Profitable law firm growth in a down economy.

• Author: Savarino, Julie

In this current recessionary economy, all law firms have uniquely competitive positions that potentially allow them to gain market share if appropriate actions are taken at an appropriate pace. However, firms too often are behind competitors in select areas. The key to future profitability and success is to invest strategically during down markets to keep up with and surpass competition in key markets or client segments.

What Does Not Work

There is a growth imperative in the legal marketplace. Firms that do not grow effectively (especially organically) must either die or merge. It is very hard for service businesses other than investment banks to save their way into making money. To remain profitable and grow assets, every firm and every lawyer must make strategic investments in key areas. Too many law firms pay way too much attention to the expense and cost side of the ledger and too little attention and meaningful investments on the income and assets side of the ledger. Too many firms are so tight with money and investments that they select only the cheapest options, which are not usually the best in the long run.

Based on budget constraints, too many firms hire business-development staff or assistance that are not necessarily qualified, appropriate for the position or proven in the marketplace. The tendency is to "throw a person at the problem" to complete basic marketing tasks such as seminars and newsletters. Usually the staff member has a job description that includes everything but the kitchen sink. The staff member is then buried doing lots of little things that are all over the map with no real results. This makes it tough to gain internal credibility and be truly helpful in developing business. According to studies, most marketers--for various reasons--quit or turn over after one to two years. Then, the lawyers lose whatever faith they had that marketing or business development "works" and the hiring cycle begins anew with even less consensus to invest appropriately. This cycle is an expensive and inefficient way to support strategic growth.

Too few firms and their leaders embrace the fact that the firm's most valuable assets are two categories of people: those who operate internally (lawyers, staff, suppliers, vendors, etc.) and those who reside externally (clients, contacts, prospects, referral sources, experts, alumni, etc.). All decisions should be made to nurture, grow and develop relationships with every person associated...