The 3 Critical Factors Limiting the Growth and Profitability of Your Legal Practice
Word provided by The Business Instructor
And if we don’t have a clear picture of what’s stopping us from growing, it’s twice as hard to know what to do to overcome it.
Over the years I’ve identified 3 Critical Factors that limit the growth and profitability of most legal practices I see.
1. Model: The professional services model is broken
The professional practice model is stacked against growth and profitability.
It’s generally a time-for-money model - even if you’re working on fixed fees, they are generally calculated on an estimate of how long it will take.
If the fee-earners have to do lots of non-fee earning tasks (such as marketing, networking, talking to potential clients, billing etc) and yet you only generate fees when they are doing fee-earning tasks, this restricts your ability to generate profits.
2. Method: In most cases, the method used for growing a practice is misguided
Most firms focus on growth by looking at ways to get more enquiries from potential clients.
Some spend a lot of time and/or money on marketing to achieve this.
This method ignores the fact that the fee-earners may not be converting as many of those enquiries into paying clients as they could be, meaning enquiries are wasted. If so, time spent on improving conversion rates could give a much higher return than time spent generating new enquiries. It would also be cheaper to do.
Focusing on new enquiries also ignores the other five ways of increasing fee income and profits without needing more enquiries, such as getting more work from existing clients.
Missing out on these other opportunities means you work harder (or spend more) than you need to in order to get the growth you want.
3. Mastery: Mastery of business skills is often missing or not given the attention it deserves
If getting more clients and/or getting more work from existing clients is a key part of a fee- earner’s role (this is usually the case in the professional services model), yet they aren’t trained in how to do them quickly and effectively, then it takes too long to get the results.
This means too much time spent away from fee-earning and too few new enquiries or matters resulting from the time spent.
If you feel that the growth of your practice could be limited by any of these 3 Critical Factors, then it’s important to assess:
1. What impact is it having on your practice growth and profitability?
2. What would be the effect of removing or reducing that limitation?
3. What steps can you take to remove or reduce it?
If you’re not sure what steps you can take, you can hear my recommendations at Legalex when I’ll be speaking about ‘The Practice Growth Formula: How To Get More Clients and Increase Your Profits Without Working More Hours” on Wednesday 27 March at 12pm in Theatre 3.
Or get bespoke advice during a 15 minute ‘Focus’ session on our stand 635 (text SESSION to 07903571611 (standard text rates apply) to book).
Phone: 020 7275 7471