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Boost quarterly profits with this proven 6-pronged cost cutting plan

Every now and then, office administrators are forced to look for new ways to cut expenses. There are lots of dollars waiting to be saved, but many of them are in places so conspicuous they get overlooked.

Go for the obvious.

To save the firm money, begin with increasing staff productivity and continue on to reclaiming lost office supplies and capping what the firm pays for the attorneys’ professional expenses.

1 First, build the productivity

The biggest expense is personnel. Thus, the first effort should be to reduce the staff costs. But that doesn’t mean layoffs. Instead focus on making staff more productive and thereby eliminate the need for temporaries or new staff. Increased productivity can also mean the office can reduce its current staff by attrition.

Take these five approaches:

  1. Expand the training. More training means staff do more work and do it faster. Advanced training in document creation software, for example, means the documents go out faster, leaving the secretaries time for other work. If cost is an issue, look at the alternative. An extra $1,000 spent on training may save $30,000 in salary and benefits for a new employee.
  2. Draw up procedures manuals. Create a manual for every clerical position. That makes it possible to shift employees to new areas, so when, say, a commercial secretary is out, a litigation secretary can fill in, and there is no need to bring in a temporary. The procedures manuals also make hiring easier because they give the administrator a ready reference of what skills and experience each job candidate needs to have.
  3. Standardize more documents. A standardized document that only requires staff to fill in blanks saves all kinds of time. Ask secretaries and attorneys to make a list of documents that are not already standardized and set up forms for them.
  4. Have the attorneys input their time directly into the billing system. In many firms, the time entry is a two-step process that’s done first by the attorney and then by the secretary or the billing department. Having the attorney enter it directly into the billing system saves the interim steps for the clerical staff and once again increases staff productivity.
  5. Set a leave policy. In smaller offices there’s often no policy for sick and personal leave, or if there is, nobody keeps track of it. And people take advantage of that. When the off days are actually counted up, many offices are surprised at the number of excessive staff hours they have paid for.

2 Next, shop the benefits

From building productivity look at the benefits. Shop the insurance market every year and compare costs. Health plans especially vary significantly form carrier to carrier.

Shopping also keeps the insurance agent honest. Many firms rely on their friend the insurance agent to provide that service and don’t realize it is easier to the agent to continue to use the same carriers.

Often when firms ask for bids, they find less expensive plans and so does that agent.

3 Rent rates and short leases

Then look for the savings in the rent.

About a year before the lease expires, start shopping for a comparable space.

Compare square footage costs, but also compare what each rate includes. It may or may not cover items such as utilities, janitor service, maintenance, parking, storage space, and a periodic remodeling allowance.

The search may turn up a rent agreement good enough to warrant moving. If not, the office can still use the competitors’ numbers as a negotiating point in renewing the current lease.

Another potential money save is to sign the shortest least possible. Do that unless the rate is ridiculously great on a longer lease. With a short lease, the firm can take advantage of market dips. It can move or it can negotiate a cheaper rate for its lease renewal.

4 Equipment and computers

There is more money to be saved in the equipment:

-Use just one communications vendor. A single vendor can package everything from the long distance service to the Internet service and give the firm a better rate.

-Weigh the maintenance agreements. Are they cost-effective? Track how often maintenance has been required under each current agreement and compare that to what the cost would have been had the firm paid for the repairs on a time and materials basis. It could be less expensive to drop the agreements.

-Unify the computer upgrades. When there is an upgrade, upgrade all the users so all computers are always operating the same way.

Most offices upgrade a little here and a little there but when different sections of the office are running different versions of a program it is not always possible to move staff from one area to another. With everything operating the same way, staff can cover for one another which again increases productivity and reduces the need for temporaries.

5 Supplies waiting to be found

-Standardize the supplies. Many a firm lets the attorneys choose their favorites in pens and other office supplies. The attorneys may like having the choice, but the convenience is costly. Order only one type of pens, pads and so on at and the firm can save money by buying the most economical products and also by getting discounts on bulk orders.

-Search out the barely-used. Hidden away in closed files is money. It is the barely used legal pads. Lawyers are famous for writing on one page of a pad and then putting the entire pad in the file. Just go through the closed files and look for the pads. Tear off the written pages, put them back in the file, and make the pad available for use. Think there is not a savings in there? Think again. In one client firm, a cost-savings consultant found 800 legal pads in closed files.

Pens have a similar fate. They wind up in unused desk drawers. Have a pen amnesty: Go around the office and have everyone open their desk drawers and fork over their extra pens. Resurrect unused supplies and the firm may not have to buy supplies for several months.

6 Put a cap on attorney expenses

Save more money but putting a limit on reimbursement for attorneys’ professional expenses. Lawyers tend to join a lot of organizations, so many that they cannot go to all the meetings or take part in all of the online community activities. Often they are members of the city, county, state and national divisions of the same organisation, mainly because they don’t have to pay for them out of their own pockets.

There is also overspending in out of town meetings, often because it is nicer to attend a meeting in a resort area than it is to go to a meeting in the city.

The best way to cull out unnecessary organizational expenses is to set a limit on the professional fees the firm covers for each attorney. Anything over that attorney pays for personally.

Do the same for continuing legal education and also for entertainment and marketing.

Let the attorneys set the limits and review the amounts annually to see if they are adequate. Set the amounts according to need. When there is a change in tax law for example, the attorneys in the tax section may need to attend more seminars.

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