How your firm can charge more per case
Discover strategies for charging your true value, increasing fee-earner profitability and improving cash flow that industry leaders shared with Osprey Approach
Long-term success requires a healthy cash flow. As running costs, salaries, and insurance fees continue to increase, it’s important to achieve improved profit margins per case to future-proof your firm.
During Osprey’s Empower Law Firm Leaders interview series, we spoke to several law firm leaders who have shared their advice, expertise and best practices for improving profitability, helping firms to recognise and charge your true value while increasing fee earner profitability and improving cash flow.
The perfect legal business focuses on cash flow
The king of cash flow, Simon McCrum — former managing partner of the UK’s fastest- growing law firm — shared his insights on what it takes to run the perfect legal business. “History is littered with the perfect firm of solicitors that didn’t quite make it. [That’s because] the perfect firm of solicitors wasn’t about cash flow. It was about the brilliance of lawyers, getting into the Supreme Court, being highly ranked in the Legal 500. But there’s an eerie silence when you look at the business.”
Simon’s blueprint for running the perfect legal business focuses on ensuring cash flow, but crucially, it prioritises honing your firm’s competitive advantage — your client service. This enables you to exceed client expectations and charge your true value.
Focusing on your client service, says Simon, does three things: “Firstly, clients are more likely to come back to you, particularly if you cultivate that relationship by cross-caring. Secondly, your happy client will be part of your sales force — they will be your marketing. Thirdly, price goes out the window.” Simon emphasises that when you deliver a five-star service, and you deliver on your promises, you can charge accordingly. “I’m very proud of the service we delivered to our clients, but the problem is I didn’t charge for it. We offered a Bentley service but we were charging Ford prices.”
Client feedback fuels improvement
Ian Hopkins has spent three decades in various fee earner and managerial roles, which, has given him a unique insight into what makes a high-performing law firm. Crucially, Ian emphasises that there has to be clarity in the vision: “You must have goals and objectives in place. Once you have those in place, you need to check in regularly to make sure that progress is on track and to see if any adjustments need to be made.”
Fierce competition is one of the many challenges Ian highlights that SMEs currently face, and he recommends doubling down on your strengths. “Understand the market you’re in and focus on your core business services. Stick to what you know and do it famously.” To understand your market, you need to understand your clients, which starts by asking questions: “The feedback you’ll get will be worth its weight in gold to your business. It could help you avoid needing to run faster and faster each year, just to stand still.” Avoid assuming how your clients feel about your service: capture direct feedback during and after a case to help you identify areas for improvement to ensure you’re optimising your strengths to outperform the competition.
Focus on outcomes when communicating your value
Former CEO of a top 200 law firm, Shaun Jardine, shared his decades of experience to help firms better communicate the value of their lawyers and to win more new business.
As a champion of value-based pricing, Shaun discussed the benefits to SMEs, which ultimately creates a “three-way triangle of happiness”. Clients are happier with their options, lawyers are happier (which is key for the current battle for talent), and the business is more profitable as a result.
Shaun believes that “the decision to ditch the billable hour is client-led first of all”, which is because “clients don’t care about the process”, they care about the outcome. To successfully communicate value — that you can charge more for — firms have to focus on what the client truly wants and consider people’s different buying habits: “Everyone assumes that most people want the cheapest price, but that’s not the case. We don’t all buy the cheapest bottle of wine, car, or clothes.”
Focusing on outcomes also enables firms to take advantage of technology and innovation. Shaun explains that when price and value aren’t connected to the time it takes to complete a process, you can leverage automation and tech to take away the heavy lifting.
Improve efficiencies with a digital-first mindset
Sophie Holdsworth, operations manager at Farnworth Rose, joined us to discuss the strategic priorities of SME law firms that’ll help them stay competitive.
A crucial habit firms should adopt to improve profitability is to streamline internal operations, which helps to increase the value charged for every hour worked. Sophie advised that firms should, “create robust, repeatable processes that are easy for staff to follow. Use Osprey — or your case management system — to create workflows and standardise processes.”
Improving internal efficiencies inevitably impacts clients, helping you provide a five-star experience that increases recommendations. Technology helps with the heavy lifting and Sophie explains that digital solutions can offer client-facing tech tools to provide a more convenient and modern service. Crucially, tech assists with back-office operations to make the team more effective.
A client-focused mindset helps improve firm-wide profitability
Improving profitability requires a firm-wide client-focused mindset. Every law firm leader, in the Osprey Empower Law Firm Leaders series, highlighted the importance of putting the client experience at the heart of your values, strategy, and objectives to help you achieve long-term success. Enhancing the client experience should drive your systems, processes, and behaviours.
For more valuable insights and industry knowledge on running a successful modern law firm, hear from experts across the legal sector in our Empowering Law Firm Leaders interview series. New episodes are released every month, listen for free now.
