One of the best ways to hone a firm’s business strategy is to dig deeper into the assumptions relied upon to devise that firm’s business strategy. At the Redwood Think Tank, we reported not too long ago that law firms, on average, lose work from existing clients at the rate of 1% per month. See “Client Attrition Analytics: Firms Can Control Whether Clients Stay or Go,” Accounting and Financial Planning for Law Firms, January 2007. We based our estimate on a study of four firms that experienced remarkably similar rates of attrition.
Since then, we were asked whether our estimate would hold up if we studied a larger number of firms. We also wondered whether some firms experience lower rates of attrition, and if so, why. So we set out to do a follow-up study, and pulled data from 23 random Redwood Analytics clients that participate in the Redwood Benchmarking Program. We cataloged the clients that had provided work in 2005, and evaluated the attrition associated with those clients on a monthly basis through December 2007.
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