“Teamwork divides the task and multiplies the success.” ~Author Unknown
A very old and common technique for building business is to ask for and give referrals. Every year I get at least a handful of letters and brochures from law firms seeking referrals on their areas of expertise. I also know many lawyers, solo practitioners in particular, that refer business that comes their way, when it involves areas of expertise or resource commitment they are not comfortable with.
If you are a small or solo firm and would like to get more out of case referrals, there is an alternative to sending them out the door. Consider joint venturing cases you might otherwise refer. There are more solo firms in Texas than any other size firm. The areas of practice for these firms vary widely. Why not ask someone to work with you on a case instead of just farming it out? Here are six reasons why this option can be beneficial:
- It allows you to earn fees on a case you might not otherwise be able to handle. When I get a case in the door that I may be reluctant to take on because I either lack the resources (i.e. money and staff) or experience to handle it properly, but I would otherwise be very interested in taking, I will usually look for a lawyer with the expertise or resources I am lacking to join me in the representation on the case rather than just refer it. Most solos, even very successful ones, will be very open to taking a case on a joint venture if the case has the financial potential to justify it.
- If you refer a case, you still need to stay sufficiently involved to protect your referral fee and satisfy the requirements of the code of professional responsibility. If you joint venture the case, although you will likely be committing more time and effort to the case than with a referral, you will also earn a higher portion of the fee. If you are trying to grow your business, keeping more of the fee can be crucial.
- If you refer a case because you do not feel you have enough experience to handle it on your own, you reduce your opportunity to ever acquire that line of experience. If it is an area that you receive frequent inquiries, or would like to handle more of, a joint venture can be a great alternative. You work closely with someone who knows the area of law while you earn a higher-than-referral fee, and eventually you will be qualified to handle that type of case on your own.
- If you have experience in an area that because of the customary fee structure, requires substantial financial investment (i.e. the firm covering expenses), consider asking a firm with adequate resources to invest and joint venture the case with you. If the case is a good investment, most firms with the financial resources will still be interested in taking the case on a joint venture. You provide a bulk of the man hours, while they share their knowledge, expertise and finances with you for, let’s say, half the fee. When I’ve had the opportunity to take in such a case, I have never had trouble finding a joint venture partner to split the fee based on their financial backing and second chair legal support. A good investment is a good investment.
- If you joint venture a case instead of refer it, you are more likely to be in a position to receive additional business or referrals from your client. When you send a case to another firm, assuming that firm does a reasonable job, that client may be more inclined to go to refer that firm in the future rather than your firm. A good lawyer will develop a bond with their client throughout their representation. Unless, you already have an otherwise very strong relationship with that client, the relationship that client develops with the referred lawyer will likely be more vivid in their mind than the previous relationship with you, so when the client has additional needs or an opportunity to refer, chances are the lawyer you referred will get the new business or referral. Many experts on the subject of marketing agree that the best way to develop business is first through your existing clients. The more clients you can keep in the fold, the greater potential for repeat business or referrals from them.
- By pulling another lawyer into a case, you also increase the likelihood that the lawyer you joint venture with will reciprocate by asking you to joint venture with them on one of their cases, or possibly even out right refer cases to you. It is a win/win for both lawyers because it expands the work for both firms by providing the benefits of shared skills and experience while maintaining separate practices.
Of course there is the down side to joint ventures. As with any joint venture, you then become responsible for the actions of the lawyer you are venturing with as you would be in any partnership, but that responsibility is limited to that one case. If you choose your joint venture partner wisely and stay active on the case as you would your own, that risk of additional liability should be minimal.
Also, be sure that if you think you might want to joint venture with another lawyer on a case, you include that possibility in your contract with your client.
While a joint venture will not be the answer for every case, it is a valuable alternative to referrals that can produce greater revenue for your growing firm.