You’ve managed your practice for long enough to know that there will always be cyclical ups and downs in your revenue and profits. Today, the financial state of many practices unfortunately mirrors that of the economy. One consequence of the current economic slowdown is that attorneys revise their client engagement standards because business is slow. This is a recipe for short term gain and long term pain.
What often happens to practitioners in a downturn is that they start to scramble for revenue. The most common revenue “fix” is to make a push for new clients you would not ordinarily want as clients or, worse yet, to pursue new niches to specialize in. These tactics can backfire, especially if they are pursued hastily, and can result in a law firm taking on clients who may be difficult to deal with or who do not pay their bills. Some of these clients may even bring the worst result of all, the malpractice lawsuit.
The key to success in a downturn is to stay the course: maintain focus, do what you do best, tune up your new business development tactics, and, most importantly, choose new clients carefully. For today, let’s just focus on the problem of lowering your client engagement standards and accepting every client who walks through the door.
As you proceed with new client retention, proceed with care. Screening potential clients is somewhat of an art; you need to listen to them carefully to determine what kind of client they will turn out to be. Some of the best indicators of a new client’s nature include how emotional they are and how they talk about other people, especially other attorneys. Try to determine the potential client’s ability to work with you in a methodical, patient manner. Talk about fees up front, and gauge their reaction to both initial and ongoing legal fees. Sometimes, a search of public records may help you in the screening process.
What we have found to help in uncovering problem clients is this line of interview: First, have the potential client identify why they are in your office; in essence, get them to tell you the problem they have. Then ask how long it has been a problem. Now comes the magic! Ask what they have done to address the problem. This question will usually help you, because the prospect will tell you what they have done and if they have gone attorney shopping. This line of questioning often results in the disclosure of failed relationships with other law firms. Not uncovering this information can be fatal to your practice.
The new client process is a two-way street. Remember, you are interviewing them as much as they are evaluating you. After all, gaining a new client who proves to be a difficult client is a losing proposition. Once you do get a new client, be sure to maintain a steady stream of written communications that keeps them up-to-date on all proceedings and fees.
Economic downturns can be challenging. The best business-building methods for your practice should include maintaining and promoting your areas of specialty, developing a customer retention strategy, and carefully screening potential clients to make sure they are a solid fit.
Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555