Is your goal to expand your law firm in 2023? If so, you might consider how adding to your firm’s practice areas can help you drive up revenue and boost your profits this year. According to Clio, practice area is one of the most important determinants of law firm revenue. For example, their 2020 Legal Trends Report revealed that intellectual property law firms charged up to $324 an hour, while juvenile law firms charged only $87 per hour.
This example shows what a big difference it can make to choose to expand in practice areas that are more profitable overall. Today, we’ll share some key information about which practice areas are most profitable and how to choose additional practice areas for your law firm in order to get the best results.
How to Decide What Practice Area to Add to Your Law Firm
Just because a practice area is among one of the most profitable doesn’t mean that it’s a great fit for your law firm. For example, if your law firm houses mainly family attorneys right now, expanding into malpractice may not be the most solid strategic decision for you. When considering what practice areas you want to add, consider who your current clients are and the possibility for referrals. In the example of a law firm that mostly practices family law, for example, expanding into retainer based services for small business owners might be a good option since many of your clients already likely own businesses or have friends and family who do.
What Law Firm Practice Areas Are Most Profitable?
Calculations from firminnovators.com based on Martindale-Avvo, Law Crossing, and Salary.com reporting suggests that the highest-earning practice areas for small firms are:
- Medical Malpractice
- Intellectual Property
- Real Estate
- Personal Injury
- Business & Corporate
If you’re looking to expand based on profitability alone, adding one of these types of law to your practice could help you shore up your revenue significantly.
What Law Firm Practice Areas Have the Most Growth Potential?
Of course, the most profitable law firms aren’t necessarily the ones that will see the most growth in the next few years. Since some of the most profitable practice areas are already more saturated, it’s worth considering those with more growth potential as opportunities for expansion. According to Attorney at Work, the top growth practices for 2023 are:
- Labor and employment
- Data privacy & cyber
- Investigations
- Litigations
- Class actions
If you’re considering expanding your practice areas, choosing an area that is both more profitable and also has growth potential can be very helpful when strategizing for growth.
Using Law Firm Benchmarks to Inform Expansion
If you’re interested in making a higher level decision about your expansion, considering benchmarking services can be extremely helpful. When you work with a specialized bookkeeping professional for law firms on benchmarking, you can get an idea for which practice areas are most profitable and have the best growth potential in your geographic area. This can help you make an informed decision on how best to expand.
