Is marketing necessary if a law firm can generate strong internal referrals? Sue Bramall argues that it is.
We’re all familiar with referrals in in a range of contexts; ‘refer a friend and get 20% off your next magazine subscription’, or ‘refer a friend for the job and get a £500 bonus if they’re hired’. These strategies have been around for a long time because they work. They make everyone’s lives easier.
Whatever the context, referrals are a means to leverage our connections in a way that adds value. In the context of business, and let’s not forget a law firm is a business after all, referrals add value by either increasing revenue, reducing costs, and strengthening client relationships. Or do they?
Specifically, internal referrals can significantly bring down the cost of a law firm’s marketing efforts by identifying synergies and anticipating opportunities between a client and the firm. Yet despite the advantages, internal referrals seldom happen as frequently as they might.
In the digital age, when we think about law firm marketing, our minds immediately go to online events, SEO, LinkedIn, blog posts, or perhaps even podcast interviews. The power of word-of-mouth appears to have been forgotten in this online era. Yet according to legal practice management software Clio, 62 per cent of clients looking for a lawyer still seek recommendations through their close connections. There is value in word-of-mouth, and huge potential in the form of internal referrals.
According to Thomson Reuters, the key drivers of a law firms’ brand favourability in the UK, after the all-important ‘Legal Expertise’, are ‘Relationship’ and ‘Service’. Loyalty can quickly erode if clients cease to feel valued; customer service skills, turnaround and responsiveness feature heavily in clients’ assessment of a firm’s quality of service.
Internal referrals present an opportunity for law firms to both improve their client relationships and enhance their service, whilst at the same time, reduce their legal marketing efforts, and increase their revenue from existing clients. However, they also present a challenge, specifically where there is insufficient awareness or trust between colleagues.
Law firms often comprise multiple departments, tens if not hundreds of lawyers; how well can people truly understand what their colleagues do? How consistent are standards of client care?
As shown in the table below, internal referrals are mostly driven by two factors; client demand and/or firm capabilities. The more lawyers strengthen their knowledge in the latter, the better. Yet, traditionally, lawyers have relied on demand from clients before they consider making an internal deferral. And this is where opportunities, more often than not, may be lost.
As much as everyone wants to cultivate a collegiate working environment and consider themselves progressive in modern-day 2021, the reality is, in practice, the approach is generally reactive, as opposed to pro-active. Let’s be frank – there is often a deeply entrenched lack of trust within law firms. Perhaps not a conscious or deliberate one; but it is understandable why one might question “does this colleague have the expertise that’s required?”. “who will be held accountable if my colleague doesn’t do a good job?”, “will they look after my client as well as I do?”, “could this harm my own reputation within the firm?”, or “ruin my relationship with the client?”
This is especially true if you had a bad experience in the past when referring an enquiry, only to hear later from your client that they never heard from your colleague, or the other lawyer didn’t follow up promptly, never quoted for the work, or worse didn’t return their call. They will be unlikely to get a second chance!
When demand for a particular client need is identified, an ‘active’ approach is favourable to a ‘reactive approach’. The latter involves waiting for demand from the client to arise before bothering to find out what other members of the firm can do, and thus, determine whether they may be able to help. An active approach at least entails knowing the answer in case the question ever comes up: “It looks like this needs input on XYZ law, I’ll call my mate and introduce them.”
Ideally, law firms should strive towards a culture whereby internal referrals are driven by the firm’s own capabilities. When it comes to building strong client relationships and providing top quality service, an environment where lawyers can anticipate their clients’ needs and reassure them they have ‘got all things covered’ is key.
In this context, lawyers look internally to the firm’s own capabilities. It requires strong knowledge of what the firm’s different departments do, which teams and individuals can help, and what their ideal clients look like, and what triggers a need for legal advice.
The focus here should be placed on working from an ‘active’ towards a ‘proactive’ stance. Whilst the former can still ‘get the job done’, the latter goes above and beyond. An active stance entails identifying the synergy between an identified client and an internal colleague or team. It’s certainly helpful, but what if there’s more your firm could do?
A proactive stance requires a deep understanding of the firm-wide capabilities; to such an extent that when working with a client, lawyers can identify every possible synergy, whether it be for existing or future opportunities.
For example, one of the firm’s new clients is a small tech business where the founders are looking to sell their shares and retire. Equipped with in-depth knowledge of the firm’s capabilities, you know your firm has a strong corporate dealmakers, a tax team, a real estate team, IP specialists, and a wills department. This is potentially the sort of client that each of these teams could add value to. So, you ask the right questions to garner more information.
As you build a relationship with the client, you learn they’re looking to make a few donations to some members of their family who will later be using that money to invest in real estate. Plus, it transpires the shareholders need to draw up their wills, and their son is getting divorced.
It’s an ideal scenario; you’re in a position to reassure the client your firm can help them with all of the above. They don’t need to spend their precious time sourcing new lawyers; you can handle it all.
It’s a win-win situation. This type of practice, however, entails a conscious effort, on both an individual and a collective level. It requires firm-wide proactivity, and good information sharing systems.
It goes beyond merely building those all-important client relationships and includes building relationships across practice areas. It requires a firm-wide approach; cross-departmental cooperation to present clients with an optimum plan. It also requires firmwide reporting; lawyers need to know what their colleagues are working on and what milestones they’ve achieved.
In short, it requires communication, collaboration, and trust. And as with any firm-wide cultural shift, it requires an important investment of time. But the return is certainly promising. The hard part is done, the clients are in the door. Now all that’s left to do is identify the synergies between the firm’s capabilities, and the client’s existing and future needs.
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