After a few years of extraordinarily high demand for legal services, demand is beginning to wane, according to Reuters. If you’re like most law firms, though, you want your client base—and your revenue—to increase year by year. How do you ensure your firm stays profitable when the market isn’t in your favor?
The answer: proactive strategic planning. Proactive planning can help you set tangible goals for reaching new clients, retaining existing accounts, and improving your firm’s operations. Here are five steps to planning for business success in 2023 and beyond.
1. Create SMART goals
Setting firmwide goals makes your daily effort more meaningful. When teams aren’t aligned around common goals, each firm member is essentially working in a vacuum. One department may make changes to improve firm efficiency, another may focus on bringing in new clients, and another may focus on cutting costs. By aligning the whole firm around central growth objectives, you can maximize the effect of your efforts.
SMART goals are specific , measurable, achievable, relevant, and time-bound goals. Because SMART goals—and the pathway to achieving them—are clearly defined, firms can easily track goal progress and adjust them, if necessary.
For instance, consider a law firm with a SMART goal to increase client retention by 10% in the first quarter of 2023. Numerous strategies may help the firm reach this goal, from implementing a CRM system to updating billing practices. By choosing one method to implement and measuring progress over time, firms can analyze whether their chosen method is working. If the goal is not achieved, they can adjust their tactics for the next quarter.
2. Evaluate your current clients
Satisfied clients are at the heart of every successful law firm. By reviewing data on your current clients, including their retention rates, referral rates, and case statistics, you can make informed decisions about the most impactful ways to update your firm’s operations in 2023.
One place to begin is by looking at your repeat clients and referrals. How have these numbers changed over the past year? It’s easier and more profitable to retain current business than to convert new leads to clients, so focusing first on improving the client experience for your current clients can help increase your retention rate. At the same time, this can organically boost referrals.
One of the easiest ways to improve the client experience is to strengthen communication skills. Clients that feel out of the loop or overwhelmed by their experience working with your firm may reflect on their interaction negatively, even if their case is successful. Legal practice management software can make your law firm more accessible to clients without increasing attorney workload. For example, CosmoLex equips clients with a secure client portal and secure file-sharing methods, making it easier for clients to share and receive communications about their cases.
Another way to increase client satisfaction is to make the client’s legal experience more convenient. Firms that accept payment methods clients are looking for, like credit cards or online payments, stand out by offering modern features that save clients time. While many firms are concerned about maintaining compliance when accepting online payments, legal-specific payment processors ensure firms handle client funds appropriately and ethically.
3. Evaluate your current cases
Another thing to consider when updating your operations for 2023 is what services your law firm currently provides. Do you have any clients looking for services you don’t provide? If so, what SMART goals can you set to gain expertise in these additional areas? For example, if your firm focuses on business law, gaining expertise in trademark services might help you provide additional support to clients you already have.
When it comes to legal matters, not all matters are of equal profitability. Of the services your firm does provide, what types of cases are the most profitable? Focusing on increasing business in your most profitable areas can boost your revenue without requiring you to manage more clients. Comprehensive legal practice management software can help you analyze your most profitable matters with built-in reporting tools that automatically measure matter data. Then by effectively using marketing automation tools to target your ideal clients, you can gain more business in the most profitable aspects of the law for your firm.
4. Review your KPIs for 2022
Reviewing KPIs at the end of every year can help firms determine which processes and workflows can be changed to improve efficiency.
For example, if your firm measures productivity or financial KPIs, one important metric to consider is collection rate. Your collection rate is the amount of work the firm is paid for (measured in hours) divided by the number of hours invoiced. If your collection rate is low, your firm is not being paid for all the work you complete.
By analyzing this KPI, your firm may take steps to improve your collection rate in 2023, like using automatic time tracking tools to effectively itemize bills or using legal billing software to enhance your capability for eBilling, automatic past-due reminders, online payments, and other methods that may improve the billing and payment experience for clients.
Note: KPIs come in many forms, from individual performance to financial and productivity KPIs. Carefully choose which ones to track throughout the year so you can maximize your business insights.
5. Assess your current operations
Is your firm effectively using available technology to improve operations? The right technology tools can help law firms get more work done faster, improve client satisfaction, and minimize administrative effort.
One way to analyze your firm’s operational effectiveness is to use time-tracking tools to measure how team members spend each minute of the day. Where is valuable time being wasted on non-billable tasks? Automating or outsourcing tasks can help free up your schedule for high-level billable work while ensuring all necessary tasks are still completed.
Another way to improve your operations is by utilizing legal-specific software solutions. For example, many law firms use generic accounting software like Microsoft QuickBooks. However, because QuickBooks is not legal-specific, firms must find additional software solutions—or complicated, error-prone workarounds—to manage trust accounts, sync accounting data with a legal billing system, and maintain legal compliance with client funds. Using legal-specific accounting software, though, can help reduce inefficient business practices while minimizing subscription fees and compliance concerns.
Make CosmoLex your partner for business growth in 2023
CosmoLex’s comprehensive suite of legal practice management tools helps firms improve operations, identify profitable practices, and make progress towards firmwide goals. With practice management features, legal billing and payments, business and trust accounting capabilities, and legal customer relationship management tools, CosmoLex supports your business goals from every angle, helping firms increase revenue and client satisfaction in 2023 and beyond.