Growth strategies for progressive private client practices

Private client practice is in a state of flux.
Are clients being tempted in to the world of DIY online documents? Are the brands luring away the core income of many practices? Will your existing and potential clients begin to purchase legal services from supermarkets and other non-solicitor legal services providers?

The answer to all the above is yes. Some of your clients and potential clients will be tempted away by the lure of price-driven commoditised services. But perhaps these are really customers who do not genuinely value the service you offer?

Value proposition

Although these new delivery methods have not dramatically changed buyers’ views so far, they must pose some threat to traditional practices, even if it is just to make us think differently about how we present private client services in the future.

There is strong evidence that clients want to purchase legal services locally from the solicitors brand, but only if solicitors begin to use a ‘value proposition’ throughout their firm. Value is delivered in numerous ways, but it does not imply ‘cheap’, it is based on the value that the client places on the services you provide and that is so essential in a private client practice.

When faced with numerous options of service, from where do you choose to purchase domestic items? Aldi, Lidl, Tesco or John Lewis? Customers buy from each, but who would be prepared to pay a premium price for outstanding customer service?

Is it time we accepted that if we cannot make a reasonable return on the work we undertake, then perhaps we should just not try to compete? It’s a tough call to tell a client that you do not want their business because they have been quoted a ridiculously cheap and therefore unprofitable price, but it may be the only option.

So, what are the growth strategies available to private client practices?

There are three key areas:

• a strategic plan/vision that encompasses running your practice as a business;
• embracing a value pricing strategy across the firm; and
• adopting a local private client marketing and sales strategy.

First, if you are a firm that has not yet decided on your future strategy, your succession and exit plan, and a clear vision about how you intend to retain your clients and grow your business, then it may well be too late for your practice.

Firms are embracing the SRA rule 8 and are running their practice as businesses with all the fundamental business acumen that is required. For those firms that have not explored the advantages of incorporation and the obvious benefits of converting capital accounts into loan capital, let alone the tax advantages, then you are missing a huge opportunity.

If you are one of the firms still unsure of your vision, I would encourage you to get help without delay. If you continue to procrastinate you may well get left behind.

Second, one of the fundamental growth strategies for private client practices is to embrace the psychology of value pricing. Law firms have to have, or develop, the confidence to charge a premium price for their services and not feel obligated to compete with a plethora of non-lawyers trying to compete for this space.

After all, you became a solicitor after years of intensive study, you are one of the most regulated professions and your professional indemnity premiums are huge and should provide clients with added protection – all this expertise comes at a price – surely?

The profession needs to develop confidence in the pricing policy it adopts and not compete with competitors, whether they be other solicitor practices or new brand entrants. This is a strategy of realising the cost of your ‘production’, in other words, how much time is recorded on file and what value the client places on the service provided.

Value added

Should we be charging a success fee on all private client cases? There are a number of firms who have embraced this simple, yet effective, principle and have grown their turnover by over 25 per cent without increasing time recorded hours, particularly on litigation matters such as a contested divorce.

Value pricing is not new and, in many respects, it’s what solicitors used to do before we had too many solicitors and too many practices all competing in the new commoditised world. The percentage of legal work today represents two per cent of the gross domestic product (GDP) of the UK – just as it did in 1988. The difference is
we have three times more practising solicitors today than we did 25 years ago.

Clients will pay a premium for a specialist service rather than a general one.

We can also consider the service levels we provide at a variety of affordable prices. Those clients who wish to travel first class by whatever means will pay a significant premium for the additional attention and level of expertise they receive, so let’s offer a choice of service levels at a price our clients are prepared to pay.

How many times do clients demand work is completed urgently, or require exceptional servicing, yet we just provide the service at our standard rate?

A firm-wide value pricing strategy will differentiate you from the competition, it will make you far more profitable, and encourage
you to turn away those clients that are non-profit making.

Progressive practice

Third, firms that have embarked on a policy of external skills for business development and cross-selling are expanding rapidly while their counterparts are retracting.

Managing and farming your clients with
products and services meet their needs and
provide proactive solutions, but at a premium price.

Why are these progressive practices becoming so successful?

Most solicitors, although not all, find marketing and business development a chore that goes to the bottom of their daily to-do list. Yet there are professionals available who do all this ‘stuff’ and enjoy it.

I appreciate the argument that it becomes an additional overhead, but I have yet to meet the firm that has embraced the above three key steps to see this external resource adding huge value to the bottom line.

To ignore the importance of marketing, selling and cross-selling services is a recipe for failure. Competing in this highly competitive world means differentiating your firm from your competition and, although traditional practices do not appreciate this approach, it is one the most successful private client practices are embracing.

We have all read the similarities that have been drawn by some to the legal profession and the opticians market, but I believe these pundits have missed a significant point.

Certainly there is much that a private client practice offers that could be commoditised, but
the analogy with opticians implies we are all competing in the same way.

Perhaps we should consider the similarities to the veterinary profession? Smaller, well-run practices offering services to their local area at a premium price. They outsource their incoming calls to professionals and pets are seen by different grades of staff dependent on the urgency and the price the client is willing to pay.

Providing local legal insurance cover at three distinct levels would also enhance the private client practice offering. There is a very successful future for those practices that can recognise their true value. SJ