Increase Profit by Decreasing Costs

Volume 38 Number 4

By

About the Author

K. William Gibson is a personal injury lawyer and arbitrator in Clackamas, OR. He is the author of How to Build and Manage a Personal Injury Practice and the editor of Flying Solo: A Survival Guide for the Solo and Small Firm Lawyer

Law Practice Magazine | May/June 2012 | The Time Management IssueIN LARGE LAW FIRMS, the costs of running the office get spread around. But in small offices, those expenses are the responsibility of the lawyer whose name is on the door. If expenses run high, the solo has a bad month.

So how does a solo or small law office cut costs? I would suggest that the best way is to “go virtual” or “almost virtual” by cutting fixed expenses, using the Web to deliver services, outsourcing essential services, working without a full-time staff and even eliminating the traditional office.

All too often, the lawyer in a solo practice, or the handful of lawyers in a small partnership, think they have no control over their overhead expenses, but that is not necessarily true. To really cut the overhead, lawyers will need to rethink everything they do.

RETHINK THE TRADITIONAL OFFICE.

Solos are usually faced with the choice of renting more space than they need or renting an office from another lawyer or firm. Whichever of these options the lawyer chooses, the rent, along with payroll, will be the largest single monthly expense. But, more and more, solos and small firm lawyers are cutting their monthly rental expenses by renting only the space they need in a shared office, sometimes called an “executive suite.”

In an executive suite, you pay for what you need and can afford, whether a full-time office, a part-time office or just a conference room where you can meet clients.

But what exactly do you get with a shared office arrangement, and how can it help save money each month? Most of the time, your rent includes the office space; reception services, such as telephone answering and greeting clients; high-speed Internet access; and mail handling and coffee service.

With a full-time office, the lawyer can move in with all his or her files, put pictures of the kids on the wall and use it every day.

A part-time office is shared with other people, and you need to leave it empty when your time is up. But it’s a great place to meet clients, take depositions or hold arbitration hearings. Also, you will often get a good location and a prestigious address. When you are not in your part-time office, you will likely be working at home or at a coffee shop.

Shared office space is available in every community. It may be a regional or local business, or part of a national organization that has offices in multiple cities. National office-sharing companies include Regus/HQ Global Workplaces and Star Office Space. Regional office-sharing companies include Barrister Executive Suites in California and Premier Business Centers, which operates in five states.

If you have a secretary or legal assistant, it may not make sense to set up shop in a shared office, unless you and your employee share one office. (I have done that before.) By the time you pay for two offices, you will probably find that the cost is beyond what you could get a traditional office for. But if you want to run your practice without any full-time employees, a shared office might well be the ticket.

ELIMINATE FULL-TIME EMPLOYEES.

Having full-time employees means that you not only have to pay the monthly salary for someone to answer your phones, prepare documents, organize your cases and talk with clients, but it also means you have to pay payroll taxes, employee health insurance and worker’s compensation insurance. Not only that, but you will likely have to pay a replacement when your employee is on vacation or is home sick. If you provide sick leave and vacation benefits, you may find yourself paying twice.

When you get to where you need to hire someone, consider part-time workers—people who want to work less than full-time—and pay them hourly. You will only need to pay them for the time they spend in the office. If you don’t want to require people to punch a time clock, don’t worry—there’s probably an app for that. Having part-time employees gives you more flexibility than having one full-time assistant. One of your employees will usually be able to increase hours to cover for someone who is off.

GO VIRTUAL (OR ALMOST VIRTUAL).

A virtual office does not include a shared office or executive suite, or the delivery of legal services in the traditional way, where clients come into your office and meet with you, writes ABA author Stephanie Kimbro in her 2010 book Virtual Law Practice: How to Deliver Legal Services Online. Kimbro says that a virtual practice is one that exists online and serves clients through a secure portal, where the lawyer and client can communicate, share documents and other information, and schedule activities.

A hybrid model seems to make the most sense—one where clients can communicate with you via a secure portal and can also come in for a face-to-face meeting. Lawyers who need a lot of face time with clients, insurance adjusters, doctors and opposing attorneys will likely never be 100 percent virtual. And while tools such as Skype can reduce the number of in-person meetings, they won’t eliminate them. Virtual practices are best suited for lawyers with transactional practices, where their work involves a lot of paperwork flowing back and forth between the lawyers and their clients.

SET UP A CLIENT PORTAL.

Setting up a virtual office will require that you invest in a client portal. By doing so, you can then have any number of “virtual” employees working from their homes. Think of all the rent you will save.

Most portals work as a Web-based service and charge you a monthly or annual fee. Client portals allow clients to log in at their convenience and see what work you have done on their case and what events have been scheduled. Some clients will welcome that convenience, while others will feel that it is too much work and will insist on calling you for an update.

Law technology guru Richard Granat, for example,  offers a secure portal through his company DirectLaw.

TRY OUTSOURCING SOME OF YOUR WORK.

How do you get by without having any employees, or at least without as many as would be required in a traditional office? One way to eliminate some of your staffing costs is to outsource the low-level work that your highly paid employees currently do. A legal assistant has better things to do than answer the phone, so why not find someone else to do it? Outsourcing telephone reception is a popular concept right now. Companies such as Ruby Receptionists will take messages from callers or relay information to them if you are not available to take their call. They also will transfer the call to you if you have requested that they do so.

Other telephone reception companies providing “live” telephone answering include Receptionist.org, Yantram and ReceptionHQ.

If having a live receptionist isn’t critical to your practice, there are any number of “virtual receptionists”—available online or with local software—that will answer your phone and offer personalized messaging. There are plenty of options available, but the bottom line is that it is no longer necessary to incur the salary expense of having someone answer your phones and take messages.

In addition to outsourcing telephone- answering services, you can also outsource some of the higher-level duties that your full-time employees currently perform—often to the same companies that offer reception services. Yantram, an Indian company, offers personal assistants to handle everything from Internet research to website maintenance and search engine optimization—all for about half the hourly rate you are probably paying your clerical staff. Search for “virtual legal assistant” and you will find offerings from around the world.

Will all of these suggestions pencil out for you? It’s hard to tell until you know exactly what you need. But one thing is for sure: It is no longer necessary to rent a large office and hire a large staff to run a small law practice.

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