With many law firms experiencing growth in their property departments in 2021 due to the SDLT holiday, this has resulted in the % of income that property represents increasing to levels that may have negative consequences for firms some of which may not have been foreseen or appreciated. In this case, it is important to start developing your law firm and diversifying your service offerings.
For many law firms, property is an important department contributing not only to the firms overall financial position but providing cash flow due to the relatively short life span of the average property matter.
However, with property remaining high on the list of high-risk factors for both the Solicitors Regulation Authority (SRA) and Professional Indemnity Insurers (PII) allowing your firm to increase the amount of property work undertaken at a % that is high (in excess of 30%) starts to create additional issues.
The larger the property department, the more risk attaches to the firm. Insurers will start to get concerned about the amount of risk that too much property work brings with the consequence that premiums face being increased or in some more serious cases a firm’s risk profile steps outside of the insurer’s rules and renewal terms may not be offered. In addition, the more high-risk work a firm undertakes the greater the possibility of the SRA raising an enquiry with a firm.
This is not a suggestion that firms should seek to reduce property work but a warning to consider the impact and take action to control the risks increased property work presents. Property departments are more than just income and cash flow. The creation of a successful property team can and will generate work for other departments. For example, the Company owner who entrusts your firm with his/her business is likely to entrust the purchase of the family home to your firm through to the private client who needs to sell their property and create or update a Will after the sale.
A property department is important to a firm and alongside recognising the benefits the department brings a firm must also recognise the risks and build strategies to remove this risk.
Central to any good law firm is a well run and managed set of policies, controls and procedures which are well communicated to well trained staff who are technically competent and well supervised. However, this blog is not about how managing the risk that handling property work creates, it is about identifying other strategies that firms can implement to sustain a successful firm without becoming overly dependent on property work and through doing so control the risk.
The development of a new business is never as easy as you think and there are many factors to consider when developing your law firm.
– The easiest form of marketing and new business development is to sell to people who have already used your firm for services. Too few firms seize the opportunity to discuss additional and other legal needs with the existing clients. There are various points at which discussions with clients can take place about their needs. This may be the direct result of a service being provided having a potentially dependant element, (Getting or updating a will when completing on a property matter) or it may be through more general marketing activity letting clients know you are there and the services you provide. Be aware that to market your services to existing clients you require a positive opt-in for ongoing marketing or you will breach the UK GDPR (except where you have a legitimate interest to recommend a service that is relevant to the work you are or have performed). There are various areas of cross selling that can be used and applying some thought to this will reveal such areas and enable the firm to discuss how these opportunities can be maximised. This all benefits you in developing your law firm. For further insight, you can contact The Strategic Partner.
– Building and enhancing your online presence is a must for Law firms. In 2020 and 2021 the internet has become more widely used by firms as more traditional forms of marketing and networking have taken a back seat. Many firms have turned to the online space to better promote their firm and those who do this properly have reaped the rewards. As your competitors get better at improving their online presence, your website will fall from the first page of Google and you have to respond to retain your positioning and client base.
Online marketing is proven to work and does not have to be expensive. Organic presence is what firms seek and this is easier to achieve with localised geographical campaigns that are focussed on particular services. It does not take a lot to get this right, but expertise in website management and online presence along with focussed activity will pay dividends. It is also possible to spend your marketing budget on the areas you seek to expand and for many firms, focussing the budget on areas such as private client, family and commercial have seen an increase in this work without impacting on areas such as property with the result being increased income in such areas which balances the % of income and therefore improves risk.
– A big part of developing your law firm comes from marketing. In some service areas and in some geographical locations, activity is much higher and there are firms that have advanced online presence. In addition, your firm may want to compete in an area where you do not have an office but it is a location you can win business. The best and most effective way to handle these situations is to start introducing paid advertising using search engines such as Google and Bing which will immediately (with some management) boost your campaign so you compete through paid advertising. This will also assist with your organic ranking and over time, with both organic and paid advertising working, your cost to acquire new clients will reduce. This type of pro-active marketing can be used, as suggested, to compete in more difficult areas or simply to push a particular service so that you feature higher in the search engine results for that service only. Pay Per Click (PPC) advertising is how most understand this and it is a complex area that needs to be understood before embarking on such activity. For more information and guidance on how marketing could benefit your law firm, visit our Partners page.
Establishing your Client Base
– Firms have to protect their client base. It takes a long time to establish a client base and it is important to retain this. Letting clients know where you are and how to find you if they need you is relatively simple. Many firms will and do produce newsletters and articles and these should be shared with your clients. Remember you need consent, but also making sure you stay in touch with clients, inviting their feedback on the services they received and ensuring they are getting guidance at appropriate intervals will assist (for example updating a will). There are many reasons why a firm can and should contact their clients both during and after a case. To gain a new client is a success but so is keeping that client through service and contact.
Identify Acquisition Targets
– There may be firms in your area who are seeking an exit or are ready for a merger. Make sure that you identify a firm that offers complementary services and those that can help expand your lower-risk areas. With many smaller firms having a good mix of private client and property work, they are ideal merger or takeover partners as they bring experience and increased income in lower-risk work. M&A is a tried and tested way to expand your firm but tread carefully and do your due diligence. Also, ensure you take your insurer along with you. For guidance on how to approach Mergers and Acquisitions, visit our M&A page.
New Enquiry Management
– The creation of a robust method of capturing new enquiries is more than essential. In too many firms the process of new business capture is too casual with a lack of visibility on the enquiries coming through, who is dealing with them and if they convert. An effective growth strategy for developing your law firm requires feedback on the enquiries being received to confirm if they were a waste of time or lead to a new client. If this information is captured, it is possible to drive and direct marketing to what is working and to fix what is not. Also, if someone calls into your firm, sends an email or has completed a web enquiry, it needs to be captured, recorded and processed to a conclusion – converted and a new file opened for lost and closed prospects. For firms we have worked with, assisting in the implementation of an effective new business management strategy has seen an increase in conversions by 20%.
Although this article is about how to further develop your law firm, it also seeks to address the issue that firms have been over reliant on property work. Reducing dependence on property has significant benefits which sit alongside retaining and maintaining a healthy property department.
For more information about the work that The Strategic Partner undertakes for law firms to help develop, grow and sustain their firms you can contact us on 0203 911 9710, email us firstname.lastname@example.org or visit our website and make an online enquiry www.thestrategicpartner.co.uk.