Reduce Your Law Firm Overhead With A Tech Stack
Everyone thinks lawyers make a lot of money. Some do. Many lawyers charge a lot of money, but because their businesses are expensive to run, they don’t make a lot of money. When there’s an economic downturn, the bottom line is ever more in focus.
For many in the legal profession that haven’t adopted lean practices (even during the pandemic!), overhead can soar to 50% of revenue or more. Yes, fifty cents of every dollar charged is going into… The Overhead Swamp.
No matter the practice area: employment law, real estate, intellectual property, personal injury, family law, mergers, litigation — the Overhead Swamp can literally drown your business. Kill it dead – especially in tough economic times. Big law, small law — everyone is affected.
It’s Easy to Have Too Much Overhead
Law firms with too much overhead usually have significant administrative staffing, manual, paper-intensive processes, and redundancy in tasks — and legacy technology.
I’ve practiced in a (relatively efficient) version of this kind of firm for decades. What I’ve seen is, the higher the overhead is as a percentage of revenue, the less satisfying the practice. This malaise may manifest in not making enough money, or feeling like you don’t have enough time for yourself, your family or your community.
LeanLaw’s discussions with hundreds of attorneys show that firms that adopt lean practices can operate at overhead levels of 20% of revenue or less. The 20% benchmark is scalable: at $100,000/year of revenue, $20,000/year of overhead is possible. At $1,000,000/year, $200,000/year of overhead should be achievable.
I expect most lawyers who are able to build a million dollar practice have already done their restructuring. When your legal services are in a lean law firm, you won’t face potential layoffs when there is an economic downturn.
Invest in the Right Technology
Since the pandemic, the legal industry was hit hard by reality: we need to have to access our technology wherever we are. Slow VPN servers are no longer the best way to go. If we need to get to the office to send an invoice, we may not be able to send the invoice in an efficient manner.
At the risk of stating the obvious, cloud based technology is now a must-have. The bonus is that security for cloud based software is far more secure than the server in your office. Who do you trust more: Box.com (used by the US Department of Justice) or the IT guy at your law firm?
Practice Management Software vs. Tech Stack
Many law firms think that having an all-in-one practice management software is the way to go. The pros are having an integrated system where everyone is using the same technology and processes. The major con with almost all practice management software is that it has one or two (at the most) great features and the rest are just OK. You can’t be great at everything.
The result is that most law firms don’t use most of the features in their practice management software and thus, are overpaying for what they get.
LeanLaw advises attorneys to use software that delights them. If you like it, you’ll use it and you’ll be more productive and . Find best-in-breed software, assembled as a tech stack and you’ll never look back.
Which software makes up a law firm tech stack?
Law Firm Accounting Software
QuickBooks Online & QuickBooks Online Advanced + LeanLaw will create the most robust, legal billing engine that any law firm would covet. This package will take a legal timekeeper through the entire accounting workflow from timekeeping to billing to reporting. You’ll be able to facilitate IOLTA trust accounting with ease and tap into data that you create on a daily basis. With LeanLaw, you can make sense of it.
Google Workspace or Outlook for calendaring and communications. Most likely, this is software you already use in your personal and business life. These two are the most robust software in this space, why go with something new that you would have to populate and switch over to for work? Stay with what you know!
NetDocuments, Box.com, Google Drive or OneDrive for document management. As we said earlier, if you’re already using Google Workspace or Microsoft 365 — going into Google Drive or OneDrive is a no-brainer. You’re already there. You know how to use it, it works.
Box.com is another software so trusted that the US Department of Justice has contracted with them. NetDocuments is a legal leaning document management system that is also worth a look.
Epona is another document management solution that integrates with Microsoft 365 and Microsoft Sharepoint. LeanLaw users can onboard new law firm clients in minutes with the added benefit of that new client’s billing connected from the get-go since Microsoft and QuickBooks are integrated — LeanLaw integrates into that tech stack as well.
Before the Technology: Being Human at Work (Non-Technical)
I’ve devised a loop – a seven-step process that improves your productivity while at the same time decreasing your overhead and improving your security and workflows and thus, enabling you to be more responsive to your clients.
Following are the broad strokes:
Accountability: Designate one person in the firm (associate, partner, assistant, business owner — doesn’t matter) to understand how the technology is set up, how to troubleshoot and know whom to go to for help when there’s trouble. This person will also find that trusted resource who will advise you on the technology for your law practice management.
Documentation: Create a list of critical information – key vendors, key account info, passwords, where to call for help, and even specific procedures. Think what would you do if a phone was lost, there was a data breach or some other crisis. Use secure online tools like LastPass and Dashlane.
Synchronization: Make sure all of your data is synchronized and backed up. Redundancy is a good thing.
Document Management: Get a secure system like Box.com or NetDocuments. Do not store documents on laptops, desktops or devices. Do not buy servers or Network Attached Storage.
Connectivity: Get the fastest internet and mobile service you can afford.
Mobile: Synchronize and secure your mobile devices.
Backup: Enlist a one-day backup solution like Carbonite, iDrive or ShadowProtect. Have a plan and test it – just in case.
The coming recession may or may not happen. Regardless, your law firm should prepare as if there will be another great recession. Having your law firm prepared in case of a slowdown is always the right move.