Improving productivity and profitability is key to your law firm’s success. It’s even more critical than before as we all try to deal with the impact of the Covid-19 pandemic on the legal industry. A productive and more profitable legal practice has the necessary resources to offer better services, pay its employees and partners, and attract top talent.
Maximizing profits requires effort, but the approach is simple; you must make more money than you spend on operational and overhead costs. This article will discuss business tips to enhance your legal firms’ productivity, boost revenue, and earn reasonable profits.
Difference Between Revenue and Profitability
While revenue is vital for your business’s success, it’s not like profitability. Meaning increasing your legal firm revenues is a significant step, but you must also increase your net profits for your business to be considered successful.
Consider a case scenario where you earn more revenues by offering your services to numerous clients. However, the operating expenses of handling every client are incredibly high, this lowers your profit margin. So, what’s the best solution in such a scenario? To raise your profit margin, you must find a balance between increasing revenues and lowering the administrative and overhead costs.
To remain profitable, ensure that all your efforts generate a decent return on investment. If not, you must adjust accordingly by enhancing your legal firm’s collection rate, billing, and operational processes. In addition, ensure that you remain focused on your company’s goals.
Improving Productivity and Profitability
- Use Legal Technology
The legal industry is very competitive. However, you can apply innovation to gain and maintain a competitive edge in the market. While different inventions can boost your business success, legal technology ranks high on the list.
Technological innovations can raise your firm’s revenue through streamlining processes, including billing, and collecting payments.
According to the Legal Trends Report, legal businesses that used technology in 2020 earned more revenue. The report further indicated that;
- Law firms that used electronic payments earned 6% more than those that did not adopt electronic payment methods.
- Law companies that used clients’ portals maintained 2% to 5% more growth than firms that ignored the portals.
- Firms that adopted CRM solutions and online client intake enjoyed 6%, 7%, and 9% more growth in April, July, and August, respectively, compared to firms that did not use these technological innovations.
Both large and small firms are investing in new legal technology. For example, a survey indicated that approximately 56% and 21% of legal firms with 500 and 100 lawyers had at least one staff member who managed technological improvements.
Advancement in technology can revolutionize your law firms’ operations by enhancing productivity. Improving efficiency guarantees growth and more profits. Unfortunately, research also shows that adopting advanced technology is a significant challenge for law firms. But you can counter this challenge by investing in technology that meets your firm’s needs.
- Automate Using LawBillity Software
Spending hours on non-billable tasks means that you are lowering your firm’s profit margin by losing potential revenue. In addition, if you fail to track time accurately, the amount you invoice will not be worth the billable work you handle.
Luckily, LawBillity provides customizable and flexible time tracking features that allow you to record billable seconds, minutes, or hours using your device from any location.
Automating time-consuming tasks frees up lawyers’ time and allows them to complete additional billable tasks or improve their skills.
Additionally, you can receive your payments faster via the online LawPay payments solution. Your payment links are added to all invoices automatically. Your firm can also send invoice reminders to your clients using the Invoice Tracker in case of late payments.
- Focus on Billable Work
Time is precious but minimal. Improving productivity and profitability requires you to direct your time, attention, and energy on billable tasks and hire someone to do the rest.
Delegating duties would also mean investing in technology and assigning tasks to paralegals or other non-lawyer employees in your firm. You can also hire freelance lawyers or local lawyers to complete additional legal tasks like non-substantive court appearances and document reviews.
When all employees in your firm concentrate on their strongholds, you maximize revenues while cutting costs and raising profits.
- Invest in Marketing Your Law Firm
Marketing your law firm is an excellent way to attract more clients. Start by making sure you have a strong brand, then use the following tactics to market your business.
Having a Lead-Generating Strategy
You can attract potential online clients and convert them to new clients with a reliable lead generation strategy. Keep in mind that approximately 96% of individuals looking for legal advice start searching online, while 33% of people looking for an attorney visit a law firm website.
Updating blogs or FAQs positions you as a reliable expert and leads to a high conversion rate.
Build and Optimize Your Website
A client-centered website makes communication with potential clients more effortless, allowing firms to offer a personalized experience. For instance, by giving instant responses via Chatbot. A good website should:
- Load quickly
- Open on different devices, including mobile phones and tablets
- Indicate the services you offer
- Include contact information
- Be optimized for local search engine optimization (SEO)
Network With Purpose
Set up meetings with decision-makers and individuals who are likely to hire your services. Through formal meetings, you will understand potential clients’ needs and offer a solution to their problems.
- Set Realistic Goals and Track Progress
Set intelligent, relevant, and attainable goals and work towards achieving them. Use KPIs (key performance indicators) to track your progress regularly. For instance, you can use data from critical areas like new client development, financial reporting, and marketing.
KPIs can give more insight into your firm’s productivity, client satisfaction, profitability, and efficiency than traditional metrics like files opened.
Setting goals and following up on your progress using these indicators boosts profitability by promoting informed decision-making and fine-tuning your workflows.
Improving your law firm’s business productivity and profitability takes work and strategy, but the results are worth it. Developing a system that promotes growth and investing in marketing to acquire new clients is an excellent place to start.
Remember that being responsive and empathetic is a great way to attract potential clients and keep your regulars. Respond to clients’ queries as soon as you can to alleviate their stress and anxiety.
Finally, take advantage of advanced technology to automate tasks. Try LawBillity, legal time management and billing software, for 14-days for free.