Today, law firms are more aggressive than ever in pursuing shareholder value, employing a number of approaches to boost overall firm revenue and profit per partner. The most effective such strategy is growth. By expanding in size and capability, firms can provide more services to existing clients and better position themselves to compete for and win new business. Firms realize growth through several means including mergers, lateral hiring, geographic expansion and the use of contract attorneys.
At the same time they're taking steps to increase business volume and total revenue, firms are also working to increase internal efficiency and attorney billability. This enables the delivery of services more economically and thus more profitably. However, numerous challenges impede the path to firm growth.
Compliance issues can severely impede firm growth and revenue. As firms expand by taking on new clients, hiring new staff and broadening their spheres of practice, conflicts volume escalates. Every time a conflict forces a firm to decline a potential new matter or pass on an attractive lateral hire, firms leave revenue on the table. Through use of client waivers, firms may be able to manage such conflicts, but only if they are able to alleviate client concerns via ethical walls and secure the client's required consent.
Similarly, clients are increasingly concerned about the extent to which firms are protecting sensitive information. Outside counsel guidelines may specifically require firms to keep such matters internally confidential and greatly limit which personnel can access such information.
In this context, client sensitivity and perception can mean the difference between winning and losing business. Firms that demonstrate strong internal protections and compliance measures are able to preserve new revenue opportunities, better serve their clients and differentiate themselves from their peers.
A 2007 Law Firm Risk Survey shows that while 90% of firms have written risk management policies, fewer than half run any form of audit process to ensure compliance.
