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Small firms still relying on referrals, survey says

The vast majority of smaller law firms across the country still rely heavily on referrals and word of mouth, new research from Smokeball has shown.

user iconLauren Croft 30 November 2022 SME Law
Small firms still relying on referrals, survey says
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Cloud-based legal practice management software provider Smokeball has released its second annual State of Small Law Australia Survey, which was compiled following interviews with 154 small law firms across Australia in August 2022 — exploring what the challenges were for smaller firms over the last year.

As previously reported by Lawyers Weekly, 36 per cent of small firms are working from home either four or five days a week, with improving operations and workflows through technology, profitability, growing or retaining a client base and enhancing client experience being the main challenges for boutiques and SMEs moving forward.

Referrals and word of mouth proved to continue to be the most popular method for smaller firms to attract new clients or matters, with 84 per cent and 82 per cent of respondents, respectively, confirming this. When asked to describe all their marketing methods, networking (64 per cent), the firm’s website (48 per cent) and social media (34 per cent) rounded out the top five channels.


Interestingly, advertising and professional associations only resulted in a quarter of new work being attracted, while lead generation emails (14 per cent) and sponsorships (10 per cent) resulted in the least amount of work for smaller firms.

Looking closer at different states, NSW mirrored the national results, with 85 per cent of new clients or matters coming from referrals, 78 per cent from word of mouth, 62 per cent networking, 50 per cent website, 34 per cent social media, 24 per cent advertising, 18 per cent professional associations, 12 per cent lead generation email, and 12 per cent sponsorships.

Victoria also mainly followed suit; however, 30 per cent of their referrals come from professional associations. Other channels were 89 per cent referrals, 86 per cent word of mouth, 68 per cent networking, 38 per cent website, 27 per cent social media, 19 per cent advertising, 11 per cent lead generation email and 8 per cent sponsorships.

However, although referrals for Queensland SMEs and boutiques (86 per cent) and word of mouth (82 per cent) still lead along with networking (64 per cent) and the firm’s website (57 per cent); social media (43 per cent), professional associations (40 per cent), advertising (29 per cent) and lead generation (25 per cent) proved to be much more valuable market channels to attract new clients and matters, with sponsorships only responsible for 3 per cent of new work, the least return on investment across the country.

General manager of Smokeball Bianca Bowron-Cuthill explained that for smaller firms, social media and sponsorship might not need to be utilised at all.

“We see a lot of smaller law firms struggle with the skills, experience and investment required to create successful newer market channels through digital, advertising and social media campaigns,” she said.

“What we need to understand to support them better is whether they need to leverage those at all. For example, in New South Wales and Victoria, are those channels not as fruitful as for Queensland firms because they are not used properly, or is their way of doing business always going to be more traditional? There can be pressure to use these channels from well-meaning advisors or friends and family, but if they are not your main sales channel, should you bother, especially if they are causing a lot of headaches for partners and staff?”

Furthermore, smaller firms across the country have increased their matters overall — with almost one in five companies (22 per cent) having increased the number of matters in their firm in the past 12 months by 5 to 10 per cent, while 14 per cent of firms had increased by 10 to 20 per cent, and 15 per cent had increased their matters by more than 20 per cent. Twelve per cent of firms had increased between 0 and 5 per cent, while 10 per cent of firms did not increase their matters, and one in five firms (27 per cent) were unsure if they had increased or not.

More to come.