We’ve discussed how to determine your firm’s revenue capacity, identify gaps, and measure and predict revenue. Here, we’ll talk about some not so obvious ways (ramping up billing rates being the most obvious) to increase your firm’s revenue stream. This information was gathered from experience at a mid-size firm, original research, and reaching out to solos and small and mid-size firms.
1. Use law practice management software – Don’t leave money on the table with lost billable time by relying on your memory when sitting down at the end of the day or week to enter time. Track and easily capture time using practice management software. For instance, Rocket Matter offers Bill As You Work™ technology with 9 different ways to capture time. Let’s say you work 5 days a week for 49 weeks. The other three weeks are spent disconnected, relaxing, and getting rejuvenated. Obviously. If you bill at $300 an hour and forgot just 15 minutes a day working on client matters, you’re missing out on $18K for the year.
2. Go paperless – Moving to a less paper office saves the firm money by cutting costs on supplies, storage, labor, rental space, equipment, and so on. Although these savings speak more to profit, the improved efficiency and timed saved can result in increased opportunities in marketing and networking to land clients and boost revenue.
RELATED: The Paperless Law Office E-Book
3. Optimize billing realization rates – Realization rate is the percentage of recorded billable time that gets billed to clients. The amount that is not billed to clients is often written off by law firms for many reasons, including time spent on projects, issues, and less than optimal practices that cannot be justified to the client. Firms should try to achieve the historical realization rates of 90 and 95 percent.
4. Bill on Time – Tracking time and achieving an optimal billing realization rate is important, but what matters most is how much you collect. And delaying billing is the biggest culprit. It’s like giving away free money. By not sending your bills out on time you are essentially offering interest-free financing and performing your services at a discount. Less cash flow results in lost opportunity to invest in efforts to help your firm grow. Late bills are often challenged and chopped. See more: Law Firm Growth Manual Volume 2: Better Billing Practices.
5. Leverage Paralegals – Hire paralegals to perform billable work that you routinely do and can offload. This frees up your time to work on matters with a higher billing rate and to create opportunities for new clients. This is particularly significant as more states allow paralegals to do work traditionally handled by attorneys. The legal profession’s “nurse practitioner.”
6. Use a variety of fee structures – Flat Fee or Hourly Billing? Retainers? What about Contingency? No one billing method fits all situations and an imbalance can cause a cash-flow dilemma. Be aware of the different types of fee agreements and understand them thoroughly in order to effectively explore the options and select one that best fits each situation. Remember to be clear with the client about which fee structure you’re using to avoid surprises, delays and write-offs.
7. Fire clients – More clients do not always result in higher revenue. Working for a nonpaying or particularly unreasonable client will take up too much of your time and prevent you from landing or accepting a lucrative case. Firing a client is especially difficult for new operations but it’s essential. See: Protecting Your Bottom Line: Choosing Clients.
8. Consider coworking spaces – Avoid high rents and zero flexibility by considering a co-working space. Rents are much cheaper which increases your profit margin. And you’ll have the added benefit of networking opportunities right outside your door, a potential for new clients and revenue. Check out: Could Coworking Be An Option For Your Practice?
9. Transparent client communications – Be up front and clear about your service, process, and fees during client intake and throughout your handling of the matter. This creates realistic expectations and less haggling over unanticipated bills.
10. Practice area pivot to current issues – Is your current practice area becoming irrelevant or less lucrative? Maybe it’s time to add an area of speciality covering issues that are hot. Like cannabis law as more states legalize marijuana, or same-sex marriage-and divorce, which may soon become the law of the nation.
11. Marketing – Marketing’s barrier to entry is lower than it’s ever been. Anyone with access to a laptop can create Google ads, social media promotions, and YouTube videos. But go beyond the usual, to the not-so-obvious. Host a webinar, write an E-Book. Get exposure by recording a CLE session for a national provider.
12. Sales – Marketing, sure. But, sales? Many old-guard firms have long viewed marketing with disdain. Imagine how they consider sales. But, Jordan Furlong notes that the inevitable evolution of legal marketing is toward legal sales. Jordan continues, “Sales consulting already takes place now, although it operates under the pseudonym “business development,” because lawyers can’t bear to use such a lowbrow and unsophisticated word as ‘sales.'” See: Law Firm Sales: Solution Selling for Legal Services.
13. Get CLE accredited – Wait, what? Yes, it works. I was involved with a CLE accreditation initiative at a law firm and it proved very effective in attracting potential clients and referrals. Put on a conference, webinar, or series of events around your niche practice and offer attendees CLE credit in your jurisdiction.
14. Use Freelance attorneys – One of the biggest expenses in law firms is payroll. Small firms can avoid turning down work – and revenue – by employing freelance attorneys on an as-needed basis.
15. Improve your intake process – Why does the number of cases a firm accept decline even though business leads increase? It’s due to the lack of a sound client intake process. Improve the intake process, take on more cases, and increase revenue. For an excellent discussion, see: Best Practices for Effective Law Firm Client Intake.
16. Apply “Lean” and “Agile” concepts – Lean thinking, popularized by Eric Ries’s “The Lean Startup,” has extended to the legal profession. It embraces the principles of cutting waste, testing, and iterating. Together with Agile methodology, which includes Kanban boards, law firms can increase transparency, accountability, and productivity. This allow firms to identify bottlenecks and resolve them, and results in increased efficiency with more time for landing new clients.
Sure, raising billing rates increases revenue but it can also alienate some clients. Try some of these alternatives to ramp up revenue at your firm and you’ll get the added benefit of improved processes, productivity, and accountability.