During the Covid pandemic, the legal industry shifted towards utilising legal technology and incorporated legal practice management software into their firms.
Now, we find ourselves experiencing an economic downturn. Regardless of the intensity or duration, the economy is cyclical, fluctuating between growth and contraction. Because they are guaranteed, law firms must have strategies available to handle economic turbulence.
The time to protect your firm is now before you face a crisis. Use these strategies to protect your firm and maintain a robust profit regardless of the changing economy.
Diversify Areas of Law Practice
Take a hard look at your firm’s practice areas and profitability using Smokeball’s law firm insights. The dashboard gives you a view into the practice areas with the highest profit. Pivot your firm to focus more on these areas.
Diversifying your law firm’s offerings can help reduce risk for your business. Expand your services to more audiences, extend your service portfolio and diversify your workforce strengths. Diversifying allows your firm to deliver more services in more ways to even more clients, resulting in greater and more diversified revenue streams.
Consider expanding your services in recession-proof practice areas such as litigation, bankruptcy, or family law. If you currently need to gain expertise in these areas, hiring contract lawyers or new staff can open the door to new sectors with profit potential.
Develop a Referral Network
Referral fees are a high-profit, low-time commitment way to increase revenue. Develop referral relationships with other law firms so you can refer out clients who need additional services and collect referral fees—partner with firms in related areas.
For example, family law clients often need bankruptcy or estate planning lawyers. Use Smokeball to track the referrals, so you don’t lose sight of the fees owed.
Collect on Receivables
Nearly every law firm has an accounts receivable challenge with clients who are behind on payments or who–even worse– never pay at all. Focusing efforts on receivables can be a shot in the arm for revenue. Smokeball’s integrated legal billing software automatically delivers regular, easy-to-understand invoices to your clients, so they always have a timely and current bill.
Since firms using Smokeball can automate billing tasks, billing won’t slow or stall if a staff member is sick or away. Smokeball makes it easy to identify clients for quick follow-up. When you do, offering some clients a deeply discounted payoff is beneficial, enabling you to collect something when you’d otherwise likely collect nothing. Using technology to act quickly and not allow these overdue balances to linger helps you recoup some losses.
Capture All Billable Hours
Profitability hinges on billable hours. Instead of pushing yourself and your team to work more, focus on capturing all their billable hours. Smokeball’s automatic time-tracking software accurately identifies all billable hours from every staff member without setting timers or using tracking apps.
Efficient billing and collection start with accurate and automatic time tracking for lawyers. Time-tracking is inherently and seamlessly applied while your team does all of its work in Smokeball, Microsoft Outlook and Word. Plus, the client communication portal is integrated into Smokeball’s legal matter management, ensuring that every minute is reflected on your invoices.
Maximise New Leads
Getting the most out of your time on current matters is essential in recession-proofing your law firm’s business, but so is attracting and converting new leads. Smokeball’s lead management tracks all new potential clients and helps you regularly follow up with prospective clients to convert them to paying clients. The software also allows you to access reporting evaluating how well your firm converts leads to clients.
Take the time to evaluate where your best leads come from and increase your marketing spend in those areas. Dedicate time each week to marketing and leads management to ensure you have a healthy flow of new clientele.
Reduce Law Firm Overhead by Working Remotely
Reducing costs is a more prominent option when facing a recession. Cutting costs on memberships, subscriptions, and expenses may quickly lower expenses, but your lease is likely your biggest burden. If it’s coming up for renewal, it’s time to re-evaluate it.
Allowing more employees to work remotely reduces your need for large and expensive commercial space, thereby improving your bottom line. Smokeball removes many of the concerns about working from home because lawyers and staff use the same cloud-based practice management software whether they work in the office or elsewhere. All documents, client information, and matter information save to the cloud with easy access from a laptop or mobile phone. With legal practice management software, files are no longer held hostage on any paralegal’s office desktop.
Smokeball’s reporting and firm insights allow law firm owners and managing lawyers to evaluate staff based on data. When you analyse these customisable reports, you can spot problem areas and take steps to support employee productivity or consider where cuts are effective.
When your legal team uses comprehensive legal software, your entire practice becomes more organised and efficient. Files never go missing, and forms never disappear. Automation boosts productivity and saves time. Additionally, automatic time tracking keeps employees accountable in the office or remotely.
Use Legal Tech Automation to Find More Hours in the Day
When you implement legal practice management software like Smokeball, you can automate a huge portion of your work, creating more hours in the day. These hours can create a better work-life balance, reducing stress and lawyer burnout. With these challenging economic times, you may also spend the newfound time marketing your firm to increase leads. Both avenues are valuable and achievable for your firm when easing your burden with legal technology.
Offer Flexible Legal Fee Structures
Creative thinking becomes an advantage in a recession. It’s time to find new ways to increase revenue. For example, using Smokeball’s law firm insights, evaluate your profit for specific matters and use this information to offer fixed fee services in those areas. The data allows you to understand the average fees for the matter, giving you a springboard for establishing a fixed-fee arrangement that is attractive to potential clients that might be weary of entering into an agreement with an unknown final price.
Another option is to develop a payment plan system, giving clients a set of equal payments over time, ensuring affordability for them and ongoing revenue for you.
Every firm should plan for an economic downturn, whether it happens this year or five years from now. Taking steps today to maximise profit, effectively use legal practice management software, and streamline and organise your practice will pay dividends in the years to come.
Book a personalised demo now to find out how to use Smokeball to stay profitable.