Why Focus on Internal Referrals?
According to the 2018 Report on the State of the Legal Market from the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute, the average lawyer now bills 156 fewer hours than eleven years ago, costing firms significant lost revenue each year.
What measures can firms take to avoid this lost revenue and increase billable hours? One suggestion is to improve cross-selling and internal referrals within a firm. Not only will this help the firm increase billable hours by gaining more work from existing clients, but it will provide additional benefits as well. Providing additional services to existing clients decreases marketing costs and saves time because the client is already familiar with, and trusts, the firm.
Additionally, by satisfying as many of a client’s legal needs as possible, the firm builds deeper relationships with its clients and guards against the potential that clients will be poached by another firm, thereby improving client retention. According to a study by Redwood Analytics, client retention significantly improves when firms move from serving clients in only one practice area to serving clients in four or more practice areas.
Cross-selling and internal referrals are also easier to measure, track and manage than external referrals, new leads or new marketing and advertising initiatives.
Building Intra-Firm Referrals
While gaining additional business from existing clients may be easier, it is important to approach the process of cross-selling or intra-firm referrals with the same level of dedication and planning as new client acquisition.
The first step in any business development effort is always knowing your audience. This is true even with existing clients – getting to know the client allows the firm to identify potential opportunities and make the right intra-firm referrals. It is important to go beyond the needs the lawyer may already be familiar with from the existing work and gain a more complete picture of the client’s overall business.
Research client needs and look for similarities with other clients in the same business or industry whom you already provide services to in other practice areas. Conduct client surveys regularly to learn about clients’ challenges. Identify all of the geographic areas where the firm’s clients do business and connect clients with your firm’s offices in those areas.
When approaching an existing client with a suggestion for additional services or referrals to other attorneys within the firm, be mindful that the client may have existing relationships with other attorneys who are already servicing those needs. Although it would be ideal for the client to transfer that work to your firm, this should be approached delicately to avoid alienating the client and losing the existing work.
Often, the better approach is to gain the client’s trust and introduce them to other attorneys in the firm over time, before a need arises. This allows the client to get comfortable with attorneys in several different practice areas and showcases firm’s knowledge and expertise, giving the client the opportunity to view the firm as an overall advisor, rather than a provider of legal services in a limited area.
Training clients to see the firm’s attorneys as professional advisors who can meet several needs – including non-legal needs – is a good practice. If the firm has a good network of professionals both inside and outside of the firm that can help clients with a variety of issues, the client will turn to the firm first when they encounter a challenge. This makes it much more likely that the firm can refer to client internally for additional services.
That’s where a tool like ioRefer can help. By using your firm’s interactive platform and database provided by ioRefer, attorneys can quickly and easily exchange referrals and find and connect with other attorneys in the firm who can help satisfy their clients’ additional legal needs.