Client Size and Profitability: Do They Go Hand in Hand?

Client Size and Profitability: Do They Go Hand in Hand?

Concentrate on your key clients – a familiar mantra to many a law firm manager looking to boost the bottom line. But which clients should a firm designate as key? Where do you draw the line?

Firms derive the vast majority of their work from their largest clients. But an ironic–and sometimes overlooked–reality is that if a firm aims its focus too narrowly at only the very largest of its clients, it may miss opportunities to target clients that actually tend to be the firm’s most profitable, if not the biggest.

This premise may sound contrary to the conventional wisdom. The answer to this conundrum lies in a careful analysis of client profitability by client size–in other words, the amount of work a client delivers to the firm. A recent study Redwood Think Tank undertook underscores the analytic value of tracking profitability by ranking clients according to size.

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