What Are the Top 5 Expenses of Running a Law Firm?

Running a law firm can be expensive. Streamlining your operations will reduce your overhead while adding value to how you serve your clients. Finding effective ways to shrink your costs starts with identifying the top 5 expenses associated with running a law firm.

1.    Case-Related Expenses

Case-related expenses are hard costs that you pay on behalf of your client concerning their case. These expenses include witness fees, laboratory fees, court filing fees, and medical record expenses.

While your firm eventually passes these expenses on to the client when you bill them, you are responsible for these costs in the short term. Your firm pays for a laboratory fee, for example, and receives payment from your client several weeks later. These expenses can quickly accumulate, and you could find your firm with a cash flow issue due to multiple clients’ case-related costs.

Tracking these expenses with practice management software can help you invoice your clients promptly. This software can also automate check requests and manage your claim log. The last thing you need is your firm’s finances to be bogged down by your clients’ expensive procedural costs.

2.    Malpractice Premiums

Legal malpractice insurance safeguards your firm against malpractice claims that clients and third parties may bring. The premium you pay depends on how long you have been practicing and the size and location of your firm. Other criteria that affect the size of your premium include your desired coverage limits, prior claims you may have, and risk management discounts.

A practice management software solution that manages your firm’s data can help you minimize malpractice risk. You’ll avoid claims and keep your premiums low by never missing an important piece of information.

It can also examine your malpractice risk exposure by analyzing your firm’s past data. The software allows you to avoid overshooting the coverage you need and choose an amount of reasonable protection.

3.    Lead Generation

Most attorneys like to focus on their clients’ cases rather than the sales process. However, in today’s digital world, marketing is essential for firms that intend to grow their clientele. Lawyers have to resort to lead generation tactics outside of traditional methods like placing an ad in the phonebook or buying billboard space.

Marketing is a necessary expenditure, and most law firms devote sizable budgets to promoting their practices. They spend money creating a website, hiring a social media manager, and running ads on Google and other platforms.

A software application that provides real-time notifications about your incoming leads can help you streamline your sales process and maximize conversion rates.  Also, the ability to integrate with email list management software helps track your marketing campaigns and puts you ahead of your competition.

4.    Data Storage

Law firms have to manage large amounts of data from their cases. Cloud storage space offering the level of security your firm needs can cost several thousands of dollars per year. On the other hand, legal practices that decide to keep their data storage in-house have to set up servers and may require an IT department, increasing their costs.

Practice management software offers a lower-cost solution to secure cloud storage.

5.    Legal Research Subscriptions

With legal research costing anywhere from $1,200 to $14,000 per attorney per year, it is one of the largest expenses you will pay throughout your career. Searching for legal precedents and answering some of the challenging questions you will encounter requires paying a steep price.

The right software solution helps your firm manage records requests and quickly search through data.

Reducing Expenses Through Efficiency

One way to grow your business is to reduce your expenses. Identifying your top costs and finding ways to reduce them make your practice operate more efficiently and open up funds for future expansion.

Backdocket is a software solution that provides law firms with the functionality they need for maximizing efficiency. With free unlimited cloud storage and the ability to track marketing campaigns, you can focus more on serving your clients rather than running down leads.

Backdocket improves your firm’s internal organization while eliminating the pain points associated with managing your practice. Contact an onboarding specialist today to learn why backdocket is the right tool for your firm.

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