In today’s highly competitive legal environment, it’s important for firms to effectively manage and increase profitability whenever and wherever possible. Here, we’ve identified three main categories and four strategies in each to help you get on the path to increasing profitability in your firm.
Increase Revenues
Effective marketing and advertising—An easy way to increase revenues is to effectively market and advertise your firm. Knowing who your potential clients are and how (and where) to reach them is the first step toward effectively investing in your firm’s marketing and advertising budgets.
Cross-sell firm expertise—It’s also important to serve your clients in as many areas as possible. Perhaps a client that you’re handling a contract for might also benefit from your estate planning or tax advising services. It’s vital to identify the potential ways your firm can further service existing clients and then create opportunities for introducing the appropriate attorneys to these clients.
Fewer, but larger clients—Instead of focusing on a extensive roster of small clients, streamline operations to where you’re servicing a few large clients. This will require smart income planning and client retention strategies, but when utilized effectively, this approach can increase revenues while decreasing costs, creating a win/win scenario for your firm.
Effective billing and collection practices—All of the planning, strategizing, and billable hours your staff works can be for naught without effective billing and collection practices. It’s important that billing and collections be systematic and done on a regular and timely basis. Closing the loop and making sure all outstanding fees and bills are paid is the most straightforward way to increase your firm’s actual cash on hand.
Staff Education
Specializing in case matter—Instead of having a staff of legal generalists, it’s more profitable to employ specialists. Not only can you charge a higher hourly rate for specialists, they can also work more efficiently and effectively in their knowledge verticals than generalists can. Making sure your staff is properly trained and always working in their skill strength areas goes a long way toward increasing firm profitability.
Customer service—Fully training all staff—from support staff to partners—in the ways of proper customer service will result in more satisfied, more committed customers. Retaining your current client roster and focusing on keeping them happy will go a long way toward increasing both office productivity and your firm’s bottom line.
Pro-active problem solving— It’s not enough to just be there when a client comes to you with a problem. Training and enabling your staff to pro-actively identify and solve problems is a great way to surprise and delight your current clients. It’s also a great way to show your clients you care and to make them feel valued. When clients know their business is valued, they are less likely to leave your firm and seek new counsel. Plus, when you have a reputation for effective problem solving, your clients are more likely to come to you next time they have a situation to resolve, which could mean new business and higher profits for your firm.
Formal IT policies—Properly training your staff in IT security practices can increase your firm’s profitability by saving your firm time, effort, and resources in correcting security flaws and errors. While no firm is 100% protected from these things, properly training and retraining employees on a regular basis goes a long way toward minimizing how often security breaches take place.
Control Costs
Decrease overhead—Saving money by reducing office space costs, employing part time staffers, ridding your firm of ineffective staff, and engaging in e-discovery (taking the discovery process completely online) are just a few way to decrease your firm’s overhead. Creating a committee or designating an appropriate staffer to identify inefficiencies in your firm’s systems can go a long way toward increasing profitability.
Reduce costs—In a similar vein, reducing costs is another way to cut overhead and increase profitability. Engaging in practices such as effective annual budgeting and centralizing your firm’s purchasing will actively reduce costs. Further, holding staff personally accountable for reducing costs makes the practice a firm-wide responsibility and allows for buy-in and compliance at all levels.
Smarter client / case selection process—Formulating and sticking to an effective client and case selection criteria or process is vital to maintaining your firm’s profitability. Compromising high standards or making exceptions “this one time” should be avoided at all costs. Having high and rigorous standards will make all the difference in how much profit your firm stands to gain from any particular client or case.
Outsourcing—Finally, reducing costs can be done quite effectively when utilizing outsourcing. For example, a company like us—The Records Company—can save your firm quite a bit of money on medical records retrieval. We have the knowledge and experience to efficiently and effectively handle medical records retrieval. Our staff works at a fraction of the cost of completing these tasks in-house. Other routine tasks to consider outsourcing are non-disclosure agreements, basic contracts, client file management, bookkeeping/billing, marketing, and IT services. Engaging with firms that specialize in these areas will save time and money and in turn, increase your overall profitability.
In the end, profitability comes down to a combination of increasing revenues and decreasing costs. By harnessing your firm’s strengths, you can increase revenue in by being smart about the types of clients and cases you take on and making sure that you’re most effectively (and fully) serving the clients on your roster. To cut costs, decrease overhead and effectively manage cash flow. Also, outsource to companies who specialize in rote and routine tasks. Use us—The Records Company—for your medical records retrieval needs. Sign up for a free account and see what we’re all about. You’ve got nothing to lose and profitability to gain.