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

Originally published May 9, 2022. Updated June 12, 2023.

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 these: 

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 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.

The Solution: 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.

The Solution: 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 current clients’ cases rather than acquiring new ones. 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.

The Solution: 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.

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


A must in growing your business is reducing your expenses. Identifying your top costs and finding ways to reduce them will make your firm operate more efficiently and will open funds for future expansion.

Backdocket is a software solution that provides law firms with the functionality they need for maximizing efficiency. Our software improves your firm’s internal organization while eliminating the pain points associated with managing your practice. To learn why backdocket is the right tool for your firm and get a free demo.

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