By Elizabeth M. Miller bio
After much resistance, kicking and screaming, lawyers are finally facing the reality that the business of practicing law is separate from the practice of law. What exactly does this mean? It means that a law practice is a business and from a management standpoint it needs to be run like a business or the practice will fail.
We all know that the legal market is more competitive than ever. Clients want fee structures that limit hourly billing and they review their bills more closely than ever to make sure they are not paying for service that doesn’t give them value. This means that law firms need to take a hard look at their financials and operate more efficiently and cost-effectively. There is no more excess; “lean and mean” is the name of the game.
Here are 3 important cost-cutting strategies that will add to your firm’s bottom line:
1. Restructure your legal staff.
Examine the job descriptions and individual tasks performed by attorneys and staff members. Review the nature of the tasks and determine whether a lower level legal staff member is capable of performing the task. For example, can the receptionist schedule a new consult and provide the paper work to the client instead of the paralegal? Can a paralegal schedule an expert deposition instead of the associate? The goal is not to shortchange the efficiency or the quality of the work that is performed, but rather to have the associates perform the higher skill level tasks rather than wasting time scheduling depositions.
2. Evaluate non-legal back office functions.
There are many administrative functions in a law firm that can be locally outsourced to independent contractors and vendors who can perform these functions more efficiently and cost-effectively. Firm administration and business management, IT, HR, accounting, billing, and marketing are all necessary non-attorney functions. This is merely a matter of outsourcing or down-sizing services, not eliminating them. The benefit here is not only cost efficiency and productivity, but an increase in competency. On a full-time employee basis, the firm may not have the resources to attract and retain competent and experienced professionals, but as a contractor or outside vendor, it becomes more affordable to hire the best.
3. Institute legal project management and process improvement protocols.
Legal project management is the institution of procedures to handle cases. The concept is applied to the mechanics and business of providing legal services. While many firms have not yet instituted this concept, it is becoming increasingly popular in law firms working under alternative fee arrangements with their clients including fixed or flat fees, value billing, cost limits, and success bonuses. Even for firms that are still working on an hourly fee arrangement, legal project management protocols can increase the efficiency of legal services by designing a plan or timeline for handling cases.
While you cannot control a case entirely with legal project management because you cannot control opposing counsel or the Court system, legal project management will enable you to exercise some control over the case which in turn will help control costs.
Legal process management affects efficiency and productivity and is the companion to legal project management. You assess legal process management by measuring the performance of all processes in your office. This means you:
- define the problem;
- measure the current performance of the process currently being used;
- identify the shortfall; and
- control it by implementing solutions designed to eliminate the problem and improve the process.
Conclusion
Clearly, there are two components to increasing profit: increase revenues and reduce expenses. There is finally acknowledgement in the legal community that a huge focus of the business of practicing law is revenue and expense. Operational change is not enough. No doubt that the firm administrator or business manager is likely the best candidate for effectuating these changes but without buy-in from the partners, it will be a futile effort. Survival of today’s law firm depends on it.