatever you do, focus on maintaining the quality of your work and providing value to your clients. You are your greatest resource!