Don’t fire your clients – You need them!

Ed Wesemann, a very able consultant and partner in the legal consulting firm of Edge International, wrote that  “…Improving profitability is tough. For most firms, culling small clients represents a relatively easy first step.”

The suggestion that law firms “cull” 10% of their clients each year … or that they “fire” their small clients … rattles my very bones when I hear this. So long as the work being done for clients is profitable or can effectively be used as a training ground for new lawyers, there is reason to continue to retain this business.

This culling suggestion reminds me of years ago when I was in the food industry and the process of making store buying decisions based on computer runs (rather than walking the stores and seeing what customers actually purchased) was just beginning.  Some decisions based on the computers were appropriate; some were not. The damage, however, couldn’t be known because the buyers didn’t interact with the customers … and the more powerful, larger vendors were able to prevail in their quest for more store space.  So much so, that today we have conditions where supermarket literally  “sell”shelf space to vendors in addition to receiving other promotional benefits.

The nature of this world removes the intelligence factor … it instead inserts the “quantum factor,” a usually non-thinking, knee-jerk response to numbers.  Using numbers to help make decisions is appropriate. But, be careful how you use those numbers and what conclusions you reach only using the numbers.

Categorized in: Cash Flow - Finances