The two greatest expenses for most firms are payroll and taxes. Unless you want to move your firm to Bahrain, there’s not a whole lot you can do about the latter. If, however, your firm rethinks how it can most efficiently meet client needs through alternative sourcing, you can not only control your bottom line, but also potentially increase top-line revenue.
There are many initiatives that a firm can implement to become a leaner machine; alternative sourcing is just one component of legal agility. Legal services outsourcing is on the rise for firms of all sizes. Concepts like secondments, near-sourcing, offshoring, co-sourcing, etc., are becoming a part of the day to day reality for firms, driven by both client demand and law firms’ need to increase profitability.
Consider your business realities. As you are likely quite aware, the practice of law has natural ebbs and flows. A busy spring does not always portend a busy summer. Even if your revenue continues to increase, controlling your bottom line and converting that additional revenue to profit can be tricky. There is a significant and understandable pull to hire in times of plenty, and certainly hiring full-time employees makes sense in a number of circumstances.
If your firm ends up carrying excess idle capacity for a time, it could mean financial trouble. Even more importantly, consider your client’s needs. Some clients will come to you for matters well within your capacity. To be sure, your clients will frequently be best served by having you or other partners or associates in your firm handle their legal needs. This is not always the case, nor is it always best for the health of your firm.
Clients are often looking for one-stop shopping, but not a one-size-fits-all solution. For example, many sophisticated clients are refusing to pay high rates for low-level associates to do more commoditized legal work and are requiring firms to work with third party providers who can offer this service at a fraction of the cost. Where clients are adjusting to do more for less, law firms too need to adjust to provide more value.
Alternative sourcing is on the rise as a result of a confluence of several factors, and supply is certainly keeping up with demand. The current independent talent pool looks drastically different than it did even a decade ago. The ready availability of high-level flex talent at reasonable rates is phenomenal. In addition to the temp agencies that have existed for a long time to offer low-cost contract attorneys, there are now organizations offering high-end flex attorneys, both domestically and abroad.
New law firm models are successfully reducing the hourly rates of lawyers, making co-sourcing and seconding from these firms an attractive staffing option. Tasks like document review, due diligence, legal research, project management, and litigation support can be easily outsourced to companies focused exclusively on these tasks.
There are countless options out there, and clients are getting more and more comfortable with firms accessing these options, especially when they see the difference in their legal bills. So, don’t move to Bahrain. Besides, it’s too hot there. Stay put and rework how your firm is going to provide legal services to stay profitable and competitive in the rapidly evolving legal marketplace. For many, this requires a shift in mindset, but the payoff can be tremendous for you and your clients.
Sign up for a free Clio trial today to bring your practice into the cloud and enable the most suited legal management software for your firm today.
Nicole Bradick is an attorney and entrepreneur in the legal space. She is the Director of Business Development for Potomac Law Group, as well as the founder and President of Custom Counsel. You can Tweet her @NicoleBradick.
Want more articles like this?
Subscribe for weekly blog updates, and get the latest ideas for running an efficient, profitable, thriving law firm.Subscribe