“Few firms have adopted a structured, strategic approach to their referrals and cross-selling programs,” said ALPMA president Andrew Barnes.

“Those firms tracking revenue from referrals and cross-selling are generating strong revenue of more than half a million dollars per year, so it is well worth the effort and investment required to put together a comprehensive program.”

Referral programs are designed to encourage clients, other law firms and non-legal professionals, like accountants, psychologists and financial planners, to refer new clients to a law firm.

“Like anything worth doing, it’s not necessarily easy to increase the effectiveness of your referral program, but if you want it to happen in your firm you need to intend it, plan it, measure it, resource it and lead it,” JMA partner Amy Burton-Bradley said.

According to the research, the most popular activities and techniques to drive referrals include target lists, active networking and the hosting of events, direct marketing and social media, as well as providing resources and training opportunities to upskill lawyers in referrals.

“We were surprised to find that 50 per cent of firms do not bother to recognise or reward their external referral sources,” Ms Burton-Bradley said.

Cross-selling programs are designed to encourage clients who engage with one of the firm’s practice areas to use services from other areas as well.

“Unresolved questions around who ‘owns’ the client relationship – the lawyer or the firm – and traditional practice group models create barriers to effective cross-selling. Such barriers hold too many firms back,” Mr Barnes said.

“To maximise firm growth opportunities, law firm partners and leaders need to embrace a culture where the firm owns the client, respects the source but does not permit silos to form and work against internal referrals.”

The report revealed that only 28 per cent of firms are incentivising this behaviour and making internal referrals the norm.

“Given the known difficulties with finding the right incentive program, this low number will not surprise. Equally, it ought not close off future consideration of such a program,” Mr Barnes said.

The report made several recommendations for firms wanting to improve their referrals and cross-selling.

Firstly, it suggested creating standard procedures at the end of each matter to systematically support cross-selling, which 20 per cent of respondent firms currently do.

Secondly, firms should develop a pursuit plan to reach target clients through referral sources, which 75 per cent of firms don’t currently have.

Thirdly, it suggested maintaining a target prospective client list, which 64 per cent of firms don’t currently have.

Lastly, firms should define revenue targets for referred work, which 96 per cent of firms don’t currently do.