Strategies for Improving Law Firm Profitability
No matter what kind of business you run, maintaining a healthy profit margin is key to your success. After all, not only does this mean that you’re bringing in a reliable income stream, but it also ensures that you have money set aside to invest in business growth and development.
As such, law firm owners should always be on the lookout for ways to improve law firm profitability – which is where this blog comes in! Read on to discover some of the most effective strategies for improving law firm profitability.
Figure out what you’re doing wrong. Before trialing new money-making tactics, it is important that you’re able to look at the bigger picture and identify any mistakes that you may be making when it comes to money management. After all, working to avoid these mistakes moving forward will instantly improve your profitability.
Common mistakes made by law firms in the finance department include:
- Inefficient billing practices. Inefficient billing practices, such as poor time-tracking and failing to chase invoices, can quickly limit your profitability as a firm.
- Not pricing your services correctly. While it can be hard to determine how much you should charge clients for your services, you must ensure that your fees are reasonable and that you take the current inflation rate into account.
- Poor employee retention rates. Having a high employee turnover will harm your firm’s bottom line in more ways than one. Not only will you be spending an endless amount of money on recruitment and training, but you’ll also be dealing with skill gaps and productivity lulls as a result of this.
Make use of technology. Utilising the latest technology can also come in handy when improving your firm’s profitability, even if it does require some additional spending to begin with. This is because it allows you to streamline (or even automate) operations and tasks, so that your team has more time on their hands moving forward.
Improve client acquisition. It goes without saying that the more clients you have, the more profitable your firm will become. Fortunately, there are many different ways in which you can achieve this goal. For example, you could focus on making your firm appear as trustworthy and credible as possible, by sharing success stories, attending industry events, or even appearing on podcasts. By demonstrating your expertise in this way, you’re making your firm look as appealing as possible to a potential client, which means that you’ll notice an increase in the number of inquiries you receive.
Outsource your accounting. When hiring employees, you likely seek out legal expertise over financial know-how. For this reason, putting your legal team in charge of accounting practices such as budgeting and payroll management will always be somewhat risky. For example, it could mean that they spend hours completing tasks that would take an accountant minutes – lowering your productivity and output quite considerably.
As such, one of the easiest ways to improve your firm’s profitability is by outsourcing your accounting services to companies such as FinOp Group. Want to find out more? Get in touch today!
