Most consumer oriented law practices have a big problem. Lawyers who practice family law, bankruptcy, criminal defense, estate planning, personal injury, real estate, and other areas, have a preponderance of "one time" clients. Once the initial case or engagement is completed, the attorney gets no additional revenue, or at best, very little.

The problem is worsening. It costs more to bring in a new client today, and overhead and manpower expenses to service those clients are also higher. But clients aren't willing to pay more, and they don't have to. With more lawyers competing for the same clients, clients have more options.

I just spoke to an attorney who is spending $13,000 a month on yellow pages. The good news is that her ads bring in a lot of new clients. The bad news is that she loses money on every one.

The solution to this problem is for attorneys to develop their "back end"–services and other profitable initiatives they can offer their clients after the initial engagement.

In any business, most of the profits are made on the back end. There is a cost to acquire a new customer, and while it is hoped that this can be done at a profit, it's not required. So long as the business can make enough profit after the initial sale, if the back end is big enough, most businesses are willing to lose money on the front end.

How can an attorney develop a back end?

Some attorneys are branching out into new practice areas. So the bankruptcy lawyer who sees a downturn in new clients starts offering family law or estate planning services. The problem with this is that it makes it much harder to get referrals from family law and estate planning attorneys with whom you are now competing. It's also more difficult to market a general practice than a specialized one.

Instead of taking on new practice areas, here are two things an attorney can do to develop a back end:

1. Expand and systematize referrals. Focus on getting more referrals, better referrals, and more frequent referrals from your clients. In this way, each client you bring in on the front end represents more profits on the back end. If you spend $1000 to bring in a new client who pays you $1000 on the front end, but you earn an average of $3000 from their back-end referrals, you can afford to bring in as many "break even" clients as possible. You can even lose money on the front end.
2. Market the services of other lawyers to your clients. Instead of you taking on a new practice area, associate with other attorneys who are specialists in those areas and offer their services to your clients in return for a share of the fees (if ethically permissible) or in exchange for marketing your services to their clients. (You aren't limited to working with other attorneys; you can also market the services of other professionals and businesses.)

A key number every attorney must know is the "lifetime value" of a new client. This includes the value of their repeat business, their referrals, and other revenue derived as a result of having them on your list. Take some time to determine this number and then work on increasing it.

Q: I'm starting a solo practice. How do I compete with larger firms who use TV ads?

A: TV ads target everyone, and therefore, no one. The consumer markets are vast and expensive to reach, especially via TV. If you aren't prepared to go head to head with big budget advertisers, I'd suggest that you concentrate your efforts in niche markets.

Niche markets are small, well-defined, sub-segments of the larger mass market. "Health care professionals," "Chinese immigrants," and "people who work for ABC Company" are examples of niche markets.

You can get more bang for your advertising buck in niche markets, and leverage your time by speaking, writing, and networking with centers of influence and/or prospective clients in those markets.

If you handle consumer-type practice areas (bankruptcy, PI, criminal defense, etc.) you'll find clients and referral sources in just about any niche market. You don't need to be especially selective about which niche to choose, just make sure it's large enough to encompass enough people but not so large that you cannot effectively communicate with it. Look for markets with existing publications read by people in those markets, and local organizations where you can speak or network.

If you handle business matters, your choice of niche market(s) needs to be made a bit more carefully. Some business niches are more likely to need your services than others and some markets may already be dominated by a handful of existing law firms. The advantage in business markets is a more established infrastructure of publications, organizations, and centers of influence, ready for you to plug into.

The bottom line is that by focusing on smaller markets, you can dominate them. You'll get the lion's share of the business in those markets and never have to worry about someone outspending you on TV ads.

Why compete when you don't have to?

A personal injury attorney wrote and asked me if I have a strategy for bringing in bigger cases. I was a personal injury attorney for most of my legal career and when I look back at what I did, I have to say that I did not have that strategy. In fact, I intentionally focused on bringing in a volume of smaller cases.

My thinking was that quantity would bring quality. Bring in thousands of clients over a period of years and you are bound to have some big cases in the mix. And that was certainly true for me. But I also recall thinking, as every personal injury attorney does, that one day, I'll get a case that will bring me millions of dollars in fees and I'll be able to retire if I want to. But in twenty years, that never happened. Big cases, yes, but not a single practice-making monster.

But there's something else I understood and that was that I was not one of the big boys. The biggest cases are almost always handled by the biggest names and most of the time, they are referred there by other attorneys. I wasn't prepared to compete in that arena. I didn't have the expertise and, more importantly, I didn't have the passion for developing it.

The best strategy for getting the biggest cases is to become one of the best lawyers. Win bigger and bigger verdicts, develop your skills and your reputation amongst the bar, and when you have the respect of your colleagues, you will get their referrals.

Another way to get big cases is the one adopted by a lot of attorneys who aren't one of the best and that is to appear to be. They swing a big stick with multiple full page yellow page ads and TV commercials, they sponsor charitable events attended by centers of influence in their community, they network with the right people, send press releases celebrating their victories, and otherwise promote themselves so that they appear to be one of the biggest and one of the best. And by and large, it works.

To do this, you need money and some marketing skills, but most of all, you need drive. The biggest promoters have big, healthy egos. They are driven as much by the desire for attention as the desire for money. I'm not taking anything away from them. They are usually good enough to serve their clients well and smart enough to bring in one of the best when they aren't.

If you're not one of the best and you aren't willing or able to become one, and if you're not willing to do what the big promoters do, there is an alternative: target niche markets. Become the biggest fish in a small market where word of mouth is strong and limited resources (and hubris) can go a long way. Become the attorney everyone in that market thinks of when they think of injuries. Network in that market, write for that market, serve that market and the centers of influence in it, and over time, you'll get big cases. Do it well enough and long enough and you may even get one of the very biggest.

A few years ago, I didn't know the difference between leadership and management, and, frankly, I didn't care. To my way of thinking, these were "corporate" concepts, irrelevant to my needs as a sole practitioner trying to build a law practice.

So when people say I'm unbalanced, that's a good thing.

If you're interested in marketing your law practice online (and you should be) there are two resources I want to recommend. The first is a new book, "The New Rules of Marketing & PR" by David Meerman Scott. The sub-title is, "How to use news releases, blogs, podcasting, viral marketing & online media to reach buyers directly." That about says it all. I've just started reading it and can tell you, it's excellent. Highly recommended.

The other resource is a free ebook from consultant Brandon Cornet at websmartlawyer.com. It covers web sites, blogging, search engines, lead generation, and has links to oodles of resources. Valuable stuff.

Cornet's ebook is itself a fine example of viral online marketing, in that it is a free download from his web site (you don't even need to supply an email address to get it), coupled with good content that demonstrates his knowledge and experience. Sure enough, here I am "distributing" it to you, and thus, this strategy could quickly generate hundreds of qualified leads for Cornet's consulting services.

It illustrates another key marketing concept, niche marketing. Cornet could hold himself out as, simply, an Internet/website consultant, hoping to appeal to "everyone" but, like so many others, he would find his voice drowned out by his many competitors. Instead, by targeting lawyers, he narrows his focus, which should make it easier to both generate leads and close them, since clients (and that includes lawyers) prefer specialists.

Both books agree, the Internet has forever changed the rules of marketing. Those who ignore this, do so at their peril.

I posted two articles on the web site today:

• How to choose the right specialty. Choosing the right right area(s) in which to specialize is one of the most important decisions you will ever make. To help you decide, ask yourself, and others, these questions.

• David's web site diary. Here's what I have done to create this web site. If you're interested in starting your own blog, here's what I did (and why). I will update this page as this site develops.