An interesting issue has come up in our office recently. How much should a small law firm like ours do to diversify our revenue stream? Other businesses have this kind of issue, but in some ways this is special to lawyers.
Our law firm in Albany has a strong main practice handling traffic cases in upstate New York. We get roughly ten new traffic cases a week. One nice thing about this is that it's steady revenue.
Going along with traffic, we get a fair number of criminal and especially DWI cases. This is also reasonably steady, but the volume is lower so the peaks and valleys are more obvious. April has been a particularly slow month in that area, which is part of what brings this to mind.
We also have our personal injury practice, which is even lower volume and the timing of revenue is borderline random. We can go months with no revenue in personal injury and then settle three cases within a couple weeks.
So far that seems like a good diversity of revenue. But now our associate may have a new client with some commercial debt collection cases. I have a fair bit of knowledge about debt collection work. My clerkship in Supreme Court exposed me to that, and I've done a little work in consumer debt collection, mostly as a referee in foreclosure sales but also representing a couple of debtors.
Initially it seems like a good idea. Why not have another revenue stream? Don't you want to make more money? Well, yes, of course. I do worry about our firm becoming overly complicated, but for now this particular client and this particular line of cases shouldn't be too bad. If it's a low volume, then it's no big deal. If it becomes bigger then we may have to hire another lawyer or clerical staff, but that's hardly a problem if the money's coming in.
I'm not fond of the debt collection business, but mainly that's my reaction to what I've seen in consumer debt collection. This particular client has high-end debt collection cases involving commercial debt and commercial property, so it means little or no negative feelings. Anyone is going to feel at least a little bad kicking a little old lady out of her home, but getting commercial property back from a business isn't bothersome at all.
Of course, it's a lot better having this problem than not having any clients. That's for sure.