Law firms enjoying significant revenue growth share these six traits, a business strategy specialist says.
The former marketing director for the New Zealand Institute of Chartered Accountants has worked with professional services firms for the past eight years in developing business strategies.
In his work, he stumbled across results of research released last year which can particularly be applied to law firms.
The research, Growth Guide: The Business Growth, was released by Vantagepoint last year, found that 76 percent of New Zealand law firms have a desire to grow their revenue at least 10 percent in a 12 month period.
Firms that had experienced high-growth - or revenue growth of greater than 10 percent - each had six different factors prevalent in their business strategies, McDougall said.
“Of those six strategies – five of them are marketing disciplines. I think what we are seeing here, although it is somewhat unspoken, is the emergence of marketing as a strategy for growth, particularly in small to medium law firms.
“The six different factors, when you put them together, provide a very compelling argument as to why some firms are growing rapidly and why some are not.”
Six strategies of high-growth law firms
1. A deep understanding of client needs
McDougall gave the example of an accounting firm. “Clients don’t hire accountants for accounting services or tax, they hire accountants to help them grow and make more money – that is the benefit rather than the fundamental delivery of service.”
2. The training and development of staff
“Interestingly, particularly with older law firms whose partnership might be ageing, there is a disparity between the age of the lawyers, and the Generation X clients.
“It doesn’t come as a surprise but the communication difficulties and disparity between are really quite interesting.”
3. Provision of more access to senior staff
“This is more of a problem where senior staff become either inaccessible or much harder to reach.”
4. Converting sales opportunities
“That it is the use of referrals by existing clients. Also the employment of marketing and communications specialists to market the advantage of the firm.
“One of the interesting points here specific to law – as opposed to accounting, engineering or architecture - is that lawyers are more change-averse. In terms of potential sales opportunities that can be converted into revenue growth – lawyers tend to be more circumspect about this area”
5. Point of difference
“This is essentially about the marketing concept of differentiation. Why should one law firm be selected in preference to another when a client is looking to employ legal services?
“This highlights a particularly important problem with professional service firms – they are very good at telling people at what they do. They fail to tell the benefits of the service they provide.”
6. Effective marketing
“What that actually means in the development and implementation of a marketing plan and the buying into that plan by senior partners who are in a position to implement it.”
What can firms do to better their strategies?
There are a number of choices that firms have, McDougall said.
“They can consider hiring a new or younger lawyer who may also have a marketing degree.”
The second option is to allocate a partner - preferably a senior partner - who has some marketing knowledge who is prepared to champion the marketing and differentiation of the law firm, he said.
“The third thing they can do is take on board strategy or communications systems through a certain path - a strategy company, an agency, a design company that has a good strategy arm.
“The whole issue here is to make sure the strategy is competitive and differentiated before any communication actually occurs.”