How Legal Technology is Cutting Law Firm Overheads & Costs
The main selling point of legal technology is the increased efficiency and cost savings it brings to the table. Despite this point being emphasized by legal technology providers, many lawyers still believe that incorporating legal technology solutions is a huge investment that is inconvenient and time-consuming.
Despite the numerous advantages of legal technology solutions and digitalization, some law firms are slow to adopt new ways of working. In light of this, this article discusses how the use of technology can lower a law firm’s overall costs while also contributing to higher profits:
What are the overhead costs of a law firm?
It is critical to first understand a law firm’s costs in order to gain insight into how legal technology can help to reduce them.
An overhead is any cost that is not directly related to a lawyer’s salary. Office rent, internet and phone bills, utilities, printer costs, office equipment, office kitchen and bathroom facilities, and meeting room equipment are all included.
In addition to this, a law firm’s overhead costs can also include non-lawyer staff salaries. This include, Legal assistants, paralegals, researchers, administrative personnel, and other office personnel Simply put, anything a law firm pays for that does not generate revenue is classified as an overhead cost that must be carefully controlled and monitored.
Finally, because of the high overheads and operating costs, most law firms charge higher fees but rarely make significant profits. As a result, many small law firms lose 60% or more of their revenue if overheads are not carefully controlled or reduced.