Who DOESN’T want to make more money these days? Short of ramping up your billing rates, here are some some not-so-obvious ways to increase your law firm’s revenue stream. We’ve gathered this information from prior experience, original research, and responses from profitable solo, small, and mid-sized 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 over ten 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 paperless office boosts law firm revenue by cutting costs on supplies, storage, labor, rental space, equipment, and so on. Although these savings speak more to profit, the improved efficiency and time savings can result in increased opportunities in marketing and networking to land clients and boost revenue.
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 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. Delaying your 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. Late bills are often challenged and chopped and less cash flow results in lost opportunities to invest in efforts to help your firm grow.
5. Leverage Paralegals – Hire paralegals to perform billable work that you routinely do and can offload. This can free up your time to work on matters with high billing rates and 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 Home Offices and/or Co-Working Spaces – Home offices have become quite popular in the age of COVID due to social distancing and the cheaper (read: zero) rent overhead. Co-working spaces give you the ability to keep costs down while giving you the added benefit of networking. They will also give you a location to meet clients face-to-face without having to host them in your home.
9. Transparent Client Communications – Be upfront 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, thus increasing your law firm revenue.
10. Pivot Your Practice to Current Issues – Is your current practice area becoming irrelevant or less lucrative? Maybe it’s time to add an area of specialty 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 eBook, or start a legal blog in your niche.
12. Sales – Marketing, sure. But, sales? Many old-guard firms have long viewed marketing with disdain. Imagine how they consider sales. But the inevitable evolution of legal marketing is toward legal sales. 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.'”
13. Hire a Virtual Assistant– Virtual assistants can do wonders for your firm’s bottom line. Companies such as Smith.ai can help answer and route phone calls, website chats, text messages, facebook messages, and more. With someone manning your communications 24/7, You’ll never miss out on a potential client again.
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. Check out sites such as LAWCLERK where you can hire virtual associates and vetted freelance lawyers.
15. Improve your Intake Process – Why does the number of cases a firm accepts 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 law firm 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 can increase your law firm 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.