Though it may sound simple, recognizing whom you best serve is an important first step in building a successful practice. Here’s why: the quality of your practice – and how much you enjoy working in your practice – directly correlates to the quality of your clients.
Ironically, the client you take because you need the money ends up taking your time and not paying you for it.
If you, like many of your colleagues, have stocked your practice with clients that aren’t a good fit, you’ll spend much of your career feeling frustrated and unappreciated. In addition, you’ll never realize your income potential. Our research has shown that if you were to apply Pareto’s Principle (also known as the “80/20 rule”) to your client base, you would probably find that 80 percent of your income comes from 20 percent to 40 percent of your clients! In this lesson, you will learn the power of this principle and how to apply it to your practice.
Most of you know from your own experience that all clients are not created equal – but haven’t yet learned to trust your instincts during the intake process. You may recognize that the client that darkens your door with a page ripped out of the phone book is not quite the same as those sent by your best referral source – but you give everyone the benefit of the doubt. Don’t. Become more rigorous in your screening procedures. Carefully selecting the clients you work with not only improves your morale, it minimizes collection problems and has the added benefit of protecting you against malpractice problems in the future.
There are four levels of client types; we call them “A”, “B”, “C” and “D” clients. Each level is judged on certain general criteria: the ability to pay; having needs consistent with your expertise; their ability to cooperate; their opinion of attorneys in general; whether they are high or low maintenance; their ability to be satisfied with services rendered; and the likelihood of sending more work or quality referrals. In addition, practice-specific criteria should also be developed that relate to the viability of the prospective client’s case.
In this ranking system, which you can custom-fit to your particular practice areas, “A” and “B” matters are the good, “C” matters are the bad, and “D” matters are downright ugly.
Our studies show that the “A” and “B” clients for most practice areas typically comprise 20 percent of your client base. Hidden among the other clients you serve, they are usually a small, quiet, but vitally important group. How important are they? As mentioned before, they will generate a hefty 60 percent to 80 percent of your revenues and only take up between 20 percent and 40 percent of your time. In addition, they pay their bills; appreciate the value of the work you do for them; cooperate with you; show up on time; and send quality referrals. In short, these are the clients you actually enjoy working with! They are the low-maintenance clients that bring you the kind of matters that fit your expertise. They are not crisis-driven, and they trust your opinion. These are the clients that tend to get lost in the shuffle as you scramble to handle the constant demands of your “C” and “D” clients.
If you find you have stocked your practice with “C” and “D” clients, conduct a “housecleaning”. Most attorneys are appalled to discover how many problematic clients they work with. But there is a solution – follow the steps listed below to conduct your own “housecleaning”. If you have any doubt during this process and begin to vacillate on whether or not a client is appropriate for you, ask your staff. “C” and “D”-level clients often treat your staff poorly or take up an unreasonable amount of their time.
1. Rank your current clients and consider referring out, closing or letting go of all the “Ds” and most of the “C” clients.
2. You can do this in person, over the telephone or by letter. Your bar will typically have sample disengagement letters that you can use. If the issue is nonpayment, you are not ethically bound to continue work for a client that is not paying you. (Litigators must be careful here – confer with your trial judge.)
3. Avoid working with more “C” and “D” clients! Refine your intake selection so you don’t admit them into your practice in the first place!
Fortunately, “C” and “D” clients don’t sneak into your practice unannounced. They usually arrive waving several red flags. And you welcome them in, often because you need the money – hoping that uneasy feeling you felt upon meeting them was just heartburn. Ironically, the client that you take because you need the money ends up taking your time and not paying you for it. Begin to trust that uneasy feeling – it might be trying to tell you that you are getting involved with the wrong kind of client.
Mark Powers, President of Atticus, Inc., and Shawn McNalis co-authored The Making of a Rainmaker: An Ethical Approach to Marketing for Solo and Small Firm Practitioners.