4 Cost Reduction Strategies for Law Firms
The fastest way to improve revenue for your law firm is to cut internal operating costs. Here are four cost reduction strategies for law firms that work.
Review Employee Benefits Packages
With the drastic increase in the cost of health insurance, many law firms are examing employee benefits packages to determine where to reduce costs. As a result, many firms are choosing to offer several health-insurance options that defer the costs of more expensive plans. For example, the firm pays the entire premium for the lowest cost plan and offers employees the option to “opt up” to better plans by paying for higher premium themselves.
Negotiate Real Estate Obligations
If your firm needs to reduce costs it’s always wise to understand two things about its real estate obligation. First, take a look at how much you’re spending each month and compare the cost to other comparable locations. It’s possible to save thousands of dollars a month by moving to another part of town. Second, consider how much office space the firm actually needs to operate successfully. Many firms are allowing employees to work remotely when possible to reduce the cost of office space in areas with expensive real estate.
Scrutinize Marketing Expenses
It’s important your firm generates a positive ROI for each marketing expense and investment. Therefore, when looking to cut costs analyze your law firm’s marketing plan and get rid of anything that’s ineffective, including marketing’s “sacred cows.” These are marketing channels which may have been effective in the past but probably aren’t any longer. For instance, radio and magazine ads are examples of “sacred cow” marketing strategies which can be very costly if not generating a positive ROI.
Reduce Office Supply Costs
To successfully cut costs it’s vital that law firms eliminate all wasteful and unnecessary expenses for office supplies. Many law firms choose to rent office equipment from several different vendors to get the best price at the time. However, as the initial contracts expire rates often increase and office expenses begin to unknowingly balloon. A similar situation can occur with office supply companies which offer enticing initial contract offerings. Therefore, it is usually beneficial to negotiate with these vendors to align contracts in order to get the best price.