A recent report has found that Philadelphia law firms are the biggest spenders in the United States. Unfortunately, some law firms are spending more money than they are bringing in. That is a troublesome ratio. Law firm expenses are going to need a makeover to improve the odds.
We are seeing higher expenses this quarter according to a report by Citi Private Bank. The study looks at 166 law firms across the nation, and compared how much law firms are spending. In Philly, law firms are spending twice the national average and revenues are not increasing as much.
Regardless where your firm is located, have you considered if your firm might be spending itself out of existence?
The report shows that revenue is not increasing enough to account for the huge expense of running a law firm. Although Pennsylvania firms are the highest in expenses, all law firm expenses need to be reevaluated before it gets out of hand.
Although expenses are increasing for law firms, it does not necessarily mean they cannot thrive in this economy. The report suggests that overhead expenses as partly attributing to the increase. It may just take some brainstorming to find ways to cut costs to stay in business and run a successful law practice. Here are some suggestions to get that storm started:
1. Increase Your Attorney Fees
There is certainly a careful balance in figuring out what to charge for your legal services. Obviously, you want to charge enough, but not so much that it will cost your firm clients. There are some dandy cell phone apps that allow you to compare rates for your location and practice area. They could be a useful tool to find that perfect tipping point.
2. Go GreenRegardless of how long you have been practicing, your firm can save some green by going green and electronic whenever possible. Look into chucking your law library for online for case law and codes especially for new practice areas you’re considering. There are plenty of free or low-cost ways to do your legal research without taking physical space in your office.
3. Reevaluate Your Practice Management SoftwareThe days of purchasing legal practice management software on disks are over (whew!). There are numerous programs available online for much less cost. Some offer free trials and useful extras like secure client portals and cloud-based services.
4. Consider Shared Office Space, Coworking Style
Tech start-ups and entrepreneurs are not the only ones who can enjoy the lifestyle that is “coworking” and sharing space. Coworking spaces are cropping up around the nation and they do more than just offer shared office space. The atmosphere is generally much more diverse, collaborative (referrals anyone?), and less conservative (i.e., gourmet coffee, draft beer, ping pong tables). Depending on your practice, this may allow you to bump into potential clients every day while cutting down rent expenses.
5. Invest in Interns
Think outside the law student. Consider using marketing interns from a communication or public relations program to help come up with new ideas to grow your practice. Perhaps consider an accounting student to help balance your books, pay bills on time, and bill your clients regularly. High school students interested in the law or business can also help with the upkeep of your office files, client communications and random tasks you’ve put off too long. This helps students gain a new perspective while you get more work done.
These are just a few ideas of where law firms can reduce their overhead expenses and compensation to stay ahead of the game. With a little creativity, firms needing to stay ahead or looking to innovate should consider change as being good for business in times of increasing expenses.