Growing a law firm past seven figures is not for everyone. Many people are content with running a comfortable solo practice and that is totally ok for them.
But some practice owners want more.
Whether it’s for lifestyle reasons, the rewarding work of building a team and providing for them, or to have a sellable practice that you can retire on, some law firm owners decide that running a solo practice isn’t for them.
If this is your goal, you’ve got your work cut out for you.
Many people know the hard numbers that 9/10 small businesses (law firms included) will fail. Recent research points to this number being closer to 5/10, but the fact remains that it’s an accomplishment merely to stay in business.
A lesser known fact to the aspiring mogul is that a vanishingly small amount of small businesses make it past the seven figure mark. According to research, less than 5% of businesses ever reach this point.
At CaseFuel, we’ve spoken to literally hundreds of law firm owners ranging from solos starting out to massively successful firms. We’ve even been lucky enough to work with some of these and be a key driver for practice growth.
Success leaves clues, and after speaking to enough practice owners we’ve found the following commonalities among practice owners that reached the promised land of 7 figure annual revenues. Let’s get started
1. Know your numbers
Focusing on objective measures to your business is one of those truisms that’s trotted out by many but implemented by few. Sure, we all check bank account balances and see a profit and loss sheet at least once a year when we file taxes, but the firms that grow know a lot more than that.
Let’s start with goal setting – what does running a million dollar practice really look like?
Taking $1,000,000 and dividing it into 12 months gives us the delightfully abstract figure of $83,333.33. If your goal is to hit seven figures and your monthly billings last year weren’t there, you’ve got some work to do.
Going a step deeper, fast growing firms are able to easily convert this into case files required by getting their average case value. Let’s say you run a family law practice and made $30,000 last month on 6 new cases. Doing some quick napkin math we arrive at an average case value of $5,000.
If 7 figures is the goal, you now have the much more tangible figure of 11 cases (($83,333.33-30,000)/5000, rounded up) to hit for that seven figure monthly run rate.
How many of these can you expect from referrals next month? What events do you have planned and how have they performed historically? What cases are you getting from your website? These are the questions top firms are asking themselves to get a clear picture of where to focus their attention when they hear the alarm tomorrow morning.
This may sound simple to the point of uselessness but the reality is putting tangible figures creates clarity. This in turn reduces paralysis, the main factor keeping most practices stuck, which is easy to run into when looking at a huge, seemingly insurmountable goal like adding hundreds of thousands in revenue to your practice.
By breaking things down into manageable chunks, you’re setting yourself up for incremental gains that will result in real money in your checking account regardless of whether you make seven figures this year or not. And that’s worth investing time into.
2. Focus on predictable and scalable channels
A corollary to knowing your numbers is working with channels in which numbers are knowable. This introduces a challenge for law firms in particular because of the overwhelming dependence on referrals when starting out.
Referrals are great. Having a potential client come to you from a previous client or colleague will make for the easiest case files you’ll ever post because you come recommended. There’s no need to qualify yourself as the right attorney for the job because the alternative of finding an attorney on your own is scary to the average Joe.
But tell me, how many referrals are you going to get in the next month?
Not a single business owner in the law or otherwise is going to be able to answer that question. Referrals are reactive in nature and you can’t predict who is going to need a divorce, get hit by a car or have a loved one’s estate to settle in the world of your referral partners.
Moreover, the effort to sustain referrals as a channel plants the seeds of its own destruction. Staying top of mind is absolutely key for referrals, and when you’re working cases you start missing BNI meetings and state bar happy hours which will lead to your referrals drying up.
This is fine for the firm that’s content to be solo indefinitely. But if you want your firm to be posting more business this month than last, you need something predictable.
In our world of search engine marketing, we can easily look up the number of people searching for ‘divorce lawyer + CITY’ in a given month, usually numbering in the thousands. But it could also be hosting workshops, doing lunch and learns with captive audiences (like retirement homes for elder law attorneys) or getting a budget together on a platform like avvo.
