Financial Strategies for Positioning your Law Firm for the Future

Another front page story about layoffs? We’re not even surprised anymore. Since January 2008 nearly 10000 employees have been laid off by major law firms.[1] In professional firms the first place we look for savings is our payroll.   Certainly this is an excellent time to review your staffing and weed out the weak performers. But as you look to position your firm for the future focusing only on layoffs is unwise. After all the economic environment isn’t static. Smart leaders are looking for both short term economies and long term strategic advantages.

While salaries tend to get the first look in bad economic times it may be wiser to review other options for tightening operations and controlling costs. It’s time to sit down look at historic spending and budget for future expenditures and capital improvements. What are we spending? Which costs are strategic and which ones should we trim? Many firms have a very loose budgeting process and often there are entire categories where no one is watching to see how much is being spent. Align your spending with your firm’s short and long-term initiatives and you’ll be surprised at how much more cost efficient you’ll be.

As you go through this process assess the following areas carefully.

Office leases
Office rent is one of the largest expenses for legal practices. Do you have satellite offices with just one or two employees? Perhaps they can work at home. One professional firm I know is combining two satellite offices into one at least for the time being.    If you have leases coming up for renewal consider what class of property you need. Class A is nice but maybe Class B would be fine. Wheel and deal. You can find major savings by thinking broadly on this topic.

Vendor contracts
If your firm has several offices chances are each office has their own vendors for equipment office supplies even coffee. Pool these contracts and put them out for bid. Buying in bulk can generate instant savings. Vendors will appreciate your business particularly now.