Building client relationships to build your practice’s value
When you consider your legal practice, what gives it it’s value?
Is it simply a bunch of furniture and computers with some staff who turn up to work at them?
Of course it is that, but is that what gives your practice it’s value?
Of course it’s not.
The value of your practice comes from the client relationships that the practice has.
Without those, when you come to sell your practice, you really are just selling a pile of old furniture and computers and you know what that would be worth.
So if the client relationships are what it’s all about, what are you doing to build and nurture those relationships?
I was talking with a principal of a highly profitable small law firm client the other day and he explained his process.
It wasn’t rocket science.
He simply talked with his client about them and what was going on in their lives.
He didn’t talk about the footy, or the weather ( other than as an icebreaker), he simply showed a genuine interest in them as people.
Guess what he found happens?
He discovered extra work that needed to be done.
No surprise there.
No doubt you are doing this and doing it well, but if your practice is more than just you, or if you want it to be, then:
How do you know that everyone else in your practice is doing what you do?
While you may be able to remember all of these little things about all of your clients, can all of your other team members remember them?
The answer almost certainly is no.
At the most basic level, does your receptionist remember how every client likes their tea or coffee?
While that has little relationship to the quality of the legal advice you provide, it has everything to do with nurturing your relationship with that client.
It is that relationship that gives your practice it’s value ( or not)
It may surprise you to know, that in many legal practices, the only data that is collected about a client, is the data that is needed to do the matter the client came in about.
This is taking the notion of a transactional practice to the extreme.
The client in those practices is seemingly viewed, not as a person, but purely as a transaction.
Principals in these practices will talk about how many transactions/matters they did last year, rather than how many clients they have.
The trouble with that approach, is that if client relationships are what gives your practice it’s value, in this type of practice, they are not building relationships.
Think of any other relationship you may have. Take the relationship you have with your spouse/partner. Do you view that as a series of transactions?
I’m sure you don’t.
It doesn’t have to be this way.
By changing that approach and focusing on building client relationships, I suspect makes practice more enjoyable and it certainly makes your practice more valuable.
This article is part of our series of articles on increasing the value of a small legal practice.
If you are thinking of retiring in the next 10 years and want to improve your financial position to enjoy your retirement with the income you deserve, you can’t afford to miss our new report:
Retirement planning for the principals of small law firms
This report will focus on the strategies that you need to put in place to both increase your pre-retirement income and also to maximise your practice valuation.
Whether you ultimately sell your whole practice, or you sell your equity, if you have other partners, you can’t afford to miss this report.
Want to read more?
– You may be interested in: