The pandemic has presented opportunities to cut law firm overhead while increasing the quality of life for your people and your clients.
Ah, the pandemic. It taught us so many lessons. There is a black market for toilet paper. Sourdough starter takes almost as much care as a newborn. You can make hand sanitizer at home. And every business owner learned new acronyms — PPP, EIDL and ERC, just to name a few.
But there were also great lessons law firm owners could learn to help their firms grow and be more profitable, happier places well into the future.
Three Lessons on Law Firm Overhead
Here are the three lessons from the pandemic I believe can have the most impact on overhead.
1. Remote Works
Technology has come a long way in the past few years, and COVID-19 was an opportunity to explore it. Zoom gained traction and even became its own verb. And while the biggest fear when we moved to a work-from-home situation was that employees would become less productive, the opposite is true. A study coming out of Stanford found that productivity went up 13%. The same study found attrition rates dropped by 50%. And that is huge because the cost to your firm of replacing white-collar educated employees can be anywhere from 50% to two times their annual salary.
Another survey found that when working from home, employees cut out 30 minutes of socializing a day. If you do that math, 30 minutes a day, five days a week, 46 weeks a year for an attorney billing out at $350 an hour translates into $40,250. And all of that goes straight to the firm’s bottom line.
Who doesn’t want their billable people to turn over 50% less and contribute $40K more to the bottom line? Increasing productivity does not mean increasing costs, so all that increase goes straight into your pocket.
Lesson: Unless you must have clients come to your office, consider getting rid of it or downsizing your office space. That is a huge expense you can get off your books while doing something that makes people happy.
2. Better Talent Is Available at Better Price
The second lesson we learned is we have better access to talent. Right now, everybody’s talking about how hard it is to find good people. But I’m telling you that there are excellent people widely available and possibly at a lower price than what you are currently paying.
The response I often get to this is, “Hey, Brooke — how is that possible?”
We are no longer limited by geography. When you start recruiting on a national level, you have access to employees who live in remote parts of the country with a lower cost of living than in the big cities many of you are located. A lot of our clients are working with staffing companies that specialize in offshore employees for the legal industry.
Lesson: By hiring remotely, you are not limited by geography and can hire people with great skills in smaller towns with a significantly lower cost of living and lower salary demands. We also found that employees are quite interested in remote work and flexibility — and they will take lower pay if they can limit or eliminate going into an office.
3. Upgrade Your Client Experience for Less
The third lesson we learned is that we can upgrade the client experience through technology and eliminate or outsource some salaried positions.
Clients used to push back against doing everything online. But since the pandemic that has changed. Even my almost 80-year-old mother has become more comfortable with technology. Clients are no longer annoyed at communicating through email and on the web — in fact, it is the opposite. They are embracing it.
And this is great news for you.
Here is something we’ve always known but accepted because we didn’t have a solution:
- As long as an employee is doing something there will be errors.
- As long as an employee is doing something there will be procrastination and possible complaining.
- As long as an employee is doing something there is a salary. And that takes money straight out of your pocket.
By automating communication, you can be more accurate, more dependable and use fewer people. A CRM program is more accurate, never procrastinates and is less expensive than an employee.
What can you automate that used to be done by an employee? (Think document collection or getting standard questions answered by a new client.)
Lesson: Once that employee is gone, their salary (minus the cost of adding technology) goes straight into your pocket.
You Can Reduce Overhead and Increase Quality of Life
If you look at all three of these things — remote work flexibility, better talent and upgraded client experience — you will see a theme: quality of life. The pandemic forced us to slow down, take stock and make changes to the way we all live. Generally, this took the form of wanting more work-life balance or being able to do things on our own terms at our own time. Embrace these changes. They can lead to happier employees, happier clients — and less overhead. Win. Win. Win.
Illustration ©iStockPhoto.com
Read more from Brooke Lively:
“Law Firm Overhead — What It Is and What It Isn’t”
“How Are Law Firm Owners Paid? Total Compensation vs. Salary”
“Funding Growth: Are You Starving Your Law Firm?”
