Double dip, downgrades, recession, overleveraged – all ominous signs that we still have a shaky road ahead. One thing that law firms need to do to ensure that they remain steady, is to focus on profitability as well and not just revenue. Focus on profitability will ensure that the firm has enough cash flow and reserves to duke it out. Some tips on retaining and increasing profitability
- Account receivables: ensure your clients are paying on time. If you need to outsource it to your admin to follow up periodically - do it.
- Payment plans: proactively offer breakups of outstanding amounts so as allow clients to pay faster and little easier.
- Services: Review your service providers and see if there are providers without contracts or with flexible use options. This optimizes your usage and reduces overhead.
- Expenses: Look at monthly expenses and target a 2-5% decrease. Look at the best alternatives in terms of resources, services and technology.
Straight up advice form from law firm executives like Nigel Knowles, DLA Piper co-chief executive: "It's going to remain tough out there for a lot of firms that have nothing to differentiate themselves from the competition. Firms need to be either among the global elite or be a global business, otherwise they need to find a niche."
Some ways to differentiate your firm from the rest would include
- Branding: look harder at your branding and marketing material. Outside of the fact that you like it, does it reach out to your target audience?
- Fee structures: Can you provide alternatives to your clients to make services affordable. Flat fee, alternative billing will differentiate law firms while competing for business.
- Niche/ Services: Look hard at areas that are growing/ are in need based on market conditions and invest some time and effort into building long term specialized practice areas.
- Payments plans: Enough said – can never hurt. Ensure that you have a system in place to follow up periodically.
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