As an economics major, I am well-aware that lowering costs and increasing revenue leads to higher profits. Not that you need to be an econ major to know that (although, if you look at the nation’s credit card debt, there do seem to be many people who are little iffy on the concept – but I digress.)

Law firm leaders looking to grow PPP should focus on 3 key strategies that fuel growth.

Client Experience: The Best Investment Law Firms Can Make

Perhaps I should say “one of the best investments.” The other one is employee experience. But because they’re so intertwined, I’ll just say client experience.

The days of institutional clients pre-date my entry into the legal profession. Sure, there were a handful and there probably still are. Mid-sized firms, however, can no longer count on relationships to foster loyalty. Whether that is because GCs build robust panels or clients have become even more cost-sensitive, or some combination of these factors and others, the one thing that truly does differentiate one law firm from others is client experience.

According to a study of UK firms by LexisNexis, most law firms do not have any formal process relating to client experience. Some law firms in the study had a “tentative” process, meaning they had some desire to improve experience but no consistent, formal approach. Just 1 in 10 of firms had a formal or “strong” client experience posture.

What does this mean for your law firm? Having a consistent, meaningful strategy for client experience can set your firm apart from 90% of the market.

Cross-Practice Collaboration: A Lucrative Strategy for Mid-Sized Law Firms

Client experience is one way to build strong relationships with clients. Add collaboration, and law firms not only earn client loyalty, they make more money. According to Thomson Reuters:

[C]lients who identify collaborative teams within an outside law firm spend an average of 56% of their wallet at that firm — more than twice the average share of spend received by the firms that clients use the most.

Heidi Gardner at Harvard’s Center on the Legal Profession studies collaboration and her research found a direct correlation between collaboration and revenue for firms and individual lawyers. For example, lawyers who bring in other lawyers from different practices enjoy a 4x book of business than those who do not collaborate. Collaborators can also command higher rates and are more likely to maintain revenue in difficult economic times.

Scaling Up: Why Now is the Right Time for Law Firms to Join Forces

It would appear that Fall 2024 is the season for law firm mergers. While the biggest attention-grabbers have, unsurprisingly, focused on the BigLaw of BigLaw, mid-sized firms are also consolidating, and for good reasons.

This trend is driven by some of the usual factors, like enhancing their reputations and expanding into new geographic markets or adding complementary practice areas, but there are factors whose importance is unique to this moment in time. Since I started practicing law over 20 years ago, lawyers have increasingly become aware of the need to run their firms like a business. Now, non-lawyer C-Suite positions are commonplace. Firms are relying on more sophisticated (and pricier) software. And, the cost of just about everything continues to increase.

But what firms have not done is balance this increased overhead with substantial growth.  Law firm leaders recognize that to keep PPP high, they need to spread these costs over a larger number of partners.  By merging with other firms, law firms can almost instantly reach economies of scale.

What’s Next

Mid-sized law firms are well situated to leverage these strategies. Mergers may not happen every day, but collaboration and client-centered service can have an immediate impact on attracting and keeping high-value clients – both of which will make law firms stand out from the competition.

If you’d like to explore ways to drive growth in your firm, be sure to book an introductory call with me.