'Drop the dross' and reject clients to grow profits

Lawyers should drop their least successful clients to maximise their profitability, the Law Society's law management section annual conference heard last week.

Robert Mowbray, a partner at accountants MacIntyre Hudson, urged delegates to 'drop the dross', claiming that 80% of a firm's revenue comes from 20% of its clients.

Only by cutting the less profitable clients would firms increase turnover.

'The difference between big profitable firms and small high street practices is that smaller firms will not turn work away,' he said.

Mr Mowbray said some firms told fee earners that they were only allowed to bring in new business if they could guarantee that a certain amount of profit would arise from it.

'For many lawyers, giving work away to rivals is very hard,' he said.

'However, off-loading your least profitable clients onto your rivals means that you now have more time in which to focus on poaching their biggest clients.'

He argued that the ill-will caused by 'dumping' clients would be off-set by the long-term benefits.

Also at the conference, Peter Scott - the former head of Eversheds' London office and now a director of Howarth Consulting - warned that law firms which failed to adapt and change would die out.

'Lawyers need to face up to uncomfortable issues,' he said.

'For example, under-performing partners, partners who refuse to be disciplined, and partners who either refuse to retire or are unmotivated in the years immediately prior to retirement.'

These 'sacred cows' needed to be tackled if firms were to survive what Mr Scott called 'this watershed moment in the profession's history'.

Victoria MacCallum