As a legal professional, your expertise is what fuels your practice’s success. However, there are many factors – lack of operational efficiency, a poor understanding of law firm economics, and excessive business overhead – that can slow it down by reducing your profitability.
At Special Counsel, we help law firms and legal departments enhance their business results — not just by delivering top legal talent, but by delivering insight and best law firm management practices gleaned from our 25+ years at the center of the legal industry.
Here are some proven ways you can contain costs, boost operational efficiency and enhance profitability in your practice or organization.
1. Report and keep track of your financials.
One of the main reasons why expenses get out of hand is because they aren’t being tracked. Many firms and departments wait until the end of the year to scour their books and attempt to understand their financial situations. However, at that point, it is too late to make corrections and implement improvements.
If you have in-house accountants and finance experts, speak with them to find out how you can gain real-time visibility into your financial situations. If not, explore software options that can track, maintain and report on your financials at all times.
2. Achieve the right staffing mix.
If you are paying your attorneys to perform duties that can be performed by paralegals or legal assistants, you are probably paying an unnecessary premium.
Talented, experienced legal support professionals can handle many of administrative and operational tasks that your junior attorneys may be undertaking today at a fraction of the cost. Plus, by utilizing support professionals more often, you can free your lawyers to focus on high-value, high-grossing priorities instead of more menial tasks. You could also reduce your attorney headcount – and contain attorney staffing costs – overall.
3. Hire a legal operations manager.
Today, there’s a lot more that goes into running a law practice than practicing law. You need to manage budgets, people, investments, contracts and real estate. That’s why, according to the Corporate Executive Board, 80 percent of large legal departments now have legal operations managers. These professionals focus solely on the critical operational activities that typically fall outside the purview – and strengths – of a traditional law firm’s managerial team. By having someone dedicated to these tasks, you can continually gain operational efficiencies and improve cost containment throughout the year without distracting you from your core focus – winning clients and cases.
With many legal teams already employing legal operations managers, and with many more looking to add them, it can be a challenge filling a legal operations manager job. Consider leveraging the connections of experienced legal recruiters to help you find the right candidate for your firm or office.
4. Make selective investments in technology.
Technology can help you gain process efficiencies, but they come at a cost. Thus, not every software, app, tool or platform is the right solution for every challenge or every firm.
Thus, you should look for technology solutions that fit your goals, vision, size and budget.
If you are a larger firm with many offices throughout the country, perhaps an Enterprise Resource Planning (ERP) solution would be right for you.
If you handle lots of files, explore the potential of shifting from manual paper and printing workflows (which can be expensive) to more streamlined and cost-effective electronic document storage and retrieval systems.
If you perform a lot of document reviews that require your supervisors to travel to meet with reviewers, learn more about SightManager, an innovative document review management tool.
5. Don’t pay unnecessary business overhead costs.
One of your budget’s biggest line items is your real estate. If you have a large office – or many offices – but the space isn’t being used optimally, consider reducing your square footage in order to reduce your expenses. This approach is especially prudent if many of your staff members work from home or are routinely out of the office on client visits or in the courtroom.
Of course, there are times when you do need to add office space. For example, if you have to conduct a large eDiscovery or Managed Review project, you may need the room – and resources – to accommodate all of your files and personnel. In these instances, you can rely on flexible, scalable facility solutions that give you the space you need, when you need it, without forcing you to pay for it when you don’t.
6. Expand your expertise.
While cutting costs is important, there is another way to enhance your profitability – by enhancing your services.
Instead of referring clients to other practices, why not service their needs? Consider adding practice area professionals in specific disciplines to meet the specific needs of your clients and add to the value that you can deliver while generating additional revenue. These practice area professionals can be added on a full-time basis, or you can hire contract attorneys and professionals to support seasonal requests like tax law
For more proven tips you can use to contain costs and improve operational efficiency in your law firm or department, contact your local Special Counsel office.
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