Should debt recovery be to lawyers as PAYE is to accountants ?

Regular and repeat business is the lifeblood of most businesses, in 2 respects :- predictable and ongoing revenue streams allow for good financial planning and a degree of stability regular contact with clients creates loyalty and an ongoing relationship I thought of doing this post due to a brief conversation I had over the christmas/New

Home » David Swede » Should debt recovery be to lawyers as PAYE is to accountants ?

Regular and repeat business is the lifeblood of most businesses, in 2 respects :-

  1. predictable and ongoing revenue streams allow for good financial planning and a degree of stability
  2. regular contact with clients creates loyalty and an ongoing relationship

I thought of doing this post due to a brief conversation I had over the christmas/New Year break with an accountant in a small firm. He mentioned how important PAYE services are to his firm, even though he makes very little money in profit. To him, the real value is the ongoing conversation and regular contact with clients. In fact, contact is perhaps not the right word, engagement is what I mean.

There are lots of ways to contact clients – you can phone them, email them or meet them, or, as is very much the vogue, send out regular newsletters by email. However, that’s not engagement – the client is not using your services regularly.

The problem for lawyers is that clients mostly only come to you when they have a problem or need – most clients don’t need new contracts every month, they don’t have major disputes every month and they don’t enter into commercial leases that often.

There are however 2 areas where clients tend to have regular problems and issues – debt recovery and employment law. However, most problems associated with these areas are relatively low value and don’t necessarily require high end legal services. Frankly, there isn’t much money in heavily promoting a debt collection service or dealing with employment advice. To make these services worthwhile really needs a volume model.

However, what these 2 areas of law do offer is regular contact with clients – the client gets to know you and trust you and is more likely to instruct on a more regular basis and to be receptive to the message that the best use of lawyers is on a regular basis, pre-empting problems and planning ahead – so many clients only think of lawyers when they have a problem – the self evident truth that “failing to plan is planning to fail” should apply to legal issues as much as any other business issues, but at the moment, it doesn’t tend to work that way.

David Swede - head of commercial law department
David Swede – head of commercial law department

The legal profession gets criticised, often with some justification, for not being business like enough – in essence for not understanding client business requirements and not operating enough as a business. Clients don’t like open ended costs etc etc. It is perhaps an irony that so many forms don’t want to undertake debt recovery or employment work now because such work is a loss leader. In that sense, it’s sensible business thinking. However, looking at the bigger picture, should more lawyers follow the example of accountants and accept that they need to promote the work which builds the regular relationship ?

David Swede

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