Remember the "Don't Do" list from tip #5?Some clients may belong on your “don’t do” list. Every lawyer has horror stories about bad clients, clients they never should have agreed to represent, matters they should not have agreed to take on or that got out of control and caused a financial loss.
In order to keep your best clients coming back and referring additional work to you, you must ensure that lower value clients are not taking the place of higher value clients. One way to keep focusing on the highest value clients in your practice is to get rid of the bottom tier of your clients.
The 80-20 Rule
You may be familiar with the 80-20 rule, also known as the Pareto Principle, in which 80% of your work comes from 20% of your clients. Twenty percent of your clients will cause 80% of your problems.
Focusing on your best clients, rather than on your worst clients, brings a big return. Unfortunately, in reality, the bad clients tend to get more of a lawyer’s time and attention than the good clients.
Consider firing your “nightmare” clients, clients who don't pay on time or aren't the proper fit for your practice - your practice will benefit, and so will you.
Don't Be Afraid to Fire Bad Clients
While the idea of firing clients might be a scary one, allowing bad clients to pull your focus from your highest value clients can be even more detrimental to your practice.
Bad clients drive out good clients. If your practice is filled with lower value clients that don’t value your work, that are price sensitive, or whose work you just don’t feel like doing, you won’t have room in your practice to take on the higher value clients. And you’ll shortchange your existing high value clients because you’ll be focusing on the problem clients.
You might be afraid that turning away the client isn’t a prudent financial move. But not all clients are profitable. Consider the damage that bad clients do to your bottom line, your stress level, your focus and ability provide quality work not only for the bad client, but for other clients as well.
Bad clients and/or low value matters (or matters that are a bad fit for you):
- Drain your energy
- Make it more difficult to concentrate on the matters you’re handling for your best clients
- Prevent you from seeking additional work from your good clients
- Cause you to turn away business from a potentially good client because you’re too busy working on lower value matters or with bad clients
- Sabotage your productivity
- Increase stress and anxiety
Is it time for you to get rid of some clients? Perhaps there’s another lawyer in your area who needs additional work, or that is a better fit for your “bad” client’s personality or the type of work that client wants or needs. Now is the time to pull out your “go to” list.
Being busy isn’t the same as being successful or profitable. Getting rid of bad clients makes room for you to take on additional, higher value clients – and chances are that your higher value clients will be less price sensitive. Often, you can make more money with less high value clients than you can with high volume practice filled with lower value clients.
Getting rid of less desirable clients is only part of the solution. Once your practice is free of bad clients, you’ll want to keep it that way by not taking on those problem clients in the first place. You’ll need to put some systems in place to help you determine at the outset which clients are good clients and which are bad ones so you can send the bad ones packing before they cause trouble for your practice.
This post is excerpted from the upcoming book, How to Do More in Less Time: The Complete Guide to Increasing your Productivity and Improving Your Bottom Line, which I co-authored with Dan Siegel, due for publication later this year by the ABA Law Practice Division.