Bar News - January 20, 2016
New Lawyers Column: Referral Networks: A Young Lawyer’s Key to Building a Successful Business
By: Lindsey B. Gray
I recently received a phone call from a lawyer friend asking me to take a look at a potential medical malpractice case for his neighbor. “Of course,” I replied. “Just send me a letter so I know you are the referring lawyer. If we go forward, I’ll know who to send the referral fee to at the end of the case.”
My friend became confused. “Referral fee? What’s that?” he asked. “It’s an opportunity,” I answered.
Like many newer lawyers, my friend works at an office exclusively on cases that others have brought into the firm. He bills many hours for his time but the revenue is credited to the partner who generated the business. My friend knows that he will eventually be responsible for establishing his own book of business but, right now, “doesn’t have time to think about that.” He struggles to keep up with the current demands of work and family, let alone focus on business development.
As we all know, cultivating relationships and developing business takes much time and effort that, for many reasons, is not a top priority for many newer lawyers. Newer lawyers often put networking on the back burner with every intention to focus on networking when “things slow down.” Luckily, for many of us, things never really slow down. Just when you think you’ve mastered certain skills and have finally caught up, more work suddenly appears on your desk.
After speaking with my friend, I couldn’t help but wonder whether many of us newer lawyers are failing to capitalize on the work that we have been doing since the first day of law school. Although we may not realize it, we all have our own referral networks, however small, in our former classmates, friends and colleagues. We should start thinking of these networks as a way to build our own books of business. By utilizing our referral networks, we can generate income for our firms with relatively minimal effort.
For example, my firm works almost exclusively on medical malpractice cases. We often obtain our cases through referrals from other attorneys. When attorneys refer us cases, we provide them a referral fee if we obtain a successful outcome for the client. The referral fee is a portion (generally 1/3) of our fee, which, at times, is pretty significant. The referral fee is sent to the referring lawyer’s firm and is credited by that firm as income generated by the referring lawyer. While not all firms practice fee sharing, referring cases to other firms will, in time, generate referrals back to your office. It is a win-win situation.
Clients benefit by our referral networks too. By using our referral networks, we can ensure that clients are connected with a qualified lawyer who specializes in the area of law that their legal issue demands. My practice area of medical malpractice, for example, requires specialized knowledge of both law and medicine, which can be quite complex. Cases are extremely expensive to pursue, and therefore, must not be taken on lightly. Lawyers who only dabble in this area may unknowingly take on a case that lacks merit and waste tens of thousands of dollars in the process. Additionally, clients may be dragged through years of litigation only to be told they have no case. Using our referral networks, we can avoid these problems while generating income for our firms in the process.
Of course, there are a few things to keep in mind when referring cases:
1. Only refer to people who you would personally use for your own legal work. This is probably a no-brainer, but it is worth mentioning. Only refer to lawyers who are skilled in their craft. That guy who partied every night during law school and barely passed the bar exam, for example, is probably not a person you should include in your referral network. Clients who have positive experiences with the lawyers to whom you have referred them will be more likely to speak positively of you and refer you clients in the future.
2. Return the referral. Don’t always take and never give back. Although we cannot necessarily control how many clients reach out to us, do not pass up the opportunity to refer to an attorney who often refers to you (as long as they meet criteria 1 above). This will help you build longer lasting relationships and a stronger referral network.
3. Keep in touch. On occasion, reach out to those in your referral network. Attend a bar event that you know many colleagues in your network will also be attending. When you do attend, participate. Be interested in what others have to say and follow up with potential contacts you make.
Once you start generating income for your firm by utilizing your referral network, you may be less tied down by your billable hours. This, in turn, will give you more time to focus on expanding your referral network. With a little effort, you will be pulling your own weight in no time by generating your own business for your firm.
Lindsey B. Gray is an associate at Abramson, Brown & Dugan in Keene and Manchester, where she practices medical malpractice and personal injury law. She has been a member of the NH Bar Association since 2011 and is a member of the NHBA New Lawyers Committee.