Read about how many of our legal users have found ways to reduce expenses for their firm. Becoming a lawyer is stressful enough as it is. Especially, if you’ve made your way to the top and work as a senior partner or even the managing partner in a successful firm. Even if your firm is profitable and everything seems to be going well, there can often be a sense that the firm is still running out of money.
Sadly, this is not always just a bad feeling, it can also be a reality. Firms all over are struggling to stay afloat even though they are profitable and seem to be bringing in clients. This is more often than not due to expensive and excessive overhead costs. Costs can be addressed in order to reduce expenses and improve your cash flow.
Read on to learn 10 tips to help your law firm reduce overhead expenses so that your firm can concentrate on growth and get even bigger and better over time!
1. Reduce Headcount to Reduce Expenses
Reducing headcount is a much nicer way of saying to let some people go. This method is one that nobody enjoys doing, and everyone would prefer to implement some of the other strategies listed here. But reducing the headcount at the firm is one of the single best ways to reduce the overhead expenses at any job of office, but especially a high-end law firm.
If you sit down and figure out how much each employee truly costs to the firm, the numbers can get staggering quickly. Between salaries, bonuses, insurance, overhead, and more, employees are often the single most expensive part of running any business. If your firm gets to this point where you need to consider reducing headcount and letting some folks go, be sure you are fair and sensitive about how you go about it.
Don’t just weed out the lowest level employees and start fresh, and don’t just dump the senior partners due to their higher costs. Consider everything about who you’re letting go — their clients, their billing, their productivity, and more. Be selective and fair, and do what’s best for the survival of the firm.
2. Improve Marketing
Marketing is one of the best ways to bring in more clients and improve the cash flow coming into your business. Although it may seem counterintuitive to potentially increase your marketing fund while trying to reduce expenses, it may be one of the best returns on investment you can get to help turn things around.
If you can take a deeper look at your current marketing strategy and feel that spending a bit more money on better marketing can greatly increase clients and therefore your inflow of cash, then do it! Be selective in the process, making sure to only hire and employ the best marketing available for the price so that you can get the most out of it.
For the most optimal results, firms use a CRM with a reports and analytics feature. This will assist in guiding you on where your most successful marketing strategies are. By tracking each intake, referral, and phone call, a CRM can create charts and flow data that helps you understand where most of your clients are coming from, and at what cost. This then allows you to strategically invest more money into the marketing strategies that work.
3. Upgrade to Good Technological Solutions
Most firms find themselves paying for multiple separate software services. For example, most firms use a time tracking software ($) a billing software ($) an intake/contact software ($) and an e-signature software ($). All of these necessary software’s add up to a large cost. Alternatively, law firms could choose a more comprehensive software that includes all of these features in one! This will off-set the separate costs of each software into one easy to use system.
The legal software from NovoTempus is an all-in-one solution to your cash flow problems through its wide array of features and benefits. NovoTempus is a legal CRM, client intake system, and project management software all wrapped up into one amazing software package.
Some of the best features of what NovoTempus can do for you and your firm include:
- Maximize Performance – through the processes of streamlining client intake, automated follow-ups, scheduling emails, setting appointments, creating forms, and more, NovoTempus will automate and maximize everything at your firm for you.
- Improves Organization – NovoTempus keeps your entire calendar in mind including the past, present, and future. By tracking the entire firm’s matters, you can more easily offer your clients the best service available and keep them for life.
- Increased Revenue – NovoTempus comes with tools that report useful insights including your referral sources, marketing channels, and more so that you can know the ins and outs of your conversion rates and concentrate on the growth of your firm.
4. Work Remotely
Law offices can be massive, expensive offices that take up a lot of space so that clients can be wowed and feel more secure that they will be taken care of. While this is important and you should likely keep an office of some sort, consider changing it up so that some attorneys can work from home at least part of the time.
Having offices in a high-rise downtown might look great, but if it’s draining your cash then it won’t look great while the name of your law firm is being ripped off the building. Consider downsizing and letting some employees work remotely to save costs on expensive office space.
You can find more info on remote working from our other posts here.
5. Outsource Services When Possible
Outsourcing specific types of work as needed can greatly help reduce costs by eliminating certain positions. IT departments are one of the best examples of this. Rather than having a full-time IT staff on hand that you don’t constantly need, outsource the IT work and have a consultant on call if needed.
These days most of the IT work can be done remotely from wherever they have their office, and you can just call as needed. Other types of work can also be outsourced, and this is a great way to reduce overhead expenses at your firm.
6. Teleconference Over In-Person Meetings
Teleconferencing has gotten more and more popular in recent times, with companies like Zoom Technologies taking the world by storm. Teleconferencing can be done with video calls or just over the phone, and can help save your firm substantial amounts of both time and money when compared to regular in-person meetings.
When you have meetings in person, you may have to pay your lawyers hourly at their billing rate. When possible, opt for teleconferencing instead. You don’t typically want to ask clients to do this however. Most clients would much prefer to be there in person anytime they have to discuss their cases with you.
7. Monitor Expense Reports
You’re confident that everyone at your firm is only spending exactly what’s needed any time they have to wine and dine with some clients or for networking. But that may not always be the case. When some people get a company credit card, they may feel as if they can charge exorbitant amounts on it since nobody really checks those expenses reports.
Reduce this by monitoring expense reports and ensuring that the firm is only paying for things that will benefit the firm. You can try implementing more strict rules on using the company card that requires documentation from your employees that you can follow up with.
8. Reduce Telephone Service
One of the areas that many people don’t even think to look for discrepancies is their phone service bills. It seems like such a necessary tool to be able to use the phones, and the expense is fairly low when compared to other things for the most part. You might be surprised if you were to take a look at the telephone service bill and go through it carefully.
Check the service bill to see if there are any discrepancies with tariffs, third party tagging, and more. You could be surprised by what you find and you might even be able to save your firm thousands of dollars.
9. Remove Non-Essential Benefits
This is another tough one to stomach for some, but removing or reducing some of the benefits can be a huge saving for any employer, including your law firm. Don’t just go into the office tomorrow and announce that the firm is eliminating all benefits packages immediately. Take another look and see what changes can be made to reduce expenses without hurting the employees.
The biggest cost when it comes to benefits is typically health insurance for all employees. See if your firm could shuffle a few things around and pay part of the premium and have the employees pay up to cover the rest, or offer multiple options that the firm pays less towards. This won’t be a popular decision at the firm, but it may be a necessary one to survive.
10. Lower Pay and Bonuses
One last tough pill to swallow is to lower compensation within the firm. This is another one that is sure to not go over well with the employees, but it might be a necessary move for the firm to survive in the long run. This should only be used as a last resort as many employees may opt to leave for a different firm if it gets too bad.
One of the best ways to implement this is to reduce the base salary that employees get for just showing up, and increase the amount that they get based on their performance. This will lower the compensation for most employees while also rewarding the ones truly grinding to make the firm better.
Reducing Expenses Goes A Long Way
There are many ways to reduce expenses at your law firm. Everyone involved will find the easiest task may be reducing the phone bill. While some methods are less than great for employees such as cutting compensation and benefits. Then there are those that are arguably the best to start with such as upgrading to technologically-based solutions such as the software from NovoTempus.