Thursday, October 21, 2010

Client Diversification Minimizes Revenue Risk

Over dependence on a small number of accounts can put your law firm at great risk. As Corporate Counsel increasingly conduct account reviews in an effort to reduce outside legal costs through convergence (i.e. reducing the number of law firms they work with) or alternate billing arrangements, your law firm may draw the short straw.

A law firm Managing Partner can inadvertently be in this position for several reasons. During stronger economic times, many law firms did not feel the need to conduct any aggressive legal marketing campaigns. As the economy has contracted, however, so has the flow of incoming leads. Suddenly a law firm has a dwindling client base.

Alternatively, a law firm that is lucky enough to sign a new large account can quickly get wrapped up in the day-to-day needs of client fulfillment. Before the attorneys think about the longer term implications, the firm may be overly reliant on one or two major accounts. If one of these large client leaves unexpectedly, the ability to pay salaries or the rent can suddenly become difficult.

What is the answer? Attorneys must find a way to meet the daily demands of court deadlines and client expectations, while also investing in an on-going legal marketing campaign.

If internal staff resources are tight, law firms can reinvest some revenue in outsourced business development activities. The right law firm marketing consultant can recommend an integrated set of programs that will increase visibility, generate leads, and help the firm to create more revenue opportunities with existing clients through up-sell or cross-sell initiatives.

You can learn more about protecting your law firm's revenue base with my legal marketing book Courting Your Clients: The Essential Guide to Legal Marketing. It's now available in a 2nd edition, which includes social media marketing, blog syndication, and a recommended guide to scheduling your marketing activities. Order your copy today.

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