In the latest instalment of a continuing series on law firm marketing, Sebastian Fox discusses the most effective ways of winning work from new clients

Do you pay more attention to winning work from new clients rather than increasing your fees from existing clients?

The answer to this question could have a profound effect on your profitability.

This is because winning work from a new client is up to seven times more expensive and time-consuming than getting new work from an existing client.

The more work you generate from your existing client base, the more profitable it is likely to be.

New clients are not unimportant; it is inevitable that you will lose some existing ones over time.

To maintain your business you need to keep ensuring that as a minimum, you replace the fee income from 'lost' clients from other sources.

But why does this have to come exclusively from new clients? Many law firms have a culture that perpetuates this.

They recognise and reward those lawyers who are best at attracting new clients, rather than those who excel at generating greater fee income from existing clients.

Several factors lie behind this.

For a start, there is much more kudos attached to winning a new client.

The lawyer who has won the new client will rightly want to ensure that a close relationship is developed and that the job is carried out as efficiently and effectively as possible.

However, once the initial work has been finished, the 'new' client becomes 'existing' and the level of attention to that client's needs is lowered while other 'new' clients are sought.

Lawyers who are good at generating new clients are often termed 'rainmakers', and often they are the lawyers who make partnership quickest.

It is also easier to measure the 'new' work delivered by a particular lawyer than to measure incremental work from an existing client.

Matters are made worse by the tendency of many firms to work in silos.

Does the property department refer new clients to the wills and probate department as a matter of course? Not only can there be distrust between different departments ('I wouldn't let them come close to my clients!') but also the issue of who the client 'belongs' to can have a fundamental impact on behaviour.

Commonly, a client is seen as being owned by one particular partner or fee-earner.

Why should this be? After all, the profits are shared, so why not share the source of those profits? The firm that generates all its incremental income from new clients is adversely affecting its profitability.

Firms that routinely share clients among departments will almost certainly fare better than those who do not.

Working for a new client is more expensive for a number of reasons:

- The acquisition costs are higher (marketing expenditure plus lawyer and management time);

- It takes longer to get to know the clients and understand the issues they face;

- There are one-off setup costs (money laundering regulations, travel, etcetera), and;

- With existing clients there should be goodwill that enables to you to invest less time to get their work.

For existing clients, many of these costs will not be incurred.

You will know the clients, you should know the issues facing them and you will already have incurred many of the setup costs.

It is relatively simple to work out how much it costs to acquire a new client, by taking your charge-out rate and multiplying this by the average time taken on business development for new clients.

You could also add any pro rata direct marketing costs (advertising, PR etcetera).

What is the total?

Yet client partners remain reluctant to introduce other fee- earners to the client to open cross-selling opportunities - strange when you consider that the money saved by providing the client with more than one service will directly improve the firm's profitability.

Another consideration is that in some cases, the client will have need for additional legal advice over and above the original reason for seeking a firm's help.

However, the client may not recognise this need, and therefore it might only be uncovered by skilful questioning and interviewing that takes - in most cases - a great deal of training and practice.

In many instances, these opportunities are missed altogether.

Changing from a culture where most of the firm's work comes from new to one where there is a balance of work flowing from new and existing clients can take time.

Several things need to happen:

- Recognise that clients belong to the firm as a whole, not to individual partners.

- Have each department develop a simple set of questions to ask all new clients, which will uncover basic needs.

For example, if you carry out a conveyance for a property worth more than 250,000 ask whether the client has made the appropriate provisions in their will to mitigate any inheritance tax implications.

- Instigate regular meetings with your more important clients to uncover any implicit needs (and provide sales training to fee earners if necessary).

- Identify which clients will be affected by changes in the law and inform them accordingly, detailing how the changes will impact on them personally.

- Work out the profitability of each client to know which are currently the most profitable, and which are going to be most profitable in the future.

Concentrate on these clients.

- Recognise and reward the work of lawyers who are successful in generating additional work from existing clients in an equitable way to rainmakers.

Above all, be systematic.

There is nothing worse from a client's point of view than being contacted every other week to be asked if they have any legal problems that need solving.

The key is to share the information on clients and organise a system of who is going to contact them, when it is going to happen and what will be discussed.

For this to work effectively, there has to be complete confidence across all departments that they can rely on each other.

The consequences of a weak link in the chain are obvious.

A cross-departmental team responsible for managing and directing the various cross-selling efforts can achieve this.

There is no duplication of either effort or targeting of clients.

It also provides maximum transparency to ensure that all departments are involved.

The members of this team need not all be partners; indeed, it can provide a useful training ground to develop more junior staff.

Don't make life difficult for your firm.

Take the time to develop your existing client base - it will make you more money.

Sebastian Fox is a marketing consultant and is a former marketing director at national law firm Eversheds