Everyone loves profits. Everyone loves to talk about profits per partner. We will restrain ourselves and not talk about the value of profits per partner as a metric, as hard as it is. Instead, let’s focus on how people stare endlessly at the eye-popping numbers of the top reported law firms. BTI Consulting’s analysis of more than 330 law firms reveals the firms with best profits (reported or not) exhibit the following key traits:
- Have a small number of large clients accounting for disproportionately large chunks of revenue — A small number of mega clients creates a deep understanding of each client, forces teamwork and cross-selling, generates economies of scale, and offers an opportunity to mentor junior staff on the team.
- Engage in a continuing dialogue with clients about their business even when, and especially if, there are no active matters — Dialogue drives business instead of business driving the dialogue.
- Have revenue concentrated in fewer practice areas than other law firms — These firms go narrow and deep. They don’t worry about not being in all practice areas; they worry about missing lucrative opportunities in key practices.
- Educate their clients in specific and relevant solutions designed specifically for those clients — Providing answers and solutions are worth their weight in gold and profits. These firms invest in solving problems before they get hired instead of waiting for clients to ask.
- Socialize partners to the firm throughout the year with multiple events beyond a retreat — Socialization creates the trust to make sharing work and cross-selling a natural part of daily life. Key people know each other, trust each other, and openly share.
- Deliver a more uniform client experience across practices, offices and regions — Clients see uniformity in delivery as a risk management tool and a vehicle to save time. Clients are willing to pay dearly for extra time.
- Provide a superior client experience — especially in managing changes in scope and fact patterns — Telling clients about change early in the process or when it occurs adds extraordinary value to clients. Especially when you do this all the time.
- Work with more clients who have a large number of continuing matters — Targeting clients with the most amount of continuing work allows you to sell more work to the clients with more compelling needs. This translates into a long and reliable stream of business, reducing the cost of acquisition and delivery, and demanding the ability to deliver multiple services.
Behavior drives profits. Strategy drives profits. Culture drives profits.
Rates can help but the outsized profits come from behaviors, strategies and culture. Your actions and communication, internally and externally, drive superior profit. The firms with the eye-popping profits have senior partners who live these behaviors. These actions shout to the whole firm the importance of adopting these same behaviors — whether dealing with clients or not — and drive behavior across the firm.
The more you can push the behaviors and strategy into the culture — the better your profits.
(Originally appeared on BTI’s blog, The Mad Clientist. Reprinted with permission.)