What are these firms doing differently that sets them apart from their peers? Are there lessons to be learned that will help law firms navigate the years ahead?
The Hinge Research Institute recently investigated the answers to these and other questions in the Law Firm and Legal Services Edition of the High-Growth Study 2022. The study surveyed executives from 115 law firms to explore their biggest challenges, successes and priorities — and more importantly, to pinpoint the technologies and strategies that were their secrets to success during these difficult times.
This article examines the four factors that helped law firms achieve remarkably high levels of growth last year.
43% INCREASE IN AVERAGE ORGANIC GROWTH IN 2021
High-growth law firms increased their annual growth by 43% over last year’s figures — achieving an average of 37% growth in 2021 compared to 25.7% in 2020. In contrast, no-growth firms suffered an average growth rate of -3%.
Surprisingly, last year’s high-growth firms did not achieve this growth by sacrificing any profits: Nearly 80% of them were highly profitable, which was a 100% increase from last year’s figures. Meanwhile, only 29% of no-growth firms managed
to churn a high profit.
Also, high-growth firms did not achieve their growth from merger and acquisition (M&A) activities. In fact, growth attributed to M&A declined by 18% last year for the high-growth firms.
Instead of these usual explanations for growth, the 2022 study found that high-growth firms are currently achieving their success through the following:
- High-growth business development and marketing technologies
- Specific digital marketing techniques
- Third-party contractors to fill talent gaps
Let’s review the specific technologies, techniques and contracting strategies that brought high-growth firms so much success last year.
1. High-Growth Marketing and Business Development Technologies
As the economy continued to suffer in 2021 — and more firms deepened their reliance on remote teams due to the pandemic — high-growth law firms doubled down on their use of advanced digital marketing technology that allowed them to boost their
efficiency and effectiveness during lockdowns.
For example, high-growth law firms used customer relationship management (CRM) software twice as much as their no-growth peers in 2021. This helped them establish better client relationships despite social distancing and fewer face-to-face interactions.
CRM tools also helped high-growth firms sell a wider range of services to existing clientele while reducing their business development costs.
Another big difference was seen in the use of marketing automation technology. High-growth law firms were 5.3 times more likely to use a marketing automation platform.
In addition to using more digital marketing technology, these law firms are also realizing greater impact from this technology when they use it. They understand how to harness the data within their digital marketing stacks to track key performance indicators
(KPIs) and other metrics that help them run their businesses better. For example, high-growth law firms are 76% more likely to monitor the health of their sales pipelines and 47% more likely to leverage ROI calculations to determine the effectiveness
of their marketing strategies.
2. High-Growth Marketing Techniques
High-growth law firms are also putting a greater emphasis on different marketing techniques than no-growth firms, and they’re achieving better results when they use them. The top five most impactful marketing techniques of high-growth firms include:
Except in the case of “providing assessments and/or consultations,” when no-growth firms use the above techniques, they’re receiving dramatically less impactful results. This means that they are usually not recognizing — or realizing — the tremendous benefits these techniques can bring when executed appropriately.
“High-growth law firms increased their annual growth by 43% over last year’s figures — achieving an average of 37% growth in 2021 compared to 25.7% in 2020. In contrast, no-growth firms suffered an average growth rate of -3%.”
No-growth firms most likely receive such poor results from these techniques because they lack the right talent on hand to execute them. Unfortunately, today’s climate of the Great Resignation is making it more and more difficult to source the right talent, but some firms are finding an easy solution to fill their talent gaps. That solution involves working with third-party contractors.