Surveys have identified business development as a major problem for small law firms, yet little action is taken. Here are some steps that could change that
There’s a good reason I have written extensively about why small law firms need to improve their business development acumen. Small law firm leaders themselves consistently identify growing their book of business as one of the most difficult challenges they face in their practice.
In Thomson Reuters’ recent 2020 Report on the State of U.S. Small Law Firms report, 76% of small law firm attorneys said they face at least a moderate challenge acquiring new client business — and 26% of those respondents said this posed a significant challenge.
This is not a new problem. All four prior annual State of U.S. Small Law Firms reports have identified business development as a primary problem for small law firms.
So why do we keep talking about it? Because years of recognizing the problem has not led to action from many small law firms. Fewer than 3 in 10 firms that face a challenge finding business have reported actually implementing a plan to make improvements, which also continues a trend. I addressed this lack of action a few weeks ago, encouraging small law firm leaders to not just “do something,” but do something meaningful and avoid “relative inaction.”
The need for meaningful action
The problem of relative inaction is certainly apparent in how many small law firms have approached marketing and business development. Roughly half of small law firms reported no change in their marketing investment over the past three years. Holding spending static is actually moving backwards after inflation. Moreover, simply increasing investment isn’t sufficient to ensure you’re taking meaningful action.
Meaningful action means doing a better job of reaching potential clients. Yet according to the report, roughly only one-third of small firms advertised on social media, and even fewer engaged in reputation management, online blogging, or pay-per-click advertising. These digital efforts can be thought of as ways to reach your clients where they are, i.e., online. Today’s consumer shops for nearly everything online, and there’s no reason to think their search for an attorney would be any different.
And here is where we reach a critical realization: larger players in the legal market, including larger small firms, those with closer to 30 attorneys, are far more likely to be availing themselves of online opportunities to encounter potential clients.
Why is this critical? Because the small law firm market is becoming increasingly competitive, and the lingering effects of the pandemic are likely to make that even more of a reality. While many larger firms have fared adequately during the pandemic, many more are struggling. As the changing reality of the legal marketplace shakes out over the coming months and years, there likely will be more entrants into the small law firm space as attorneys from large- and midsize law firms look for new, more independent opportunities. And many of those professionals are likely to be accustomed to online marketing, credibly leveraging their real expertise with impact.
As with so many factors in this pandemic, this is not a new phenomenon, but rather, a catalyzation of a trend that was already occurring. I know of a small law firm in the Twin Cities that was started a few years ago by three young attorneys who were looking for a different way to serve their clients. When their old firm wouldn’t change, the lawyers did. In a few short years, they’ve grown from 3 to 15 attorneys, with five paralegals and offices in two states. Today’s small law firm leaders would do well to pay attention to cases such as this as they are likely to become more common
While a cautionary tale, there is also good news.
The advantage of focusing on current clients
If you lead a small law firm today, you have an advantage over new entrants. While the new players have to start building from scratch, those already in the small firm space need simply to shift their efforts and capitalize on their existing client relationships.
Existing clients potentially hold the key to future success for small firms. Repeat client business was listed as a key factor in determining firm success by 86% of respondents to the most recent survey. And 40% of respondents said that growth in existing client relationships was a factor in the positive performance of their law firm over the prior 12 months, with 10% saying it was the most important factor.
So, how can you bring a better focus on clients in a way that will help drive business? One option we’ve already mentioned is reaching your potential clients where they are. Now is an ideal time to focus on building a meaningful online presence — a robust web platform, a social media presence, targeted advertising, and possibly more — so clients can find you and you can connect with them.
The best part is, if properly executed, these types of improvements can actually lower your marketing spend while improving the return on your investment.
Another possibility involves improving the way in which you interface with your clients. Only about 25% of small law firms currently use any sort of client intake technology. Even fewer (12%), report using client portal tools or customer relationship management technology. And while few small law firms use these types of technology today, fewer than 3% planned to adopt any of these technologies in the near future. For clients that are used to being able to conduct a large share of their life from their smart phones, these gaps could be seen as impediments to an easy experience.
Overall, small law firms have a tremendous opportunity to offer something meaningful to clients that very few peer firms offer, which is always a competitive advantage. What’s more, each of these solutions, when implemented correctly, provide another valuable asset to the firm — customer insights in the form of data. More information equals more decision-making power, and your firm can learn more about who your customers are, what they need, and perhaps most importantly, how to reach them.
In an age where “data-driven decision making” is not just a set of buzzwords but a critical business strategy, technology solutions that provide that kind of data while addressing other problems as well, should merit strong consideration.
Clearly, 2020 has catalyzed change in many things. Hopefully, meaningful action on improving small law firm business development will join that important list.