Top 10 lists have long been a journalistic staple, but their ongoing role on David Letterman's show has made their use almost a cliché. Even so, a concise ranking can combine the value of focus with brevity. And there is nothing on which any business, including a law firm, should be more focused than increasing revenues.
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 to increase its revenues will wind up with a practice reflecting whatever walks in the door, which is not the best path to revenue growth. Taking any or all of these top 10 steps offers a far greater likelihood of success.
- Emphasize collections. Stipulating payment rates and terms in the engagement agreement and then enforcing them is the best way to maintain and increase revenues. Keep track of when clients are behind, and be firm in requesting payment.
- 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 without spending large sums on lawyer training and business development.
- Leverage technology. By making the practice of law more efficient through time savings and efficiency at routine tasks, technology makes it possible to provide legal services at a lower price with higher volume without reducing the lawyers' per unit fees.
- Rethink compensation. A compensation model that ties base compensation to involving other lawyers in legal service teams allows for blended high and low rates that best support maximizing both revenue and profitability.
- Outsource functions. Engaging outside suppliers for transcription, research, document review, data entry and billing reduces cost and frees resources to focus on services with higher revenue potential. Smaller firms can use virtual assistants and paralegals as another outsourcing solution with the same leveraging effect.
- 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, and cost structure all can be assessed to support a fee increase.
- 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.
- Stop discounts. Lawyers should resist client requests to discount any fee specified in the engagement agreement and should never propose a discount themselves.
- 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, and it makes particular sense for smaller firms that can use it as a marketing differentiator.
- Target clients. Firms can notably increase revenue by focusing on demographics, occupation, location, financials and other characteristics of clients who provide the most desirable work. Be sure to include existing clients in the mix, especially the heavy hitters. Getting more work from your largest clients enhances revenues like no other strategy.
