PHIL’S CORNER: What Differentiates Successful Law Firms
Phil’s Corner is a special column from OAMIC’s President & CEO Phil Fraim that is sent in our e-newsletter each month.
Have you ever thought about attempting to map out a strategy to achieve guaranteed year-over-year revenue growth for the firm? Maybe you’ve actually considered ways to attract additional clients to the firm. We read about the increasing need for people and companies who struggle to solve their legal problems. At the same time, a good number of law firms fail to achieve the growth they desire. How is it that both of these factors co-exist? Successful firms seem to continue to find ways to grow in spite of traditional and non-traditional competition, e.g., Legal Zoom and others.
From my vantage point, the firm that achieves success is good at executing strategy, is efficient in its efforts in providing legal services, focuses on improving client experiences, and sticks to its knitting. What is involved in each of these components?
Strategies are not guaranteed to achieve success, but without one we can pretty much rest assured what is guaranteed. None of us operates in a vacuum and because of that, competition and unforeseen circumstances impact our success, especially in the short-term. Normally there are not many voids in a specific market, but there are areas where there may be more opportunities. You can also create opportunities by doing what you do better than others in your market. I would contend this involves not trying to be everything to everybody, which brings us to “sticking to your knitting.”
A number of years ago a very well-known and highly successful “named underwriter” with a Lloyds of London reinsurance syndicate, advised me to make sure that we stick to our knitting. I asked him what that meant in his mind. He said to look closely at our mission and to know, or grasp, what we do best. Then, understand how our insured/clients perceive us and what they look for us to provide. I asked if that meant never expanding or adding an additional product or service. He said no, but to make sure it dove-tailed with our primary focus and that it did not greatly expose our capital base.
How does the above translate within a law firm? Examine what you like to do, create your mission statement, and out of that your brand. Make sure your clients have a positive experience working with the firm. I realize it is easy to make that statement, but how or where does the rubber meet the road in accomplishing this effort? Without a doubt, there are some people whom nobody can satisfy or make happy. Note to self: stay away from these folks while doing client selection. (You can begin to identify them from the fact they have engaged multiple lawyers, none of whom were any good, in their minds.)
This may seem simplistic, but I think positive client experience starts with responsiveness and good communication. Client satisfaction is very difficult to measure and requires feedback. A viable metric is client retention, and in the case of a law firm client, it would probably be best evidenced by the client returning and requesting additional legal services. A law firm that answers the phone but does not return the call is failing at client communication.
Poor client communication, aka client dissatisfaction, accounts for approximately 15% -16% of legal malpractice claims. Allegations include failing to follow client requests, failure to explain options, and failure to provide details involving the law. So how do you assure not stepping into these traps? I recommend thinking of yourself as the client and then asking what you would want to know and how you would like to be told. You are the captain of the ship, but a good captain does listen. An older lawyer once told me that he had become a better lawyer by becoming a much better listener. He always had a tendency to want to instruct and explain, but the critical part of improving his skill set was listening to what the client was asking or desiring.
I have a friend who is a retired doctor and even though he is retired from practice, he still teaches a class at medical school. When he told me the name of the class, I had to ask what that entailed. He told me it was basically teaching doctors bedside manners. How are your bedside manners? I can promise you that if I went to ten clients of one of our highly successful insured lawyers, I would find nine or even ten of those clients who would say, “She treats me as if I am important and that my case matters.” It may seem like a little thing, but it is huge when someone is considering to whom they will entrust their business and their legal matters.
There are a couple of important metrics in which I would think a high score correlates with a successful firm. One is “Utilization”, or the number of hours billed within a given day. The other is “Collections”, or the amount a firm collects compared to the amount invoiced. Obviously, the metrics are more difficult to measure in firms that work totally from a contingency basis, but even then, there are measurables. It is all about getting more out of your work.
A firm can leverage fees from bringing in additional lawyers. However, the firms that truly grow bring in more business, while at the same time increasing the capacity per lawyer of both revenues per matter and collectability of billings. Poor collections and, ultimately, fee disputes that arise are often the consequences of bad billing and/or collection efforts. Periodic billing and collection efforts improve the outcome. All of us can pay small incremental billings easier than one very large one. This is especially true if the outcome is not exactly what the client desired or expected.
Lastly, I want to note what should be an obvious fact: A law firm is a business. Yet, often lawyers don’t install good business practices within the firm. I realize not everyone becomes a lawyer to be and act like a businessperson. But without solid business procedures, lawyers will not provide as much in the way of legal services, nor be as successful in so doing. There is no doubt that successful, efficiently run law firms have lawyers who are engaged in the business aspects of running the firm.
I always tell lawyer groups that I am never going to tell them how to practice law. There are enough people in a lawyer’s life telling them those things. Plus, if I did, I would be at risk of someone saying, “Stay in your lane, Bro!” But, I do see many things that get lawyers in trouble, as well as things that help lawyers become successful. As your professional liability insurer, we are usually focused on helping lawyers avoid those troublesome areas, but I hope these observations on more positive attributes help add to your success.
Until next time,