Want to Hear the Good News? – Growth is on the Agenda for Most UK law firms.

The 2024 Lexis Nexis Bellwether report makes encouraging reading for those involved in law firm management, with growth on the agenda for most law firms.

Today’s economy has done little to deter the growth ambitions of small law firms, with 70% aspiring to grow over the next five years according to the Lexis Nexis survey. Growing organically was the favoured approach by most law firms, with 63% planning to achieve growth through their own means. This is a sharp rise from only 40% of firms in 2023, although on par with findings from 2022 and 2021. 

Achieving growth, however, can prove challenging for even the most commercially minded small business owners. Two-thirds (67%) of those taking part in the survey said attracting new business will be a significant challenge over the next 12-18 months. This highlights the need for law firms to focus more on developing their existing client base as opposed to winning new clients.

Research shows that:

• It costs up to seven times more to acquire a new customer as opposed to retaining an existing one
• 65% of a company’s business comes from its existing customers.
• Existing customers spend 67% more than new customers.
• A 5% increase in customer retention increases profits by between 25% – 95%.

So, given the research it is somewhat perplexing that UK businesses tend to focus more on winning new customers (44%) as opposed to customer retention (16%).

The best techniques for driving new business

Unsurprisingly, word of mouth is the most successful way to attract new work. 69% say they generate new work this way with existing clients acting as champions for the business.The research found that there is a significant gulf between word of mouth and the next most used tactic, cross-selling opportunities from colleagues, at 35%. Cold calling is the least successful tactic for respondents, with only 3% having had success.

Lexis Nexis research showed that almost half of law firms (49%) are increasing their marketing spend. A further 43% said they’re increasing their investment in business development showing the appetite for growth in the legal sector.It is however important that this increased funding for marketing and business development is used wisely and law firms achieve maximum “bang for their buck.” Measuring return on investment for marketing spend and business development effort is essential but often overlooked by law firms.

The reality for most UK law firms is that there needs to be a steady stream of new clients matched by a high retention rate of clients who return to the firm to maintain a healthy pipeline of work coming into the firm. Law firm leaders however will be wise to pay heed to the research. Aim to delight your existing clients who sing your praises to their friends and family who then instruct your firm. Such clients will have cost nothing from your marketing budget.