General Practice, Solo & Small Firm Division

American Bar Association
General Practice, Solo, and Small Firm Division
The Compleat Lawyer
Fall 1997
copyright American Bar Association. All rights reserved.

Controlling Overhead

By Theda C. Snyder

Theda C. Snyder has practiced in every type of setting: small, medium, and large firms, in-house corporate legal departments, and for ten years as principal of her own firm, mostly as a solo practitioner. She can be reached by e-mail at snydert@juno.com. This article has been adapted from Running a Law Practice on a Shoestring, published by the American Bar Association Section of Law Practice Management. Copyright 1997 Theda C. Snyder and the American Bar Association. Copies of this publication are available from the ABA Service Center, 800/285-ABA1 (2221).

Today's clients are highly resistant to increases in hourly rates for legal services and increasingly resistant to separate cost billing for internal expenses such as fax and photocopy charges. Working harder on more files for more clients isn't the only way to increase your firm's income. In a world of price resistance, perhaps the easiest way to increase profits is to lower overhead.

These suggestions are presented on the RAM principle. Some suggestions may not be appropriate for you, and these you will REJECT. Others will fit your personal style, and these you will ACCEPT. Another group will not be exactly right, but the tips will work once you MODIFY them. Every tip has actually been used in the management of a law office and can be the basis for your overhead management efforts.

Keep a Handle on Finances
Budget. Does your firm budget for expenses? You can't cut down your overhead if you don't know where the money is going. Keep track of your expenses on a monthly basis. There are plenty of software programs to help you do this. As you go through the year, you may be able to identify expense categories that can be better managed. Almost every category of expense can be pared. Try to stick with your original budget for an entire year. However, if you find yourself facing unforeseen events, it's better to modify and plan for the balance of the year than to discard the budget altogether. But don't simply increase categories across the board just because you've had a good month or two.

Bank charges. Try to avoid paying bank service charges. If your balances are so low or your activity so high that the bank claims it will lose money without a service fee, explore with your banker ways to become a good customer - without any expense. Perhaps transferring your retirement funds to a certificate of deposit or money market account at your firm's bank will produce enough income for the bank to offset the cost of handling your other accounts. Naturally, you should make sure you receive the most competitive rates on these funds.

Outfit Your Office Carefully
Furniture. Consider buying used furniture. You can save the most buying from private parties. Check the classified ads in the daily newspaper. There is no reason to limit yourself to buying from a law firm, although you are likely to find the greatest amount of appropriate items from one source if you do.

You might also keep your eye out for announcements that law firms are moving to new offices. Many firms, especially big firms, will refurbish to some extent. You may be able to pick up some furniture cheap to save them from having to arrange to dispose of it. Another source of cheap office furniture can be bankruptcy liquidation sales. These may be advertised in the daily paper, plus you can check the official notices in the legal periodicals. If you have friends with Chapter 11 practices, let them know you are in the market for used office furniture. They may be able to refer you to a Debtor-in-possession that would be thrilled to sell off excess furniture and equipment.

These days, many law firms are closing doors. Others are merging, consolidating operations. These situations represent an opportunity for you to pick up some quality office furniture at a fraction of the original cost. Make sure you don't wait until the last minute. Put down a deposit and document exactly what you are buying and when you will get it.

Telephone. Your office should keep enough phone books for the entire geographic service area convenient to everyone's work station. All staff should be encouraged to use the books, rather than telephone information services. Information is an expensive call. Used several times a day by a number of people, the charges can add up.

Train staff to call the operator to request a credit for a long distance wrong number. Why should you pay for a misdial when you don't have to?

Supplies. Paper is the fuel law firms consume. However, most law firms can cut down on their paper consumption. The biggest demand for copies comes from repetitive revisions. Try to be thoughtful in your revisions. Make all the revisions you are likely to make at one time. If you are reviewing others' work, it should not always be necessary to review a pristine work product. Accept work product with others' markings for your review.

Rather than throw away paper used in early drafts, cut it into quarters or sixths for use as note paper. Use it to write instructions and other short notes within the office.

Use Staff Wisely
Minimize reliance on staff. Explore ways to use part-time and temporary workers and independent contractors. You avoid the expense of maintaining a continuing, full-time staff.

You need your own computer, and you need to know how to use it. Take a word processing course at the local community college or buy WordPerfect in an Hour for Lawyers (published by the ABA Law Practice Management Section). If you can keystroke at even 30 words per minute, you will be a more efficient drafter than someone who dictates. Have a secretary finish off your work product, including a spell and perhaps grammar check.

