How to boost profitability in SME law firms

There are key trends and best practices that, according to the sector’s experts, seem to be the blueprint for running a successful modern firm.

Topics include the importance of an effective workplace culture, the impact of communication, exceeding client expectations, retaining talent, and importantly, managing cashflow and increasing profitability.

Amy Bruce, head of marketing at Osprey, recently hosted a masterclass on behalf of LPM as its annual conference.

In the masterclass she shared the insights and best practices gifted to her by over 30 industry experts and law firms leaders that she’s interview for Osprey’s Build Better Habits roundtable series, and new podcast: Empowering Law Firm Leaders.

The masterclass focused on boosting profitability, and covered  eight valuable insights that are fundamental to long-term success.  

8 best practices for long-term success and profitability in your legal business

1. Say no more

“Your pricing strategy is a way of saying no to clients that you don’t want at your firm.”

Simon McCrum – former managing partner of the fastest growing UK law firm

We had to start with the cashflow guru. His best practice is to say no more often!

In our conversation we discussed Simon’s four priorities for honing law firms’ competitive advantage and priorities two and three were: manage price against the service you offer and say ‘no’ more often.

Simon explained that when he was managing partner of the UKs fastest growing law firm, he was proud of the service he provided but he didn’t charge correctly for it. He said he offered a Bentley service for a Ford price.

Simon explained that your pricing strategy is a way of saying no to clients. You can’t serve all clients and grant every client’s wish. Your pricing helps to qualify whether the client is a good fit for your firm.

Simon also highlights other ways of saying no more: no to areas of work you’re not experts in (it increases risk, which can be costly) and to employees who have ideas that aren’t aligned to the goals and values of the firm.  

Listen to the full episode with Simon here

2. Charge more per case

“It’s worth spending the time getting to know your client because your strike rate will improve, and when your strike rate is better, you will make more money and can charge more. And when you can charge more, you can do less work for a higher value, and you get a better work-life balance.“

Shaun Jardine – author of Ditch the Billable Hour!

Moving on to the Value Based-Pricing guru, Shaun.

Shaun’s best practice for boosting profitability is to charge more per case.

Shaun talks about the importance of spending more time upfront with a client to scope the case better. He stresses to ask more questions of the client in the initial stages to truly get to know them, discover what they value and to be curious. This then enables you to communicate value effectively and the associated price because you know what will resonate with them.

He told the story of winning work over a competitor because of the type of proposal he’s put together compared to the competitor’s standard letter and price – the client felt he’d really considered his needs and understood what he required.

Listen to the full episode with Shaun here

3. Use tech to standardise operations

“Create robust, repeatable processes that are easy for staff to follow.”

Sophie Holdsworth – operations manager at Farnworth Rose

Sophie encourages other SMEs to take the time to utilise their case management system to build workflows that standardise processes. This creates a robust, repeatable process that easy for staff to follow, improve efficiencies, reduce errors, but also improve client experience.

Sophie ensures her firm is adopting digital solutions that help streamline operations and help to capture the right data that improve internal functions but crucially positively impacts the client.

See our full blog post with Sophie here

5. Empower decision makers

“We [should] now be introducing more people into our executive suites who have pedigree in being  chief executives or chief operation officers, marketing directors, IT directors, directors of culture etc. People who can play in furthering the causes of a legal business.”

Simon Tupman – author of The Heart of Practice

In his book, Simon discusses the characteristics that are needed for a successful leader which include the ability to make agile, quick, data-driven decisions. He believes that the traditional partnership model hinders quick decision making, with several partners at the table.

Simon believes there’s merit in introducing more people into the executive suites – in specialist areas such as marketing, business development, HR,  operations, and client experience – and utilising their expertise and empowering them to make decisions that can speed up progression. Trust in your leadership team to make agile decision that’ll align with your values and drive the firms closer to achieving its goals.

Simon discusses that firms are becoming more operational; running the practice like a business to remove siloes and improving the speed of decision making is key to meeting goals.

Listen to the full episode with Simon here

6. Close more deals

“We often get to the end of the sales process and just wait for a client to decide. We don’t ask questions in case they say no.”

Scott Simmons – co-owner of Legal Balance

Scott is a business development coach and his advice for boosting profitability it to close more deals!

Easier said than done of course, but the healthier your pipeline looks, the pressures start to reduce for the revenue forecasts.

Scott recommends that we ask for the work. He says often we’re too afraid to ask questions or get in touch because we’re afraid they’ll say no. His advice is to ask and be curious.

He explains if your pipeline isn’t actively in discussion with you then it doesn’t hold any value. So it’s your job to get somebody to change their thinking and take action. He shares the best way to do this is to create value through your conversion.

This links back to Shaun’s advice about knowing the client well enough; asking enough questions to best align your service to what the client values. When you do that successfully you can of course charge more and close more – a win win situation.

Listen to the full episode with Scott here

8. Prioritise an operational role

“You need to hire someone who is responsible for asking, ‘is this efficient?’”

Rupert Collins White – co-CEO of Burlington Media

For our final expert, I had to include the co-CEO of Burlington Media, and a host at the LPM conference, Rupert.  

His best practice for improving profitability is to prioritise an operational role.

Rupert stresses the impact that operational efficiency has on the long-term success of a firm, including profitability. And so, he shared that if reviewing operational processes isn’t someone’s priority then it won’t happen.

He recommends firms hire someone whose job is to process map and review if operations are effective. This doesn’t have to be a full-time person, or even someone in-house, it could be a consultant.

But if someone isn’t asking ‘is this efficient’ then the chances are, the process will eventually become ineffective.

A clear strategy, and aligned culture, and the right tech will boost the profitability of your law firm

None of these best practices are overnight successes. They require a clear business strategy, business development strategy, an aligned culture, and time.

To ensure long-term success it’s about the brand you build that will make a difference. Your brand is how your employees and clients feel about your business, which involves more than simply cutting operational costs or increasing pricing.

For more valuable insights and industry knowledge on running a successful modern law firm, listen to the Empowering Law Firm Leaders podcast. New episodes are released monthly and you can listen on Spotify, Amazon Music, or YouTube.