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Improving Profits
by Barbara Lewis MBA and Dan Otto MBA

 This recessive economy has caused some law firms to lose revenues and profits.  If  your firm is in this position, you should perform a financial diagnostic of your revenues and expenses.  Each line item of expenses should be reviewed to ensure that the expense is a necessary expenditure that cannot be eliminated. 

 Compare your expenses to the average expenses of law firms your size.  For example, your rent should be only ten percent of your expenses. 

Expenses that we’ve seen out of line include delivery services, dues and subscriptions, and supplies.  Use mail, rather than more expensive delivery services; examine your dues for organizations whose meetings you don’t attend and your subscriptions for publications that you don’t read.  And monitor your supplies, which are sometimes depleted around back-to-school time.

On the other side of the equation is the revenue.  To increase revenues you should have a good marketing plan that’s properly implemented.  Review your historical success to highlight future avenues of marketing.  Develop an action plan and spend, at least, 15 to 20 percent of your time on marketing.

Marketing is segmented into relationship and reputation.  Relationship is the one-on-one marketing that you do by having breakfast/lunch/dinner with individuals or inviting them to a sporting/social/arts event. 

Reputation marketing is writing for industry publications and speaking at industry organizations and associations.  Articles and speeches enhance your credibility when you meet the individuals who can use your services  or refer work to you.

Carefully select the individuals to whom you market.  Don’t waste time with people who can’t use your services or don’t make the decision on engaging you.  Determine who refers you business and focus on those people and their industry.  If the majority of your business is referred by other attorneys, then market to attorneys; on the other hand, if your clients are referred by insurance brokers, then they should be the focus of your marketing efforts. 

In the uncertain months ahead, now is the time to evaluate your business to ensure that it’s efficient and generating optimal profit for you.  Please let us know if you’d like our assistance. 

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