Hiring. Perhaps you think of turning to law school placement offices to hire new grads, but not experienced lawyers. Alumni of a few or many years also use their placement offices. This service is usually free for the would-be employer. Often, a placement official will ask whether you want your opening posted or handled confidentially. Job-seekers who are not alumni of that school - particularly out-of-towners - may cruise the placement bulletin board. Ask to have your job notice posted for exposure to these aggressive, smart applicants.

Some legal secretarial schools have extern programs for their seniors. Even the greenest extern can take on mundane work such as photocopying and faxing, thus freeing up your crackerjack staff for more sophisticated tasks. The downside is that as soon as the extern has learned enough to integrate well into your organization, he or she is ready to graduate and take a full-time job. If your extern is good, you have the best chance to hire him, as presumably the extern has already developed some loyalty to your organization.

Save on "Fringe" Benefits
Employee benefits. Raise the deductible on your firm's health insurance to decrease the premium. If state law permits, exclude expensive medical procedures you don't wish to cover, such as psychotherapy.

In all but the very largest organizations, there are inexpensive ways to set up retirement plans. You don't need to custom draft an ERISA plan for your firm. Check with your banker and stockbroker to sound them out on their expertise in this area. All of the major mutual fund companies can handle the paperwork for you. If you live in a large city, you can visit a mutual fund investor center for face-to-face contact. Or you can discuss your plans with a counselor on one of their toll-free telephone lines. Any of these sources can do the lion's share of the work to establish a plan for your employees.

Whether you choose a Savings Incentive Match Plan for Employees - known as SIMPLE, a Self-Employed Plan, a Keogh, or a more complicated plan, arranging for administration by a bank, brokerage, or fund lets you provide a valued employee benefit with a minimum of hassle.

Other Cost-Cutting Measures
Rapid delivery services. When using overnight mail services, find out the location of the nearest drop box. It may even be in your building. Dropping your pack in the box, rather than having a driver pick it up, can save $1.50 or more on each pack. Legal research. No matter how skilled you are in formulating your LEXIS or Westlaw queries, calling a research assistant at customer service is usually a worthwhile expenditure of time. Tell the assistant the issue you want to research. That person will try as many queries as it takes to get a result that seems to meet your need. Then, she will tell you exactly what search to key in.

Market Creatively
A law firm "retreat" may be a good way to kick off your marketing plan. Your retreat can be an evening at a moderately-priced restaurant or a day at your house on the patio or in the rec room. Brainstorming does not require an elegant setting. Set aside an evening to visit the business section of your local public library. Browse through the many directories of businesses. Some directories are limited to a specific industry. Some are arranged geographically. As you realize the breadth of the potential clientele, new marketing ideas are sure to pop into your head.

The Directory of Associations may be a lawyer's most valuable market research source. The Directory of Associations lists every formal organization in the United States, from Campfire Girls to the National Association of Securities Dealers. The book details each organization's publications. Most editors would love to get a well-written article about some aspect of law impacting the members. Conventions and meetings are also listed. You can contact the executive director to find out how to become a convention speaker or lease an exhibitor's booth.

Are you on the Internet? If you subscribe to a value-added online service such as Prodigy or America On-line, you can maintain a homepage free of additional charge. Consider adding links to other pages on the Web to increase your page's utility while staying within your free space allotment. Don't forget to keep updating your page to keep information current and lure visitors to return. Even if your Website lacks exciting graphics, if it helps, informs, and entertains your visitors, you will be effectively marketing your practice.

Travel Tips
You might be going out of town to take an expert's deposition. Or perhaps you are traveling to the ABA Annual Meeting. Whether the travel costs are coming out of your pocket or your client's, it's in your interest to cut costs. Check out the ads in the travel section of your Sunday paper. While some regional carriers may purchase good sized ads, look for the tiny boxes. They're easy to overlook. Also look at the classified ads in your local paper, particularly on Sunday. You might want to review the ads in the newspaper serving a nearby city as well. You may be surprised to see many commercial offers to sell tickets, not just ads by private parties. USA Today classified ads often offer discount airfares. Your travel agent may not tell you about these bargain fares because smaller airlines often do not purchase the text lines on your agent's system that would allow him to make the reservation online.

When traveling to a convention, bar association meeting, or CLE presentation, you can save money by rooming with another attendee. Even if you don't know who else may be attending the event, the sponsor will usually be happy to provide you with names of others whom you can call to inquire if they want to share a hotel room. Some sponsors will match up roommates. Sometimes the registration forms ask whether you would be willing to share a room, especially when the event is being held at a location where hotel space is scarce. Once you identify your prospective roommate, you may want to take some time to chat to make sure you feel comfortable with each other.

Conclusion
Now that your mind has begun to percolate with cost-saving ideas, let your imagination build on these suggestions. No matter how successful your practice, or how large your firm, controlling overhead is important. Get in the habit now of always considering the less expensive way to reach the same goal. It is a practice that will serve you well throughout your career.

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