Word of Mouth Referrals Still Best

Studies have shown that referred clients are less aggressive in fee negotiations, and more profitable and loyal
ALTHOUGH TIMES are changing and the practice of law is changing with them, there are some things that will forever be the same.

The best method of generating new work is one thing that will never change: referrals have always been the single most effective and productive method of business development available to lawyers.

Legal services are intangible, and so without the benefit of direct experience with the lawyer or the firm in question, it can be very difficult for a potential client to evaluate or assess a lawyer he or she might be thinking of retaining. In the business of law, it’s the intangibility factor that makes referrals so valuable; a lawyer who is referred has successfully made it through a prescreen, conducted by someone credible, who is providing their implied endorsement.

Obtaining business through referrals requires little or no investment of time or energy. Word-of-mouth can generate more new clients than any marketing method out there, but studies have shown that referred clients are less likely to be aggressive in negotiating fees, and are more profitable and loyal than non-referred clients. 

The bottom line is that when it comes to getting new clients, those who come your way through referrals are the easiest to get, the easiest to keep, and the best for your business. 

How to Classify Referral Sources

When building your list of referral sources, look beyond whether or not that specific individual has the potential to send you work directly. Referrals are not only directly available from your contacts, but from the people your contacts are connected to.

The fact is that you don’t ever really know where your work will come from. Everyone you know and everyone they know can potentially refer work. So, for the purposes of developing referral strategies and setting priorities, it is helpful to break your referral contacts down into three categories:

High Potential High-potential referral sources tend to be those who have had direct experience or exposure to you and to your work. Typically they are clients, and lawyers outside and inside your firm. Their first-hand experience with you means that their word carries weight.

Moderate Potential
People in this category are respected professionals and business people connected to you, who know what you do and who have connections to those in your target markets, although they do not have direct experience with you. Their referrals are based on what they perceive to be your expertise and experience.

Low Potential Low potentials are essentially everyone else. These are people you know who don’t have direct experience working with you, and who are not particularly well networked or connected with individuals in your target markets, but can nevertheless refer a potential client on the basis of your reputation and the limited amount they know about you or your firm.

Needless to say, high potentials should be your first point of focus, moderates your second priority, and low potentials last, but don’t overlook any one category. Although, obviously, you shouldn’t spend the same resources on low potentials that you do on high ones, don’t forget about them altogether, either. Everyone on your list is a potential source of referrals.

How to Generate Referrals

There are two approaches to getting referrals from your network.

The Direct Approach This approach involves asking another person to refer work to you. Keep in mind, though, that this has the potential to place them in a difficult or awkward position; what you are asking requires the other person to put their own reputation on the line, as well as the valued relationships they have with those whose referrals you want. By asking someone to refer you to their contacts, you are asking them to take a risk, and possibly for little to no return.

The Indirect Approach In most circumstances the best approach to use is the indirect one. It involves providing others with what they need to make it easy for them to refer work to you should they choose to do so. 

Let others know that you are open to new work, and demonstrate your knowledge and experience in ways that are of interest to or benefit those individuals. 

Do whatever you can to help your referral sources grow their business, and they will help you to grow yours. 

Donna Wannop, LLB, MBA, is a practice-development coach (www.donnawannop.com) who has worked exclusively with the legal profession for 30 years. Reach her at donna@donnawannop.com.
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