2017 NatWest Legal Benchmarking Report encourages firms to increase BusDev resources
The latest analysis of the financial performance of the UK legal profession reports revenue growth of 5% for the latest financial year and 11% over the past two years – well above the national average.
However, the authors also sound some warning bells that profitability is not keeping pace, and lock up has increased to 113 days – longer than any time in the last five years, concluding that ‘without a constant flow of new matter starts and paid fees, they would on average run out of cash within 40 days’ and encourage partners to think twice before distributing cash to partners.
Generating new matter starts can only be achieved one of three ways:
- satisfying and delighting clients to ensure they provide repeat instructions and refer colleagues, friends and family;
- investing time (and some corporate hospitality budget) in building good relationships with other professionals who will refer work to you; and
- investing in marketing and business development to build profile and generate new clients.
The NatWest survey shows that the median gearing in firms is 3.94, but those in the upper quartile reach a median gearing of 6.0. While firms need to improve their gearing, it should not be at the expense of productivity and so are encouraged to ‘look at employing some more business development professionals to help fee-earners to become more productive. Fee earners will never be fully productive if they have to spend too much time doing business development activities.’