Once you get a scalable channel locked in, it’s a matter of how much you want to keep investing to keep the leads coming in. Going back to the last point, you should have a cost per case file for any predictable channel you have for a decent amount of time. When you come across a whale of a case, you can choose where to invest that money to get the highest return if growth is your goal.
What’s more – getting these channels in place actually INCREASES your referrals by the virtue of clients coming in with a completely new network of their own. After some time you can be getting more referrals than you thought possible without having to wake up at 5AM to take a train into the city for your local breakfast event.
3. Owning intake
I recently did a fascinating interview with the owner of Intake Conversion Experts, Gary Falkowitz on our podcast. After working with law firms all over the country he’s come to the conclusion that firms are leaving millions of dollars of cases on the table by not focusing on intake.
In one instance, his company was able to help a firm post 200 new case files from leads that hadn’t been contacted in over 9 months. To think that this was accomplished on the coldest of cold cases paints a frightening picture of what could be possible for following up on people that may have not received a timely call back or follow up after an initial consultation.
With the amount of money being made on legal services, it’s possible to turn a profit with considerable slack in the follow up process. An interesting fact from the business world at large is that the top compensated person aside from the CEO in most cases is the person handling sales. In law firms, the person handling sales is typically the lowest compensated person working at the front desk.
While we have worked with some fantastic front office people and services, there are certainly those out there that are losing out on potential case files due to manner on the phone, slow time to call back missed calls or lack of follow up on ‘maybes’ and appointments set.
Putting this into numbers, we’ve seen firms with the best intake booking 20% of inbound leads from the internet into case files. Going to this from a strong average of 10% will result in twice as many case files posted with no change in existing spend or marketing activity.
Does your firm have 20 minutes a day to pick up another case file per week?
If you’re committed to growing a practice, the answer is probably yes. Looking at your calendar it might seem like a no brainer but in practice this can be a challenging and emotionally taxing ordeal.
4. Committing to success
Let’s be honest, calling back a missed number or following up with someone who said ‘not right now’ is going to be a less pleasant conversation than calling back a hot referral. This is one of the major reasons firms trying out new marketing channels slide back to networking after a few months.
The worst case scenario of a result like this is walking away thinking ‘marketing doesn’t work’. These firms get back on the networking treadmill and stay on flat or modest growth until they decide to take another shot.
But for the reasons we’ve outlined before, it’s almost impossible to predictably grow like this. If you’re committed to growing, you need to commit to ownership of the results you’re getting from new channels. In almost every city and practice area in the country, there are people posting case files from these channels, so the onus falls on you if they’re getting results where you aren’t.
Commitment is the difference between the client of ours that has been posting multiple high value personal injury cases per month for the last 3 years and the one the next town over that insisted that online marketing was impossible to build a business on after 2 months. Both of them were getting similar lead volumes and levels of qualification. The first was focusing on the 20% that closed, treated every case as a potential opportunity and did their best to follow up; the second was focused on the 80% that didn’t, took their negative expectations into their calls and didn’t post a single case.
The reality is we’re living in a time where law practices are abundant. Another gem from Gary Falkowitz is assuming that the client calling you cold spoke to an attorney before you and will speak to an attorney after you. This holds whether the client is coming from google, avvo or recommendations from your local bar.
This doesn’t mean you should give up, it means there’s even more business for the firm that can separate themselves from the pack with attention to clients and diligent follow up.
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So there you have it. If you’re committed to growing and can internalize these practices, you’re well on your way to having the tools you need to grow your firm. Regardless of what channels you go with, these are the keys that will keep your eye on the ball and provide metrics to move forward.
If you’re interested on the process we use to generate case files for growing practices all over the country, feel free to drop a line over at casefuel.com
For more information like this, check out our podcast for interviews with top experts in your ear buds every week.
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