Shrink to Grow Your Law Practice

By | Apr.24.14 | Client Relations, Daily Dispatch, Law Practice Management, Strategy

Shrink to Grow

To grow your law practice, you have to get more clients, right? But is that really the best growth strategy? Not necessarily. For many law firms, the right strategy is to get better, not bigger. Pursuing growth — more clients, more billable hours, more staff — for growth’s sake is often counterproductive. Good growth — sustainable, manageable, profitable, enjoyable — requires a different approach.

1. Good Growth versus Bad Growth

There is good growth and there is bad growth. Any knowledge-based service professional has experienced the anguish, stress and distraction caused by a difficult client. For some, a difficult client is one that is unreasonably demanding. For others, it’s a client that always pushes back on fees. You may not even be aware of the problems that particular clients are causing if they act one way with you and another with your associates and staff. While there will always be difficult clients, the key is to limit their impact on your firm or practice. If you have too many of the wrong type of clients, you may experience growth, but of the wrong variety.

2. Stop and Assess

Because bad growth can occur rapidly and unexpectedly, you might not realize you are on a bad growth trajectory until it’s too late. The realization may only come after profit margins begin to slip, or key personnel jump ship. That’s why it’s important to continually stop and assess your client mix. Rather than taking on whatever work comes in the door, lawyers and law firms should strategically determine the type of clients they enjoy working with and the type of work that is interesting and profitable. If parameters are set in advance, it makes it much easier to turn away work that is not the right fit. An ad hoc approach to business development leads to bad growth. A more thoughtful one results in good growth.

3. Part Ways

Beyond being more selective and thoughtful in developing new client relationships, good growth can be fueled by pruning an existing client base. Difficult clients can suck up all the oxygen in a room, consuming the energy and focus of a firm and its lawyers. The squeaky wheel gets the grease, so to speak. Consequently, good clients feel neglected and leave, or at least pull back. That’s why it’s critical to carefully, responsibly and judiciously part ways with difficult clients. It’s much better to “shrink” and marshal resources around good client relationships that hold future promise.

Being more mindful about the type of work, not just the amount of work, that you and your law firm develop is a fundamental building block of good growth. That means that to grow, it may be necessary to shrink.

Jay Harrington is co-founder of Harrington Communications, where he leads the agency’s Brand Strategy, Content Creation and Client Service teams. He also writes weekly dispatches on the agency’s blog, Simply Stated. Previously, Jay was a commercial litigator and corporate bankruptcy attorney at Skadden, Arps, Slate, Meagher & Flom and Foley & Lardner. He has an undergraduate degree in journalism and earned his law degree from the University of Michigan Law School.

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3 Responses to “Shrink to Grow Your Law Practice”

  1. Mike O'Horo
    25 April 2014 at 10:34 am #

    Clear thinking, Jay. IMO, the “bad client” problem is the product of reactive business acquisition. When you examine most lawyers’ client portfolio, most clients arrived serendipitously rather than what one of my clients likes to call “by strategic intent.” If you don’t know where today’s clients came from, or how, you don’t know where tomorrow’s will come from. That makes you more inclined to accept any client. “What if this is the only client I get for awhile? I’d better grab it.” This “cash-flow anxiety” eliminates any chance of selectivity.

    Veteran salespeople understand the 80/20/30 Corollary of the 80/20 Rule, which states that the bottom 30% of your clients produce 80% of the aggravation and demands. They’re simply not worth it, relative to their economic and strategic value.