Law Practice Matters

How Many Does It Take…

Sounds like a lead in to a lawyer joke.  You know, like, how many lawyers does it take to screw in a light bulb?  9 — 1 to screw in the light bulb and 8 to file objections to discovery requests.  Or whatever, you get the idea.

In this case however, the question posed is how many referral sources does it take to build a referral-based law practice?  Or put another way, how many people have to send you business regularly enough to [insert goal here:  make partner, cut your Yellow Pages ad, pay off the leg breakers from Sallie Mae, etc.]?

Unfortunately for you, I don’t know the answer to the question.  If you feel cheated by reading this far and not getting an answer you like, you can use the answer “10″ if it makes you feel any better.

If you are still reading, here’s why I don’t know.  Your number depends on a lot of factors, such as whether you take big cases or handle smaller matters and if you practice in an area of the law that affects (effects?  I never remember the difference…) lots of people (divorce, traffic tickets) or just a few (say, start-up chamber music group law).

The good news is that you can, and really should, figure this number out for yourself.  Here’s how:  assuming you have been in practice for a few months or longer, you should have already had some clients.

1) Start by analyzing how many billable revenues you realize (which is to say, collect in your hot little hand as opposed to bill and then never see) from an average case.

I know, I know, all of your cases are unique snowflakes and there is no average and yada yada yada.  I know the average isn’t going to perfect, it’s going to be average.  Just do it.

2) Now, assuming you have already received some referrals of clients in the past, review the referral sources for those clients.  Did they all come from one person or lots of different people?  Now, pick a period of time — say, a year — and take your best referral source (the person who has sent you the most paying clients over that period of time) and figure out how many cases it is possible to receive from a decent referral source in a year.

3) Multiply the value of your average case by the number of referrals you can get from a good referral source.  This is the economic value of a good referral source over the course of a year.

4) Finally, take your annual revenue goal and divide it by the economic value of a single good referral source. That’s how many referral sources you need to have an entirely referral-based law practice.

Here’s the math for Hypothetical Larry the Lawyer:

1) Larry’s average case (divorce lawyer) is worth $5,000.

2) Larry’s best referral source refers 2 cases per year to Larry.

3) A good referral source for Larry is worth $10,000 (per year).

4) Larry’s annual revenue goal is $150,000.  $150,000 revenues/$10,000 referral source = Larry needs 15 very good referral sources to a completely referral based practice.

Simple, but not by any means easy.  If you don’t have enough data to complete the calculation, just start tracking it now.

There’s not a lot of magic in this, but it does lay plain a couple of things.

First, if you want to build a successful private law practice, you need people to make referrals to you.  Purchasing new clients through advertising is just too expensive for most lawyers.

Second, not all referral sources are created equal.  Some folks will be able (and willing) to send you tons of business by virtue of robust personal or professional networks.  Good examples of this are real estate developers who send all the house closings from a new development to one real estate lawyer or marriage counselors who send all the divorcing couples they can’t help to one family lawyer.  You’ve got to find those super-referrers for your own practice.

Last, building a referral based law practice is do-able.  It is not magic or unknowable, it is a very straightforward data calculation.  The day that an attorney has a totally referral based practice is his or her own personal Independence Day.   Whatever and wherever you want to do and go in the practice of law, whether you dream of virtual office where you can work in your pajamas or a corner office in a sky scraper representing the Fortune 50, building a private law practice successfully all comes down to portable business.  And portable business all comes down to referrals.  And referrals all comes down to finding out your number and building your base.

Or you can just pick “10″.

Posted in Marketing | 3 Comments »

Build a Web Site… Or Else (Part 1)

Why do I picture Clint Eastwood when I read that headline?

That ultimatum comes to you courtesy of Law.com’s Small Firm Business section.  The article, written by Judith Roland, advises that “like it or not a web presence has become imperative for a successful law practice.”

