The essence of profitability, in business as in life, is to bring in more than you send out. So when times are tight – and lawyers were not immune to the recession and the ensuing slow recovery – the best way to stay afloat is to cut costs. This is especially true for solo and small law firms.
Here are some cost-cutting suggestions from penny-pinching lawyers who have made them work:
Downsize the office as much as possible
Spacious, well-decorated offices in prestigious locations are the bane of any law firm’s bottom line. So for solo and small law firms, it makes sense to have modest yet professional-looking offices in affordable premises.
Sharing space between two or more firms is one way to cut costs; especially if you can also share receptionists and other support staff.
Or you may want to consider leasing space in a third-party managed executive suite, where “you only pay for what you need,” says K. William Gibson; a personal injury lawyer in Portland, Oregon. “This can be as much as a full-time room, or as little as access to a boardroom when you need to meet with clients.” This last option is ideal for “virtual law firms:” companies staffed by home-based lawyers who stay connected to clients and each other by e-mail and cellphone.
Outsource staffing – and make deals
If you’re a solo law firm, do you really need a full-time receptionist, accountant, and legal assistant? Unless the money is pouring in, chances are that your answer is “no.” And even small firms don’t need full-time support staff in every capacity. Yes, a receptionist can be a real asset, but with careful planning you may be able to hire third parties to handle your other office functions.
This approach has been embraced by William H. Sloan of Summerville, S.C. His Sloan Law Firm specializes in real-estate law. “Business was booming when I opened up in 2006, but things began to go south in 2008,” Sloan says. To cope, Sloan cut staff – his receptionist is now his only employee.
Meanwhile, all the other services that were done in-house are now covered on an as-needed basis by outside professionals.
“I have found ways to save money by using outside help. It’s not just a matter of reducing salaries and benefits: by paying my outside accountant his fees up-front, he gave me a price break of 20 per cent.”
Go paperless – as much as possible
Paper costs money. So do file folders, filing cabinets, printers, printing supplies, and the floor space needed to house all of these items. And let’s not forget mailing and courier costs!
The Masters Law Firm is a general practice in Montrose, Colo. As much as is humanly possible, owner David L. Masters has made his firm paperless.
“Going paperless saves the expenses associated with storing and retrieving records in paper format; no more filing cabinets, folders, and off-site storage for closed files,” Masters says. “It also eliminates the need for a photocopier. We have not had one in our office for seven years now.”
Granted, there are times when documents have to be printed. But often this duty can be shifted by putting information on CDs and giving those to clients, who can then print what they need. “There can be as much as 100 pieces of paper associated with a standard real estate transaction,” says Sloan. “Putting as much as possible on CDs has saved us a lot of money.”
Cut continuing education costs by learning online
Lawyers are required to remain up-to-date, which makes continuing legal education (CLE) a must. Taking advantage of web-based learning and “webinars” cuts down on education-related expenses.
Learning online “saves big on travel expense and time away from the office,” says Masters. “For practitioners like me, who live a long way from a major metropolitan area where CLE programs are held, avoiding a five- or six-hour drive (each way) and the almost necessary overnight stay in the city, and two-plus days out of this office is a big savings.”
Other money-savers
There are many ways to cut costs in a legal firm. For instance, “review all library subscriptions,” Masters says. “Then evaluate whether the materials are used regularly enough to warrant the subscription cost.”
In the same vein, check out your courier contract: “I was able to negotiate a deal with Federal Express for a lower rate,” Sloan says.
Other possibilities: Reduce telephone landlines to a minimum, with lawyers using their cellphones as their desk phones. Eliminate postal meters; it’s cheaper to buy stamps. Get rid of the coffee service, and if you currently have a plant service, either learn how to tend the plants yourself or get rid of them. There are some nice fake ones being made these days.
The bottom line
Unless it is vital to your business and cannot be done more inexpensively, anything that costs your law office money should be cut. This will increase the amount of money remaining to pay you and your lawyers; the people who earn your firm’s revenues.
James Careless is a freelance journalist who specializes in technology.