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Legal Marketing Blog A blog dedicated to lawyer marketing in any size law firm

Don’t Put Too Big an Egg in Your Client Basket!!

Posted in Marketing Plans, Marketing Tips

By that I mean, don’t have one or even two clients account for too high a percentage of your or your firm’s revenues. It could potentially set you up for disaster. A sound law firm marketing principle involves broadening and deepening your client base in order to minimize the potential of one or two clients bringing the firm down, if they choose to leave. Their departure could be based on any number of reasons, ranging from dissatisfaction to merging with a larger company, whose existing law firm would likely end up doing all the legal work.

LeBeouf Lamb Greene & MacRae, an international firm of 700 lawyers and 18 offices worldwide, may well have wished they heeded that advice, at least for their Pittsburgh office, which closed February 1st, according to a story that appeared in Small Firm Business and The Legal Intelligencer. The demise of the firm’s Pittsburgh office was due apparently to a too big a reliance on one client, Alcoa, Inc.

In response to the question of what percentage of a firm’s revenue from a single client should start raising serious questions within the firm, “the most common answer was 10 to 15 percent” among legal industry experts and lawyers themselves, according to the story. I tell clients they should shoot for 5%.

Obviously, the event for a firm the size of LeBeouf Lamb is not devastating. But, how about your firm? If you have a client or two or three that account for a percentage of revenue you are not comfortable with, then you really need to give serious thought to expanding your legal marketing and business development efforts to ensure you have a broader client base.

  • That’s very good advice. I remember many years ago visiting a law firm where someone I knew was a partner. They were having a cocktail party to celebrate the opening of their new law library. It was the most opulent law library I had seen in a New York City office building, with a grand marble staircase going upstairs to the floor above. I was given a tour of the office and I was even shown the file room. When I looked in the file room I quickly noticed that every file belonged to only one client, OPM Computer Leasing.
    When I asked if they had only one client, I was told that the law firm had grown, as their client grew, from only two lawyers to I believe approximately 80 lawyers. I remember stating that this is very risky and I offered my unwanted advice that they seek out other clients. I asked what if the client decides to change lawyers? I was told the client would never change lawyers because they had a very close relationship from the beginning. I asked what if the business is ever sold or goes bankrupt? I was told that would never happen. I never did ask what OPM stood for and therefore never asked the one pertinent question. It turns out that OPM stood for Other People’s Money and apparently it may have had hidden meanings. Shortly after the cocktail party, OPM Computer Leasing hit the news. After rising from obscurity to become one of the largest computer leasing companies in the US, the US Attorney’s office began investigating the company for allegedly writing bogus leases and false bills of sale for some $100 million of fictitious computers. OPM was out of business the day it hit the news. With no money to pay legal fees, the law firm quickly closed its doors and was out of business.
    The moral of the story is that diversity should always be considered for all areas of life. The concept of not putting all of your eggs in one basket is not just for investments. This is also true with marketing or advertising.