Relying solely on referrals is dangerous

Referrals in law firmsReferrals can be an important component of the business of many law firms.  Whether those referrals are from other legal professionals, networking contacts, social contacts or former clients, they can really help a lot of law firms.

New clients that come from referrals can be some of the best kind of clients a law firm gets.  Those clients often come in trusting the lawyer or the law firm to a high degree based on the relationship and good word of the person referring them.

New clients from referrals also is a positive because the lawyers for law firm did not have to spend advertising dollars to bring the new client into the law firm.  This can definitely be a net positive for a law firm.

Many lawyers and law firms, however, still believe that referrals and word of mouth networking is the only way a lawyer should get their business.  In other words, many lawyers and law firms shy away from marketing — and rely almost exclusively on referrals.

Relying solely on referral business can be a dangerous proposition for most.  For many, referrals can come in waves — or not come at all.  When referrals dry up, or slow down, it can result in hard times for a lawyer or a law firm.

Apart from referrals from former clients, obtaining referrals can often result in constant time and effort.  In other words, while advertising costs dollars, obtaining referrals is not necessarily free, either.  To get lots of referrals, a lawyer or law firm has to spend a lot of time networking, meeting people, shaking hands, etc.

This means that a lawyer has to spend a lot of time meeting other individuals for coffee, lunch, happy hour or networking meetings.  In many instances, these coffees, lunches, happy hours and networking meetings might not even result in any good referrals coming from a particular source.

Of course, many of these coffees, lunches, happy hours and networking meetings results in money being expended at these events on coffee, lunch, drinks and networking fees.  If a lawyer or law firm quits engaging in these actions to get referrals, these referral sources can also quickly dry up.

To get referrals, a lawyer usually has to refer back to these same individuals — or the referrals will stop coming.  This can be hard work.   It is not always easy to refer to others in particular areas of law (if you are referring to other lawyers) or to other individuals outside of law.  Even then, a lawyer might not have many quality individuals to refer.

Additionally, time that a lawyer spends networking is time in which that lawyer is not doing substantive legal work.  This can have the net effect of hurting a lawyer’s bottom line as well because lawyers get paid, after all, for competing legal work.

At the end of the day, obtaining business from referrals is a positive.  However, most lawyers are wise to come up with a comprehensive marketing strategy as well.   Most lawyers who do very well get their business from multiple avenues, including a certain portion through marketing.  Whether that marketing is online, in paper format, television or radio, most successful lawyers and law firms diversify their approach.

When a lawyer obtains a certain portion of their business through marketing, they also do not have to worry as much about the peaks and the valleys.  They also do not have to spend so much time networking with others (and trying to locate people they can refer back) and can get back to the practice of law.

If you have any thoughts, feel free to share them below.

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