Just like any other types of businesses, law firms often face financial problems. This is especially the case when it comes to small companies. Thankfully, since you’re essentially facing the same issues as many other companies in different industries, you’ll be able to incorporate some of their strategies to save your law firm and increase profitability.
In case you’re in a solo practice or have a small number of employees, you will need to have a good business plan if you want to increase your profitability. Even if you’ve been running the practice for a few years, it’s still a good idea to rethink everything. First of all, you should check how much you’re spending on the office space you’re renting. Along with the payroll, this is your biggest monthly expense, which is why you shouldn’t spend more than you have to on it.
One of the easiest decisions that you can make is to simply find a smaller office space for your company. In case you need to cut costs even further, then you can consider moving your firm to a part-time or shared office. This means that you’ll essentially be sharing the office with other people. You’ll have a certain time period during the day when you’ll have it all to yourself, but you’ll need to leave it empty as soon as you’re done. Nevertheless, a part-time office is an excellent way to cut your costs while still having a place where you can meet your clients.
Aside from part-time offices, there are also some convenient legal services available like First Legal Depositions, which basically provide you with the resources to schedule a deposition wherever and whenever you want. This company has outstanding conference rooms all across the United States and helps with everything from coordinating the depositions to providing assistance for your technical needs.
Keep in mind that you don’t even need to have an office when you’re not meeting clients or holding depositions. Therefore, you can work from home or any other location by having a virtual practice. Basically, your law office will exist online and you’ll communicate with your clients via a secure portal. You’ll be able to share documents and schedule activities easily by working through a virtual office.
Another great solution for improving profitability is to outsource low-level work. After all, a legal assistant shouldn’t be the person answering the phones at your firm. Simply hiring a virtual assistant to message clients and answer the phones is one of the easiest ways to reduce your expenses. This is an important thing to do, since there is no need for a legal assistant to be getting a high salary for doing tasks that someone else can do for a significantly less amount of money.
If you have more employees than you need now that you’ve started outsourcing some of your work, then it’s time to downsize your law firm. Keep in mind that most companies go through a phase when they need to let some of their employees go in order to stay profitable. After all, you shouldn’t really be paying someone a salary if they have a lot of work to do. In case you’re looking to cut costs, then it’s recommended that you start hiring part-time workers.
However, if you decide to let someone go, you’ll need to be sure that you’re making the right decision. Make sure you do your research on exactly how much work each employee does and how much they’re of value to your law firm. Once you do this, you will be able to determine who you should let go.
In order to increase your profitability, it’s important that you keep track of your expenses and profits. Make sure to hire a financial manager who will make good income and expense predictions, since that will help you come up with a good plan for improving your law firm.