Can One Be Too Frugal?

By David J. Bilinsky

Anyone who runs a business knows that it is profitable only if you have funds left over after paying all the bills. This enforces a common-sense mentality in ensuring that your costs don't get out of control. However, in some offices the principle of saving money is taken to such an extreme that their frugality is actually costing them money. Here are some examples from across North America:

• A firm was looking for a technician to fix their computer system as it "was always crashing." On inquiry, it is revealed that they were limping along with 10 year-old computers.
• A lawyer wanted his homegrown Excel-based accounting "system" audited to ensure that it met all accounting standards (perhaps he should have gone into accounting rather than practice law?).
• A lawyer lost all his documents due to a hard-drive crash. He had no backup system (such as a $250 external USB Hard Drive backup).
• The lawyer who didn't put names on the file folders so they can be re-used more easily (old file contents get dumped in the pile "over there"). While his assistant sometimes got confused on whether the phone numbers written on the file folders related to this file or one of the earlier ones, he assured us that “he always knew.”
• The lawyer who only bought file cabinets for closed files as he liked to: “keep the rest handy.” — He had a minimum of seven piles on the desk and floor: (1) To Do today; (2) To Do earlier this week or so that he didn't get to; (3) Waiting to hear from someone; (4) Thinking about what to do next; (5) Might be ready to close but he needs to check; (6) Ready to close but no room in that file cabinet; and (7) To be sorted in the right pile.
• The law firm that was hit with paying civil penalties as a result of using pirated software.

Someone once said that time = money. We can spend time in making money or we can spend time in saving money. Each of us need to find a reasonable balance between how we use the limited (and fixed amount) of time given to us on the twin tasks of producing work and on saving expenses. Hopefully we can recognize that not spending money can in some cases, result in lost time – and the indirect cost of spending too much time being frugal is letting our lives slip away between our fingers.

This is an excerpt of a blog post on www.thoughtfullaw.com at: http://bit.ly/aYtzHR.

The views expressed herein are strictly those of the author and may not be shared by the Law Society of British Columbia. David J. Bilinsky is the Practice Management Advisor for the LSBC. Email: daveb@lsbc.org; Blog: www.thoughtfullaw.com.

This article originally appeared in the August 2010 issue of BarTalk and is reproduced here with permission of both the author and the Canadian Bar Association, British Columbia Branch.