I agree with the underlying premise of the article (that a web presence has become a given — tablestakes, as it were — in marketing a law firm) but the author doesn’t go quite far enough in her advice. Admittedly, if she did, most lawyers would probably stop reading and move on to something easier.

Most lawyers I meet know that they need a web presence to market their law practice.  What they don’t know is that establishing a “brochure” website (basically, a simple website that contains the same information as one might find on a tri-fold brochure — sidebar, get rid of your tri-fold brochures — marketing a law firm.  Typically, who we are, what we do, where to contact us.) is no better than not having a website at all.

In fairness to Ms. Roland, you’ve got to walk before you can run, and there is not a lot of point in discussing the do’s and don’ts of law firm web design with a lawyer who doesn’t yet acknowledge that he needs a website.  That said, lawyers considering building a web presence need to know that the internet is about a million times more cluttered than a typical Yellow Pages, and we all know how easy it is for an ad to stand out in that environment.  (Sidebar:  stop buying Yellow Pages ads.)

What you’ve gotta know in addition to the fact that you need a website is:

1. You need your website to findable.
2. Your website needs to be sticky to remain front of mind in your visitors’ heads.

As you might expect, neither of these things is particularly easy to accomplish.  The first requires significant technical expertise and the second requires marketing acumen.  But just because they are hard to do does not mean that they aren’t worth doing.  On the contrary, if a lawyer is not going to put in the time, money and elbow grease to make a firm website that is findable and “sticky”, I would strenuously argue (a phrase which sounds like I am channeling Demi Moore in A Few Good Men — “your Honor, I strenuously object!) that a lawyer is better off saving her hard-earned dough and forsaking a website altogether in favor of other marketing efforts that will yield a better ROI.

Websites are not an end in and of themselves — well, maybe they are for web design companies, but not for the lawyers that hire them.  Websites, like all other marketing efforts, need to translate into revenue, preferably in as few steps as possible.  Far too many lawyers are mis-spending thousands of dollars for pretty brochure websites that are hard to find and don’t offer anything more to visitors (potential clients, that is) than a smiling picture, a phone number and invariably a promise that in law firm X clients come first.

Don’t get me wrong, there’s nothing wrong with pretty websites, it’s just that pretty websites that aren’t findable and aren’t sticky don’t make you any more money.  Which, I blithely assume, is the reason you are marketing your law firm in the first place.

In the next two parts of this three part article I’ll discuss findability and stickiness.  That way when you decide that it is time to pull the trigger on a website (or a website redesign) you’ll know the issues and won’t get stuck paying $7,000 for a pretty tri-fold brochure that happens to live on the web.

And that should make your day.

Posted in Marketing | No Comments »

Practicing Law in a Small Town

I got the opportunity to head up to Pilot Mountain, North Carolina today to meet with some lawyers and talk about the law practice management issues facing solo practitioners and small firm lawyers in rural areas. (The photo was not taken by me, I stupidly forgot my camera, but the mountain was too interesting looking not to share.)

Living in Chapel Hill and working in Cary, it would be easy to forget that most of the lawyers in North Carolina are on their own or in firms smaller than 5 lawyers, and most of them practice in towns a lot more like tiny Pilot Mountain than big, sprawling Raleigh.  Even though in many ways the practice of law is different in a small town than a big city, a lot of the issues facing small town lawyers are the same as those facing their colleagues in more urban areas:  understanding and using new web-based marketing opportunities, facing increased competition for business, finding efficiencies in management systems to keep overhead down and the bottom line healthy.

It’s a tough job; these folks have to do all the same stuff that a big corporate law firm does (market, sell, deliver legal services, professional development, administrivia, etc, etc) with only a fraction of the staff that a big firm has.  On the plus side though, these small firms and solo practices are quick and nimble decision makers.  They have freedom and flexibility in how to run their practices that big firm lawyers can only dream about.  Not to mention the lack of long, pointless meetings…  It can be a nice way to practice.

Anyway, I had a great time getting to know those folks and look forward to being back in Surry County again soon.

Posted in North Carolina | 2 Comments »