IT’S IN THE MIX: PRACTICAL ADVICE LEARNED FROM OTHER INDUSTRIES ABOUT MAINTAINING A DIVERSE CLIENT MIX
The old saying, “don’t put all your eggs in one basket” has never been more true– and that’s especially the case when it comes to practicing law. Since many firms (particularly smaller ones) rely on just a few main clients for most of their billings, they’re leaving themselves potentially vulnerable to a variety of risks. Clients come and go and, unless a firm’s attorneys are careful, a firm could be bankrupted because one or two major clients moves, goes out of business, or decides to use the services of another firm. This is especially the case if the firm’s major clients are over-concentrated in the same business area– and more so if clients are operating in potentially volatile industries such as real estate, or finance.
Despite the many risks of client overconcentration, many attorneys still see their law practice as a vocation, rather than a business– so they fail to take precautions to diversify their income sources (i.e. clients) from market downturns and other risks. By failing to diversify their client base, these attorneys put both themselves and their employees at greater risk– but those risks can be avoided with a little preparation and a smart strategy.