Avoid Waste of Money: 7 Ways to Cut Unnecessary Spending

RJH Consulting

By: Krystal Champlin

Volume XVIII / Number 9 SEPTEMBER 2009
(Reprinted with permission of Ardmore Publishing Company)

Seven areas where simple waste eats up the profits
And All Seven Are Easy To Get Rid Of 

A tight economy doesn’t allow for the waste of money. Yet waste of money is there in just about all firms, and it lurks in places where no one thinks to look. Here are seven such areas. They are outlined by ROBERT J. HENDERSON, a Jackson Hole, Wyoming law firm consultant at RJH Consulting and also a former law firm man­aging partner.

The Unplanned Marketing Venture
Start with unsophisticated marketing, Henderson says. A tremendous money drain comes from market­ing that isn’t designed to suit the firm’s individual goals.

Many times one firm sees another’s new marketing strategy “and jumps right in” without ever finding out how it benefited that other firm, without ever consid­ering whether it will bring in the type of clients the firm wants, and without ever questioning whether it can be measured.

Every marketing effort has to be designed for the individual firm, he says. Otherwise, it has no value. He gives the example of television advertising. It may greatly benefit some offices, but for firms that get most of their clients from business referrals, it’s use­less. A firm might spend $100,000 on it and never see any return on its investment.

Brand marketing is another potential money waster and something that almost always needs to be viewed “with a jaundiced eye”. While it may help some firms, for the most part, “it’s a Madison Avenue thing that’s sold by marketing consultants”. It can’t be measured, because its benefits can only be seen long-term.

“Any money spent on marketing is wasted if it doesn’t produce business,” he says. An easy way to find out if it does is to ask client prospects how they found out about the firm. If most say they heard about it through a television ad, then obviously television advertising is worth continuing. But if they say they were referred by other clients you need to cut your losses. The marketing needs to be focused on building the referral base.

The Hidden But Flashy Website
There’s money lost too via the website, mostly in two ways.

First is search engine ranking. No matter how ele­gant its design, if the site doesn’t appear on the first page of a Google search “the firm might as well not have it,” Henderson says. The firm needs to engage someone versed in search engine optimization to get the site a high ranking.

The second waste of money comes from paying for unnecessary site attractions. A good example is flash introductions. “A lot of firms have them because their web people tell them flash is really neat to have.” But it’s a useless expense and also a detraction from the usability of the site. “People don’t want to have to click out of an intro to get to a website.”

The Unused Staff And Space
A tremendous waste comes from poor planning for, and ineffective use of staff and space.

Staff account for the largest single overhead item in every office, so their use should come under “constant review and scrutiny.”
The job descriptions need to be reviewed with fre­quency to see if there are too many people doing too little work and where overlap occurs.

Do the same when anybody leaves. Look at the job description for the position and see if the duties can be distributed to other staff and thereby eliminate the need to hire a replacement.

As for office space, in today’s economy, the rule is that not enough is far better than too much. Wasted space is wasted rent.

What’s more, he says, space that just recently became empty may be a long time getting filled. When money gets tight, people get conservative about their business expenses, and they aren’t anxious to take on the expense of legal services. For that reason, “the law profession is one of the last to experience a recovery.

And beyond the expense of the unnecessary rent is the cost to the firm’s image. If a client comes in and sees empty offices “it looks like the firm has taken a hit” and is suffering for lack of business — and maybe that client would do better elsewhere.

Danish or Doughnuts?
Then there’s the great drain from squandering expensive attorney time on routine administrative decisions.

There’s no need for the partners to sit through a presentation on the benefits and drawbacks of Copier A versus Copier B, Henderson says. Buying a copier “is not rocket science.” The administrator can handle the job without their assistance.

Neither should the partners spend time with the hiring and firing decisions for non-attorney staff. That too is the administrator’s job as is discipline.

And neither should the firm trade off its billable hours for an attorney’s non-legal skills. Yet that’s done often. It’s not uncommon, for example, to see an attor­ney with computer knowledge take charge of the office’s computer issues instead of having a staffer do that work.

Some time wasters border on being ludicrous. He cites one firm where the partners actually spent time discussing “whether the office should switch from Danish to doughnuts in the break room.”

Losses like that are ridiculous, “but they happen routinely in law firms,” and the billed hours lost “can get into the thousands of dollars.”

Look at the numbers.

If 10 partners with an hourly rate of $500 spend a mere 15 minutes talking about the doughnuts, those doughnuts have just cost the firm 2.5 hours of billable time, or $1,250.

The Internet Temptation
Further waste of money and time comes from the personal use of the Internet by both staff and attorneys.

The Internet is a temptation sitting on everybody’s desk, Henderson says, and the office needs a policy for its use.

What’s more, that policy needs to carry conse­quences for repeated violations – including firing. There are software available that can monitor its use.

The E-Mail To The Next Office
Similarly, there’s loss from overuse of internal e­mail.

“It almost always takes longer to type out an e­mail” than it does to call someone or simply get up and walk to that person’s desk, Henderson says.

What’s more, e-mail can create a wait time because it doesn’t always get answered immediately. The attor­ney or a client “could be sitting around all day waiting for a reply when the answer was readily available face-to-face or over the phone.”

And on down from there is the potential money loss from the fact that people put things in e-mails that they might not say in person and thereby increase the practice’s liability risk.
The Brochures In The Closet
Finally, there are those expensive firm brochures – high-priced design. slick paper, full color.

And as if they aren’t expensive enough, if they carry photos of the attorneys, they have to be redesigned and reprinted every time somebody leaves.

“Unless a firm is a national or an international organization dealing with Fortune 500 companies glittery, fancy brochures are a waste of money,” he says. The message can be just as effective printed plainly and on standard paper.

The greatest waste of money, however, comes from the failure to have a plan for getting those brochures to the people who can make them pay off. In most firms, the expensive brochures "just sit there.”

The brochure is not something to distribute at random. It needs to be a part of the larger marketing picture. The firm needs a program to contact and develop new clients and referral sources, and the brochure should be designed to be part of that contact.

What’s more, the text has to do more than tell how great the firm is. Its purpose is to bring in clients, so it has to answer the big question of why people should retain the firm as opposed to the competition.

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