Posted by Dave Seager, consulting adviser at Legal Futures Associate SIFA Professional
Keeping abreast of the news and trends in the legal market is essential to SIFA Professional. It is our commitment to our members, to ensure they are always best equipped to support their solicitor partners.
Therefore, in June, it was with considerable interest that we read this year’s Lexis Nexis Bellwether report, which assessed in detail, with input from numerous solicitor contributors, the main challenges facing small law firms seeking to grow and be successful in 2023 and beyond.
The well-respected annual insight highlighted five main challenges, identified by a cross-section of smaller law firms. They are clearly shown in the image taken from the Bellwether report below:
It struck us very clearly that our SIFA Professional financial planning professionals are in an excellent position to seriously assist law firms with the first and third challenges highlighted.
Attracting new business
Those surveyed were expecting less growth in 2023 than in the previous two annual reports, and the need to attract new clients was a priority.
What was interesting was that, more than ever, the law firms were citing business development strategies (88%) and marketing (81%), which is perhaps not something that would in the past be associated with solicitors.
Certainly, social media is mentioned, as is the importance of testimonials, although the report is not clear exactly whether the endorsements are directly elicited from clients or via comparison sites.
However, it is hard to disagree with the contention that a personal recommendation for a service is, without doubt, the best source of new clients; an actual personal endorsed referral will always be stronger than a testimonial on a website.
Coincidentally. in June, the Solicitors Regulation Authority published its report of the first year of its quality indicators pilot with review and price comparison websites, and the findings seem to support the above contention.
This quote from the report shows that the public are far from convinced: “Looking at general online behaviour, 88% of consumers surveyed said they regularly refer to review websites when shopping around for a new service/product. This figure fell to 22% when asked about legal services in particular.”
Research has consistently shown that those needing to find a lawyer see word of mouth as the best source of recommendation.
It is here that we believe quality financial planning colleagues can actively support the growth, via new client acquisition, for the solicitor practices that have chosen to partner with them for third-party referral.
Third-party referral works both ways, because as certainly as you will have clients in need for complementary financial planning advice, they too will need a safe pairs of hands to pass on clients needing legal advice or services.
It is self-evident that being referred new business, and hopefully a new client, courtesy of an endorsed recommendation from the client’s financial planner will be superior to those generated by marketing or a comparison site.
That is not to suggest that self-promotion and marketing your services is not a sensible strategy, which is absolutely is, but we would hope that your chosen financial planning partners can positively supplement that.
Retaining existing clients
We see this challenge as inextricably linked to the previous one, because of the differing natures of legal services and financial planning.
The Bellwether report suggested that small law firms were concerned at retaining clients beyond a year, which is alarming, as the individualised touch with clients would traditionally be a strength of smaller law firms over their larger siblings.
Some 83% of respondents suggested that they would target growth by attracting more business from existing clients. Indeed, one individual quoted some excellent early career advice: “One of the wisest things I was told as a young lawyer was not to get so focused on getting new clients that you forget about the actual clients who are loyally with you right now.”
Customer relationship management (CRM) technology was cited as being increasingly used to stay in touch with clients, offer them news and inform them of further legal services they might require. In the financial planning community, CRM has been actively utilised for some time and we would happily discuss best practice in using the technology.
What cannot fundamentally change, however, and as such will always make it more difficult for law firms to retain clients, is the frequently transactional nature of the work and services provided. Individuals do not move house or get divorced regularly, nor do they need more than one lasting power of attorney, for example.
Conversely in financial services, the development of a genuine financial plan with an individual or a couple, based on their life stages, goals and aspiration, is the start on an ongoing journey. A journey with twist and turns, regular stop-offs, surprises and one therefore, that has a route in need of regular review.
This is why we believe so passionately not only that the modern-day client requires a more holistic overview and a plan for their affairs that includes legal with tax and financial, but that it is this joined-up approach that ensures client retention.
A client you refer to a financial planning partner will invariably be offered advice beyond the pressing need you identified and have a financial plan developed. At various points in that plan, they will need to underpin it with your legal advice, and for this they will refer back to you, which obviously assists you converting that customer into a retained client.
A financial planner will be sitting down with clients at least once a year, with the chance to reinforce the message that they are a mutual client of both the planner and the law firm that referred them.
So, when you identify that an individual you are advising needs some ancillary financial advice, by making that positive referral to a chosen and trusted financial planning firm, you are not only working in their best interests but also in your own.
The client will receive the holistic overview and advice they deserve, and this type of satisfied individual or individuals are the ones you will retain long term.
We are working in professionally challenging times, with high inflation, a cost-of-living crisis, high interest rates, and where clients, or potential clients are seeking value. Value does not mean low cost but it should mean a complete service for the price, and that will frequently mean joined-up advice from more than one professional.
Solicitors working hand-in-hand with high-quality financial planners will not only differentiate themselves in the eyes of the customer but the partnership will ensure a flow of new clients and their retention.