All of your business activities matter
Profits are the name of the game in business and legal practice is no different.
However, improving the profitability of a law firm is easier said than done and you need to approach it strategically.
There are a lot of market pressures to deal with for small legal practices; they have to shoulder emotional barrages from clients, keep an eye on competitors and market themselves to bring in new work and this is generally done with pretty limited staff. While there is no single solution to improving profitability, here are some ways that can help:
Build your brand
Branding should be an investment every law firm takes seriously. Branding will be one of the first interactions a prospective client has with you and you have to make it count. Strong brands command respect among peers and open doors for collaborative opportunities. The reality is, big brand names command huge paychecks because a customer would rather pay more per hour to a big brand than a firm with little to no brand identity. You may not be a big name yet, but a strong brand is the first step to becoming one.
Expand your network
Networking is one sure way to keep your work slate busy. Networking is fundamental to expanding your business opportunities. Keep a database of your past clients as well as colleagues and maintain good communication with them; you don't know when a friend of theirs might need your services. Attend events and meet professionals from diverse industries, you will be amazed at how many opportunities may present themselves. Networking will also allow you to refer work onto others when it doesn't fall into your area of expertise, and in time they will do the same for you. The more people you connect with, the bigger your circle of influence grows, and the more you stand a chance to expand your client base.
This is an excellent, generally low-cost method of improving your profitability. Unlike big marketing and advertising campaigns which can cost an arm and a leg, face-to-face discussions can be an excellent opportunity to market yourself and your practice on a personal level.
Take advantage of industry insights
The business environment is ever changing, in 2020 more so than ever. Law practices that can adapt to change are the ones that thrive. It is pretty straightforward; adapt or fail. With proper insights, you will be on top of industry trends and how they will affect your business. A key to improving profitability is to use these industry insights to put yourself ahead of the competition. But you have to know how to utilise them to create an impact; both for you and clients. Will law firms automate repetitive tasks in two years to come? Will it be profitable to hire employees on a permanent basis or to work on short contracts? These questions and the ability to react quickly will lead you to better position yourself in the industry and make profits while other firms are still trying to adapt.
Invest in technology
The legal business has a lot of routine tasks that can usurp your energy. Instead of going the traditional way, you can accomplish considerably more by investing in practice management software. As a firm, you have to be aware of technological advancements in the industry and make good use of them to increase your profit margin. Using a web-based practice management software like mattero can improve your profitability by providing you centralised access to everything you need, no matter where you are, drastically cutting down the time you would spend searching across multiple platforms.
Ask for feedback
This one may seem pretty simple but it can have quite the impact on your practice. After you have completed a matter for a client, ask them for feedback. This can point out areas you excel in and areas you need to work on. If you don't want to do it in person there are plenty of online tools such a Survey Monkey that allow you to easily create feedback surveys. This will help you provide better service to your future clients and make it more likely that they will repeat business.
Profitability improvement does not have to be a far-fetched dream. The earlier you consider the action you're going to take, commit to them, and start planning, the bigger your profit margin will grow. Improving profitability takes consistent work, but it is very achievable.