Most solos realize that cutting overhead can sustantially increase our bottom line. That’s why increasingly, many solos favor virtual offices over costly downtown space, or prefer to outsource projects to deal with short term work spurts to avoid adding new staff. But if you’re still not convinced that cutting costs can make a real difference in your income, consider the example of Google (disclosure: my husband is a Google employee). According to this news item, even in this tough economic climate, Google managed to increase revenues and profits by slowing recruitment (hiring 519 people compared to 2130 the previous quarter) and downsized some of the selections in the free employee cafeteria (though if they have, my husband hasn’t really noticed).
Of course, cutting too much from the budget can hurt you in the long run. Below the jump are some suggestions for where you may be able to cut:
1. Office rental: If you’re having trouble making rent each month, maybe it’s time to revisit that expense. Moving from an office rental to a home office or home and virtual arrangement can save several thousands of dollars a year, not to mention the stress and worry of paying rent each month. For some lawyers, the home solution isn’t feasible because of lack of space or feelings of isolation, while others may use the office just enough that a per-diem office arrangement wouldn’t represent any real savings.
Alternatively, perhaps your office is large enough to accomodate two desks and your landlord will let you share your space with another lawyer – for instance, you’ll take Mondays and Wednesdays, your sublessee can have two other days and you can trade off the last. The arrangement will cut your rent in half and create a good deal for another lawyer. Just be sure that if you adopt this approach, that you secure your files and don’t share computer equipment.
2. Malpractice Insurance Back after 9/11 in a similar economic climate, I opened what I thought was my renewal letter and discovered that my insurer was going out of business, and the company to which my account would be transferred was planning to double my rates. By then, I had joined Solosez, and after asking around, collected rate estimates from a few companies, including CNA. The CNA coverage was even less than I’d been paying under my original policy, plus gave me more coverage with a smaller deductible! I’ve been with CNA ever since, and have recommended the company to other lawyers.
Even if you can’t find a cheaper insurer, there are other ways to lower your rates short of dropping the policy entirely — which incidentally, is not a wise choice in these troubled times, when clients are all to eager to sue or grieve lawyers who achieve poor results. For example, you could increase your deductible or perhaps, lower coverage limits if you still feel sufficiently comfortable with the resulting added risks. Don’t, however, drop the component of coverage that provides representation in grievance proceedings. Again, in times like this, clients are more likely to grieve lawyers, and you don’t want to find yourself naked, without representation before a disciplinary committee.
3. Staff I know that in this climate, no one wants to cut employees. But if the choice is between paying your employee’s salary or preserving the economic viability of your law firm, you need to choose the latter.
Many experts recommend cutting the ties with an employee entirely rather than trying to offer accomodations such as part time hours, since the employee could retaliate and do damage on the job. You’ll have to use your judgment here as to whether cutting back hours will work for a given employee. If you feel you need to make a clean break, but you still have administrative tasks that you can’t manage on your own, you can hire a virtual assistant or part timer to fill the gaps.
4. Legal Research Costs: These days, lawyers need some kind of computerized legal research service, but unless you specialize in legal research and writing or handle a large volume of complex federal matters, you can probably get by without top of the line service. These days, many state bars offer research packages like Casemaker, Versuslaw or Fastcase as a free or nominally priced benefit of membership. For most lawyers, particularly those with exclusively state practices (I still don’t full trust the comprehensiveness of the federal district court databases on any of these sites, though they’ve improved considerably), these low end tools, supplemented by a visit to a law school or public library to use the free Westlaw kiosk, should suffice.
As for lawyers who require specialty databases (in my case, energy regulatory), consider single library subscriptions which give much of what you need day to day. Or if you can’t get by with less than the best, see if it’s possible to pair up with another solo to split an account.
5. Marketing Costs A downtime is certainly NOT the time to cut down on marketing costs. But, it is a terrific time to review the results you’ve obtained from past efforts. If, for example, you spend $400/month on Google search terms and never snagged a single paying clients, drop the service. Or perhaps you’re spending a couple of hundred dollars a month on lunches and bar networking events, again, without much result. Why not turn lunch into a cup of coffee (much cheaper) or invite a group of people you want to meet to low priced happy hour or a brown bag presentation at your office. You’ll get to reconnect with colleagues and save yourself the price of a bar event where you likely come away empty handed. And review all of the bar dues that you pay — some may not yield much of a return, so now’s the time to withdraw. You can always return when business picks up again.
6. Supplies As a solo, you may not buy enough of anything to really save on supplies – but at least, you can find ways to reward yourself a little. Sign up for incentive programs at stores like Staples or Office Depot, or take advantage of coupon programs on line. Every few months, you’ll get coupons or gift certificates that will let you splurge on something for yourself or your staff.
7. Technology There are many, many free applications available online from project management web apps to billing to word processing programs. Some may not be at all adequate for your needs, but others will help fill the gaps until cash starts to flow. Take the time to see what’s out there before thumbing your nose at it.
8. Make Due Yes, you want to upgrade to the new version of the iPhone or junk your laptop because the battery doesn’t last as long as it once did. Do you need to make those changes now, or can you get by until the economy picks up? For example, while laptops are cheap, you can cure the battery problem by simply buying a second battery which is less expensive than a new machine. As for the new phone, will looking cutting edge really increase your business? In some practice areas it might, but in others, clients simply don’t notice.
The same goes for clothing. If you work from home, you really don’t need all that many suits for work. You may grow tired of wearing the same outfit several times a month, but if you’re not seeing the same people, no one will notice.
These are just some suggestions – you, my readers, most likely have many more, so share them below.