A perennial question for businesses facing tough times is whether to prioritize cost-cutting or revenue growth. But cost-cutting and revenue growth aren’t mutually exclusive. Shedding unnecessary expenses can quickly free up funds to invest in initiatives to propel your firm’s growth. Below are some relatively painless ways to cut costs:
Ineffective Paid Marketing Although it might seem counter-intuitive to cut marketing costs at a time when you need to bring more business through the door, the key is to cut those programs that don’t work. So if you’re paying $200/month for a paid listing in a lawyer directory, without a single call in three months, you should think about cutting your losses rather than throwing good money after bad. Same too with SEO services or paid blog content. If you’ve committed to a long-term contract, see whether you can negotiate an early exit with the vendor. Otherwise, ride it out until the end of the year – and avoid binding yourself for more than three months to a program moving forward.
Potential Savings: $200/month
Unnecessary Subscription Costs It’s no wonder that most vendors love subscription products. How many times have you signed up to subscribe to an online program or service, and then forgotten to discontinue it when it’s outlived its usefulness. Take a few minutes to comb through your PayPal Account or credit card statements, and terminate those services that you haven’t – or possibly never – used.
Next, make sure that your level of service continues to match your need. While it’s penny-wise and pound-foolish to shut down mission-critical systems like phone service, or law practice management platform to save a few bucks, you may be paying for extras that you’re not using. For example, maybe you’ve moved from relying on your smart-phone for calls to a VOIP system. In that case, you may not need an unlimited smart-phone plan. Likewise, most LPM and online document portals charge on a “per seat basis” – and you may be continuing to pay for an account for an employee who departed months ago and hasn’t and won’t be replaced.
Potential Savings: between $20 – $100/month
Malpractice Insurance Take some time to review your malpractice insurance policy when it’s up for renewable. Though you probably won’t want to adjust your coverage levels, assess whether bumping your deductible up or dropping a high-risk practice area that accounts for only a tiny percent of your practice can make a difference in monthly premiums. Also, because malpractice coverage can be a big-ticket item, it might be worth shopping around. My original malpractice insurer which was then the D.C. Bar’s preferred provider went under as a consequence of 9/11, forcing me to to look at other providers. And even at a time when rates were going up, I procured $250,000 more coverage for 60 percent of what I’d been paying before.
Potential Savings: between $50 – $100/month.
Bar Association Dues For lawyers who practice in multiple jurisdictions, the cost of mandatory and voluntary bar memberships — ABA, state and local bar and practice-specfic bars – can easily add up to $1500/year. And unfortunately, many of these membership fees are an unnecessary expense. That’s unfortunate too, because many bar associations <I>could </I> have leveraged the collective purchasing power of their members to negotiate meaningful discounts for everything from office supplies to malpractice insurance, web design and law practice management systems. Instead, many bar associations instead have adopted the “preferred provider” approach – where a single vendor pays the association for the privilege of free advertising to members. While that provides a nice chunk of change for the bar associations, their members don’t realize any benefits. Bars have tried to change – offering access to legal research like Fastcase as a benefit of membership – but if your only rationale for joining a bar is to access Fastcase, you might be better off subscribing to Jenkins Law Library, which for $150/year buys you Fastcase and an array of other free legal research resources.
So take some time to consider the dues that you’re paying to multiple bar associations. How often do you attend conferences and networking opportunities – and are those events open to non-members? Does the association provide other services – like law practice management or an ethics hotline – that benefit members? Finally, does the bar association provide equal opportunities to solos and smalls to advance through the ranks – or are big-firm lawyers and those who are well-connected to the establishment favored over newcomers? After subjecting your bar association to this test, you’ll probably be able to cut a few memberships from your list.
Potential Savings: Between $20 and $75/month
As this exercise demonstrates, cost-cutting can result in real savings – as much as $500/month even for a small operation. Which means that after two months, you’d have enough to hire a freelancer to give your website and logo a nice facelift. After four months, you’d have enough to attend a bootcamp to add a new practice area to your firm, or to hire a high-end consultant whom you’ve wanted to work with. Alternatively, even if you don’t have immediate plans to reinvest your savings right now, you could use the additional cash flow as a cushion so that you can be selective about the clients and cases you take on. Above all, don’t treat cost-cutting as an end in itself, but instead, as a means to the end of a more successful, growing practice.