With the New Year in full swing, many attorneys may be wondering how they can cut spending strategically in 2024 in order to drive down costs and boost profitability. Every month, we work with our clients to maintain and develop budgets that are based on common sense financial principles and that help them to achieve their overall goals faster. Too often, we see attorneys cut spending in the areas where it is needed most and maintain unnecessary costs that are holding them back from investing more meaningfully in their business.
Today, we’re sharing some strategic cost-cutting measures that can lead to increased profitability, without compromising the quality of service to your clients or divesting in things that can help your law firm grow.
Start by using law firm software to offset your costs
Technology is one of the best ways to enhance efficiency and reduce costs in your law firm. For a low, monthly price your law firm can introduce software that can save hours of time every week for each attorney on your staff. We recommend looking for software that combine both productivity and time management features as well as financial features, like billing. Some software may even help with daily operations like research and case management. The more time you can reduce on these tasks, the more money you will save by freeing up your staff’s time to work on more important things.
Should my law firm work remotely? It's worth some exploration
Research shows that today’s law firm client is more accepting of remote work than ever before, and some even prefer it. It’s a better time than ever to consider either closing down a physical office or using a shared space to reduce overhead costs. If you do want to maintain an in-person space but you still want to reduce overhead in this way, consider housing only a few attorneys at an in-person office and having support staff and others work remotely. Paying for a 3 person office opposed to a 10 person office can still have some major benefits!
Consider Hiring Freelance Attorneys and Contractors
Another excellent way to drive down costs is to reduce tax spending and maintain flexibility by hiring freelancers and independent contractors. Not only does this strategy help you scale your team without long-term commitments, it also has significant tax savings by eliminating payroll tax on your end. Obviously, you won’t want to do this with every position. For example, your staff attorneys should be a constant for better rapport with your clients. However, positions like assistant, paralegal, marketing coordinator, and others can easily be converted to contractor positions. These can also be remote positions, saving you money on overhead costs.
Avoid Unnecessary Tech Investments
Yes, we encourage you to invest in tech for your law firm, but be smart about what you invest in. It’s not uncommon to see attorneys invest in an entire year of software that they haven’t fully tested, only to barely utilize it in the end. Our advice is to spend some time researching tools that directly align with your firm’s goals and operational needs and to test those tools through demos. You especially want to use tools that have been approved by other law firms of your stature. Don’t be the guinea pig of a new software company if you can help it!
Don't Cut Spending on Delegated Tasks
Delegating tasks that cost less to outsource than your firm’s billable hourly rate is a smart strategic decision, but too often, attorneys will look to cut this spending when finances are tight. We advise attorneys to avoid making these types of cuts because they will only make your firm less profitable in the end. Cutting spending on tasks that can be efficiently delegated at a more cost effective level leads to an inefficient use of resources within your firm and should be avoided at all costs.
Thinking of doing DIY Legal Bookkeeping? It'll probably cost you!
More than any other industry, law firms need the support and guidance of a dedicated bookkeeping professional who specializes in legal bookkeeping, and failure to do so can come at a huge cost. DIYing your books sounds like a great way to save money, but in reality, bookkeeping helps to boost your profitability and protects your business overall. Every year, we stop thousands of dollars in money leaks from leaving our clients accounts. We also help our clients optimize their budgets, improve their bottom line, and protect themselves from risks associated with trust accounting. This is one thing you don’t want to risk cutting corners on!
