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Adapting your firm during periods of low client retention and cash flow

In times of low client retention and cash flow, law firms must adopt innovative and cost-effective strategies to boost revenue and client acquisition, writes Amanda Little.

user iconAmanda Little • 22 July 2024 • SME Law
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In times of economic downturn or reduced client retention due to financial stress, law firms can face significant challenges in maintaining steady cash flow. During this period, it is essential that firms (no matter the size) seize the opportunity to take the quiet time to reconsider their business models and their marketing and branding campaigns and pivot to achieve greater results with less spend. By doing this, a firm can decrease its outgoing and increase its incomings, equally more profit in a harder environment.

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With such strategic measures employed to increase revenue and client uptake, firms will see a greater uptake and client retention without necessitating substantial financial outlay.

Here are five key ways law firms can pivot effectively during such periods:

  1. Leveraging existing client relationships
One of the most cost-effective strategies is to focus on nurturing and leveraging existing client relationships. Law firms should prioritise regular check-ins and personalised communications with current clients to understand their evolving needs and offer tailored legal solutions. Satisfied clients are more likely to return for future services and refer others.

This can be done through regular telephone and email check-ins with clients while the matter is ongoing.

All firms should also implement a client feedback system (I recommend it is anonymous for true feedback), which will provide valuable insights into improving service delivery and client satisfaction both during and after the completion of a matter.

Further, interview your clients on the way out (either if they leave the firm, or the matter is complete) to find out what your firm did well and what the firm can improve on and ask them for their suggestions for service delivery improvements.

The key is to increase client satisfaction, retention, and thus future referrals, through improving service within the firm. Take this data and implement change within the firm to create a better customer experience.

  1. Enhancing online presence and digital marketing through a long-term game plan
A robust online presence is essential for attracting new clients without significant expenditure. Law firms should optimise their websites for search engines (SEO) to ensure they appear prominently in search results organically.

Money spent on organic ranking is a far better long-term investment than paid campaigns. Many firms get stuck in the circle of paying for leads for work now, without considering their long-term strategy, thus neglecting the future of the firm.

Additionally, engaging in content marketing by regularly publishing blogs, articles, and legal insights can establish the firm as a thought leader in the industry. Social media platforms provide a free or low-cost way to connect with a broader audience and showcase the firm’s expertise.

Ensure your employees are meeting the business development key performance indicators (KPIs) and tie this directly into their role so that everyone shares the burden of content development.

  1. Offering free workshops and webinars to your ‘ideal clients’
Hosting free workshops and webinars on relevant legal topics can attract potential clients and demonstrate the firm’s value. For personal services, find out what your clients want to know about and give them just enough for them to know you know your stuff, but not to do it themselves! There is a fine balance between showing that you’re an expert and providing too much information.

For B2B relationships, deliver online seminars on interesting, complex topics associated with the interplay with your colleagues. It is better to have only a handful of the right attendees than a mass of a few hundred people who are unlikely to send you referrals or engage you for your expertise.

These events can be marketed through the firm’s website, social media, and email newsletters to reach a wide audience.

By providing valuable information and practical advice, law firms can build trust and position themselves as experts, making attendees more likely to seek paid services in the future or refer your ideal clients to you.

  1. Cross-selling and upselling services
Law firms can increase revenue by cross-selling and upselling services to existing clients. This involves identifying opportunities where clients may benefit from additional or more comprehensive legal services.

Training staff to recognise and suggest these opportunities can lead to increased client engagement and higher revenue per client. To do this, your firm’s “intake” staff should be trained in all areas of law the firm offers, to identify the primary area at the initial intake and then to harness the residual of the firm’s expertise to benefit the client from the outset.

In a multi-jurisdictional practice, this becomes an easier task. For example, a client attends for family law advice – thus triggering advice about tax implications of the property settlement and estate planning documentation. A firm may want to bring in other experts from the firm into the initial consultation as part of that process.

Create warm referral networks within your firm to encourage client retention and, thus, spending.

  1. Leveraging technology and AI
Embracing technology and artificial intelligence (AI) can significantly streamline operations and reduce costs. Law firms can use AI-driven tools for document review, legal research, and case management, freeing lawyers to focus on more complex tasks.

It also will free lawyers to focus on the business of doing business, thus increasing revenue for the firm and overall profit.

With the emergence of brilliant and dedicated legal AI tech in bespoke areas of practice, the sky’s the limit, and firms that join the movement will feel the benefit first.

Considering all the above, in times of low client retention and cash flow, law firms must adopt innovative and cost-effective strategies to boost revenue and client acquisition. By focusing on existing client relationships, enhancing digital marketing efforts, offering free educational events, cross-selling services, and implementing technology, law firms can navigate challenging economic conditions and emerge stronger. These strategies not only help in immediate revenue generation but also lay the foundation for sustained growth and client loyalty in the long term.

Amanda Little is the managing director of ALA Law (Amanda Little & Associates) and chief executive of the Family Law Education Network of Australia.

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