Boosting Your Law Firm’s Profitability
In an extremely competitive market where clients are increasingly demanding more for less, law firms (especially smaller ones) need to identify ways to generate a greater return on investments. This may seem like a big undertaking, however, there are simple ways to make your law firm profitable without the need to attract new clients or expand into new areas of practice. Here are a few ways to streamline your operations and improve your firm’s bottom line:
Work from a Virtual Office
While it may not be practical for all firms, evaluating whether all of your office space is really necessary can help you maximize firm’s profit. If your firm employs a large number remote attorneys that only need to collaborate from time to time, there may be little need for everyone to have their own office.
With a virtual office, there's no office lease, no utility payments, no hardware, and none of the associated costs that come with having a physical office space. Those savings affect your profit margin, allowing you to invest more in your employees as well as your clients. No remote attorneys? Consider offering work-from-home days to a rotating set of your attorneys in exchange for sharing offices.
Review Employee Benefits
The right combination of benefits is critical to both recruiting and retaining the best legal talent. But your benefits package may not be aligned with your employee’s needs. Benefit costs include everything from company-sponsored health plan contributions, to company travel expenses, to educational expenses. The best way to start assessing whether there are any inefficiencies in your benefit package is to identify which programs are most important to employees. You’ll be able to reduce or eliminate programs that are deemed less important or are underutilized.
Outsourcing Legal Talent
Outsourcing legal services can lead to huge cost savings for your law firm. By bringing in freelance legal talent, your firm is able to reduce costs and increase value to clients, while maintaining or increasing profit. Today, services like Hire an Esquire are making it easier than ever to find freelance attorneys that can immediately add value to your firm. Flexible staffing enables your law firm to avoid the fixed cost of salaries, which can add up to big savings in the long run.
Additionally, when you combine external talent and in-house skills, your law firm is better able to tailor its capabilities to meet your customers’ demands. Your firm is able to scale up for larger, more difficult projects when needed, which, in turn, helps you keep up with larger firms.
It’s the Little Things
Small savings ultimately allow for greater profitability. Whether you are purchasing office supplies or food for your office kitchen or event, there are plenty of ways to make more affordable choices. For example, your firm may qualify for discounts if you consolidate your orders and buy in bulk from one or two vendors. This boils down to making careful purchasing decisions. These smart money management practices help eliminate careless spending and pave the way for increased profit. Even if you think your law firm runs lean, you may be missing these opportunities to cut overhead and improve profitability. Instead of searching for ways to expand clientele or issuing layoffs as ways of increasing profit, consider these cost-cutting methods first.