On average, law firms experience a decline in billable hours from existing clients at a rate of 1% a month, according to a new study by Redwood Analytics. Eventually many good clients leave, switching to another law firm.
Happily, research shows that law firms can identify clients that are at-risk of leaving, and that firms can control whether they stay. Here are the four markers that identify whether your firm is likely to retain a client. This client:
- Provides the firm a large amount of legal work.
- Has a mature, established relationship with the firm.
- Sends the firm work in more than two practice areas.
- Has more than two firm partners significantly involved in the management of the client’s matters.
No. 3 and 4 are the key indicators. Firms that successfully cross-sell clients are going to keep them. On the other hand, firms that allow partners to hoard clients and keep other partners away are likely to lose those clients.
The more varied the legal services provided to a client, the less likely they were to leave. Less than 15% of clients using a firm for three areas of law are likely to leave the firm within two years. Less than 5% of clients that had retained the firm for four or five areas of law are likely to cease using the firm. On the other hand more than 35% of clients that used the firm for only one area of law left within in two years.
For the full story, see "Client Attrition Analytics: Firms Can Control Whether Clients Stay or Go."