Practice Management

You would think that our economy is going to hell in a handbag.  We are burning through fuel, money and jobs at an astonishing rate.

According to CNNMoney we Americans saw our net worth decline by $1.7 trillion (that is with a 'T') in just the first quarter of the year.  The amount of equity in our homes dropped 46.2%.  But, get this.  These declines are NOT affecting consumer spending that much.  Why?  Because Americans are spending everything in their wallets and borrowing even more.  Admittedly, more of this hard cash and credit is going to fill up cars, heat and cool homes, and for groceries, all because of rapidly rising oil prices.  Do not think that Americans are desperate for cash?  We are still borrowing against our homes in record numbers even though the value of our homes are declining.  And, then of course, as if matters are not bad enough, jobs are flying out the window.  Unemployment is on the rise.

You would think the capitalist, headed by Bush, sold us a bill of goods.  Whereas you might be right, the question is what exactly can a solo or small firm practitioner do to survive and thrive in this mess?

First, consider your practice areas.  You might want to add areas like consumer bankruptcy to your mix or segway into that area if the fees and how you are paid are beneficial in your area.  (If they are not, and you have bankruptcy judges and courts that do not respect attorneys enough to see that they are paid a good wage for their work in a timely manner, then you might want to stay way).  Ask yourself what are the areas of law that will increase in down times?

Second -- and this is so important -- you want to rapidly and aggressively cut costs and overhead.  It is not just a matter of your earnings falling or becoming stagnant.  If costs increase on the upward spiral that they are on, then soon everybody from your landlord to your employees are going to be demanding more money from you.

What can you do:

1.  Get out of the commercial buildings.  Run!  Get to someplace what you might have an interest in or can get an interest in, on a fixed note (where payments do not adjust radically).  But, you say that you are renting some space from a bunch of other lawyers?  Big deal. When their rent increases, or their overhead increases, they are going to come looking for you to help them make up the difference.  As my Dad says, "Newton's Law is that bullshit runs down hill".  Guess where you are. Move home.  You greatly lower overhead and hopefully you are in a place where the payments will not so dramatically impact you.  If you can totally eliminate an expense by using a space for which you are already paying each month regardless of your commercial space, that is money in your pocket.

2.  Get rid or re-purpose staff.  Love your staff or hate your staff, it does not matter.  As the economy falls you and your practice will be the only solution they have to get more money in their pockets.  Reconsider the roll each person plays and ask yourself, "how can I operate without this person or that person"?  If you just absolutely need then, tell then they need to work out of their homes with you over the Internet.  Tell them that ending their commute, etc. will save them money.

3.  Stop wasting money on advertising.  This takes many forms. Yellow pages, direct mail, small papers and the like.  These marketing avenues are dying.  Prices will rise because they have to fight to economy as well, but results will not follow.  Look, I am a firm believer in TV and web advertising, but let us face facts.  You need frequency and saturation to succeed in these mediums.  Relationship marketing is the best way to get this done cheaply, with a blog and other social media as your hub.

4.  Get rid of the paper.  I have been unable to get rid of all the paper, but I no longer use that much.  After about a month and a half I went a purchased a ream of paper.  It cost almost 10 cents a page.  Now add in toner for your printer or copier, electricity, and you are burning through money like crazy.  Just look at that copier and that printer running and get mad.  That SOB is bankrupting me!  You bet those machines are hurting you.  And, staff in particular has gotten so use to freely printing stuff off.  Paper also takes a lot of space.  Space costs money.  Get mobile, get two monitors, and get as paperless as possible.

5.  Stop consuming fuel.  If you have gas hog, consider ways to get rid of it and get something more economical.  If you cannot at this time, I understand.  But, end the commute for not only you, but your staff.  You do this by moving home or moving terribly close to where you work, or moving your office terrible close to where you live.  Take advantage of telephonic hearings in your courts.  Make your home more pleasurable so you do not need to leave constantly.  I enjoy my house. I probably step out twice a week, most weeks.  Also, commercial buildings are the biggest energy hogs in our County.  You do a lot by not supporting them.  If you do not have to spend money on commercial buildings you can spend money greening your home and making it more livable and pleasant.  Eventually, steps like landscaping, replacing older appliances, replacing old windows, weather stripping, and putting in water and energy saving devices will do you good, do your pocketbook good, and do the environment good.

These will set you on the way to doing better in your practice and avoiding the problems we will all face in the near future.