After a long recession and slow recovery, the economy seems to be headed back to more stable ground. Just as the weak economy required law firms to make changes in strategy, the improved situation calls for the same action as well. These three steps can position your firm to make the most of the upturn:
- Help Your Clients Grow
The most cost-efficient route to sustained profitability is through the retention of profitable clients. The clients most likely to stick around are grateful clients.Demonstrate your expertise by identifying and bringing existing clients growth opportunities that they can pursue within their own industries or beyond. Not only does this show them that you are in their corner and understand their needs, but it also opens the door to cross-selling of additional firm services.
- Reconsider Your Practice Areas
Many firms responded to the recession by focusing on volume. However, in better times you should emphasize profitability when deciding which practices to continue, add or drop.In addition to evaluating your practice areas to determine which are the strongest, survey the legal landscape in general to get a sense of which areas are expanding and shrinking. Practices that may have thrived during the downturn, such as those handling loan workouts, foreclosures and bankruptcy, probably have seen a drop-off in activity. Others are vulnerable to automation or commoditization.
On the other hand, depending on location and other factors, you could see an increased demand for merger and acquisition, construction, real estate, private equity, technology and regulatory work. The sweeping changes in the Tax Cuts and Jobs Act should translate to escalated activity in tax practices. The spreading legalization of cannabis is creating new legal industries in certain states (although these largely tap existing expertise in, for example, tax and regulatory matters), too.
- Adjust Your Fees
The recession led to a race to the bottom in terms of fees for struggling firms. Reassess your fees and look for places where you can boost them. Do not increase your fees across the board, but do raise them for your star attorneys or those in high-demand or specialized areas.Think about reining in any steep discounts you felt pressured to offer. In current conditions, discounts should be extended only where you stand to benefit, such as when you are guaranteed a large volume of work. Continuing unnecessary discounts for highly-profitable clients out of a fear of rocking the boat undermines your value.
Eyes on the prize
Regardless of the economy, the driving goal for law firms should be long-term profitability. To achieve this, make sound, data-driven decisions and avoid the temptation to chase the next hot, but all-too-often fleeting, practice area.