October 25, 2014

Coach’s Corner: How Do You Increase Revenues?

Law is a business and planning is the first responsibility of a business owner. Business revenues will not increase without a plan to identify the desired outcome and define what is necessary to achieve it. A law firm that does not plan for how to increase its revenues will wind up a practice reflecting whatever walks in the door. It is doubtful that serendipity and whim are the best paths to revenue growth. Taking any or all of these steps offers far greater likelihood of success.

  1. Emphasize Collections. Stipulating payment rates and terms in the engagement agreement and then enforcing them is the best way to maintain and increase revenues.

  2. Hire Laterals. This enables the firm to add revenue from experienced practitioners who have specifically desired skills and a strong book of business to enhance revenues immediately.

  3. Leverage Technology. By making the practice of law more efficient through time savings and efficiency at routine tasks, computer technology reduces costs, enhancing volume and revenue.

  4. Rethink Compensation. A compensation model that ties base compensation to involving other firm lawyers in legal service teams allows for blended rates that maximize profits and revenue.

  5. Outsource Functions. Engaging outside suppliers for transcription, research, document review, data entry and billing reduces cost and frees resources to focus on revenue-generating services.

  6. Raise Rates. There is no prohibition against raising rates at any time, the only ethical obligation is that legal fees be “reasonable.” A firm’s growth history, professional reputation and success, the difficulty of the matter and the sophistication of the client are among the factors that are considered in determining whether a fee is reasonable.

  7. Reduce Overhead. Money spent for space and staffing may be hard to cut, but the best way to do it is throughout the business cycle rather than waiting until income slows.

  8. Stop Discounts. Lawyers should resist client requests to discount any fee specified in the engagement agreement, and should never propose a discount themselves.

  9. Target Clients. Firms can increase revenue notably by focusing on demographics, occupation, location, financials and other characteristics of clients who provide the most desirable work.

  10. Unbundle Services. Structure a laundry list of unbundled services and fixed prices/fees to create a flexible fee structure. It’s the same model used by the airlines to enhance income.

Ed Poll is a nationally recognized coach, law firm management consultant, and author who has coached and consulted with lawyers and law firms in strategic planning, profitability analysis, and practice development for over twenty years. Ed has practiced law on all sides of the table and he now helps attorneys and law firms increase their profitability and peace of mind. He writes the LawBiz® Tips E-zine, where this post originally appeared on August 30, 2011.

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