How to Trim Your Law Firm’s Overhead Costs in a Recession
The legal industry has always been a competitive market, with firms often competing directly against each other to offer the best services at the most competitive prices. As such, law firm owners are always looking for ways to reduce overhead costs – especially on the cusp of an oncoming recession.
After all, the cost of just about everything is rising – from rental fees to software subscriptions, making it hard for law firms to stay in the green. Furthermore, there was a marked decrease in demand for law firms’ services at the end of 2022. For example, “lawyers billed an average 112 hours per month in the fourth quarter of 2022 — down from 121 hours the previous year.” This downturn in demand is something many firms are still struggling to recover from.
With that in mind, here are some simple ways to trim your law firm’s overhead costs in a recession.
Remote working is one of the key legal staffing trends in 2023. However, in addition to being an excellent way to boost employee satisfaction, working remotely provides you and your law firm ample opportunity to reduce overhead costs. For example, you no longer have to deal with rental fees and mortgages for business or office spaces.
Alternatively, you could downsize your office and put together a hybrid working schedule for your employees. This, again, will reduce costs while allowing you to enjoy the benefits of both remote and in-office working, helping your firm grow from strength to strength.
While going paperless will initially incur additional costs, it can actually be a great way to reduce your overheads over time. This is because you will no longer have to spend money on office supplies like paper, ink, or printing. This can quickly become a significant saving, particularly when taking into account that “the average employee costs $725 per year because of their printing habits.”
This is also a great way to ensure your business is sustainable and eco-friendly. Given that consumer trends show that clients often favor sustainable businesses, this could also help you bring in new clients, ensuring your firm has a steady stream of work to rely upon.
Outsourcing specific duties, such as accounting, can also help you to reduce overheads. This is because vital tasks, such as tax planning and payroll, aren’t being neglected, but you aren’t forced to hire a full-time employee, either. This can help you to cut back on a variety of costs, such as:
- Labor costs (Salaries, 401k benefits)
- Operational costs (Outsourced staff will work remotely)
- Training costs
If you aren’t already convinced by this, “the Harvard Business Review states that you could achieve cost reductions of around 20% to 30% by outsourcing non-core business processes.” Furthermore, this can also save you a great deal of time and energy, which ensures that each employee is working effectively.
At FinOp Group, our talented team of accountants is on-hand to provide your firm with various financial support services. Get in touch today to find out more!