Technology

It's Budget Time! 12 Timely Tips To Help Manage Law Firm Costs

Law firms that want to invest in new technologies must subsidize investments with lean budget practices that continuously reassess all ongoing costs.

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One of the few silver linings of the 2008 financial crisis was that many lawyers were shocked into budget consciousness. Seemingly overnight, lawyers became willing to reassess old assumptions. Maybe they could live without personal copies of treatises. Maybe they would try online resources that they had resisted. The crisis has passed but the changed legal market place remains. Law firms that want to invest in new technologies must subsidize those investments with lean budget practices that continuously reassess all ongoing costs. No product is a “slam dunk” for annual renewal in 2019 without some “due diligence.”

Here are some tips to help your “harvest” saving which can be reinvested in “nextgen” resources.

Focus on ROI. Products such as Research Monitor and Onelog can provide invaluable insights into the number of lawyers who actually use web-based products.  Products are often maintained based on  “anecdotal” statements suggesting that a product is “used by everyone.” Tracking actual product usage may tell a very different story.  Actual product utilization is a more reliable basis for renewal and cancellation decisions. Usage data can also be a powerful lever in negotiations with vendors.

Centralize Procurement With the Experts. The IT team has the expertise to evaluate software and understand network compliance and security issues. Research/KM teams have content and licensing expertise to assess digital resources. An inventory of all resources is a first step toward eliminating redundant products and creating cost accountability system.

Communicate with Practice Groups and Business Units. Provide practice group leaders with a spreadsheet listing the resources that are purchased for the benefit of that practice group. Engage their assistance in eliminating products which have declined in use or which are duplicative.

Work with Business Unit Stakeholders. News and business data is utilized by both lawyers and administrative units. For example, conflicts, research, and marketing teams all need access to business data, but a firm could end up with three different largely redundant products. Assess the workflow and content needs of each team and identify the best product that will meet the needs of all.

Establish Budget Policies and Systems for Approval. Is partner approval required for purchases charged to practice groups? If yes, is there an approval cap? Are there some cost thresholds that need to be approved by the executive director or management committee? Are there any resources such as deskbooks and court rules which any lawyer can request without approval? Having a written policy which explains how to request a new resource and who needs to approve purchases enables lawyers to support budget best practices and policies.

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Thwarting Rogue Purchasers. In any organization, there are personalities that routinely find ways to avoid the rules. The Accounting Department can be a powerful ally in frustrating the “rogue” purchasers who try to circumvent the approval and review process by trying to get reimbursement for their unauthorized  purchases. Accounting personnel will be happy to assist in your budget compliance initiatives.

Right Size Your Licenses. If your practice groups have shrunk since the last renewal of a license — look at the “material change” clause in your license — you may be able to cancel products which are no longer needed or shrink licenses which have more seats than you now need.

Avoid Automatic Renewals. Many licenses will auto-renew unless the vendor receives a written notice 30, 60, or even 90 days prior to renewal.  There are contract management products which offer an automatic “tickler system” that alerts contract stakeholders of key dates for contract cancellation and renewal. A simple spreadsheet which lists all license renewal dates and notice of termination deadlines can be used to proactively track and cancel under-performing products.

Replace Print with Digital. Digital resources get a “bad rap” for being costlier than print. Digital resources may be more expensive but they are also offer “virtual library access” available to all lawyers, at any time, from any location with internet access. The true cost of print resources needs to include the costs of maintenance including staff to manage print, upkeep costs such as loose-leaf filing, and space for library storage. The total cost of print often compares unfavorably with the digital alternatives.

Be Proactive — Know the Market. One of the best ways to manage costs is to maintain an expert understanding of emerging products. Proactively seek out products which are less expensive or better than existing products. Engage practice groups in the ongoing evaluation of new products with a view to eliminating inferior legacy products. Use your knowledge of the market in product negotiations with existing vendors.

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When the Hot Rainmaker Departs… The Bitcoin Guru came and went — and she may be leaving  suite of high-ticket specialty resources that no one else wants. Have a system for tracking all resources purchased for specific individuals and cancel their legacy resources when you receive the lawyer departure notice. Practice groups are transient too, and niche practice groups are the worst. What will you do with all those equine law resources? Cancel ASAP.

When in Doubt — Cancel. The most telling way to determine the value of a resource is to terminate the license and see if anyone notices. More than once in my career, that expensive product which a lawyer insisted they “used every day” was gone more than a year before the lawyer noticed.

How can you harvest your budget savings? Budget management is an ongoing process which can get easier and more efficient with smart centralization, the collection of ROI data, and effective communication with practice groups and business units. Budgets in most firms remain flat, therefore effective saving strategies may offer the best way to fund the procurement of  “next gen” products which offer AI and analytics features and functionality.

Jean O’Grady is a knowledge strategist/librarian/lawyer with over 30 years’ experience leading the transformation of research and knowledge services in Am Law 100 law firms. She is the author of the Dewey B Strategic blog, which monitors the evolving landscape of technologies and companies that are transforming the business and practice of law.

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