Be your own money saving expert

I don’t think that anyone would disagree with the fact that legal firms in Scotland face incredibly difficult times, in particular those firms which are highly geared towards property.

With property sales at a historical low, prices falling, the number of new properties coming to the market 75% lower than at this time in 2008, and commercial property and corporate transactions also dwindling, it is difficult to see how legal firms can swiftly increase their turnover.

This leaves one option open to them to ensure survival: how can they quickly cut their overheads?

If a silver lining is to be found in the current cloud, it is that the firms which survive this downturn and aggressively cut their overhead will emerge leaner and more profitable, with more efficient systems in place, when things turn the corner.

My own firm, MOV8 Real Estate, opened its doors in September 2007 when the downturn looked inevitable. I won’t pretend that I foresaw it being anything like as severe as it has been. That said, from the outset we have put in place systems and employed technology that would allow us to rapidly “scale” our business. To be honest, the idea was to up-scale!

However, the same technology and systems that allow rapid up-scaling also allow us to down-scale quickly while continuing to deliver the levels of service to property sellers and buyers that we insist on. Indeed our overheads in March 2009 will be roughly 75% lower than in March 2008.

I engage in consultancy work for other law firms. The idea is to implement these same systems and technologies to help them to reduce overheads and improve efficiency too.

This article will share with you some of the methods that I share with them: methods that I have found allow firms to deliver legal and estate agency services as profitably as possible, with the minimum possible overhead.

Outsourcing: loss of control?

Does all of your work need to be done by employed staff?

It can be hard to know where to start with outsourcing. Some people feel that it involves giving up an element of control over the work they do for clients. The truth is that with the correct systems in place it works just like having in-house staff, but much cheaper.

The principal area in which I believe most firms can make huge efficiencies, whilst providing a more extensive service to clients, is the handling of incoming calls. Some outsourcing of call-handling, combined with “intelligent” telephone numbers (which can be routed to a variety destinations) can lead to major cost savings and improvements in customer service. Some firms have multiple office locations and yet, if the phones in one office are busy, incoming calls cannot be answered by anyone in another office; or, if they are, it is through using dated and expensive telephony equipment.

Outsourcing call handling can be done within office hours, or only for out-of-hours calls, or as an “overflow” when all employed staff are on the phone. Many call handling companies work for several different companies at any one time. They can often handle your calls on a pay-per-call basis, so you only pay for the calls that you receive. I know from extensive experience that call scripts and call flows must be carefully drafted for it to be effective, and this can take some time to implement. However, properly scripted and correctly implemented, the cost savings can be huge.

Have you considered outsourcing estate agency itself?

Of course, if you lose an estate agency client, there is a good chance that you will lose their private client instructions too. If your property department is running at a loss, might it be time to consider outsourcing the estate agency function?

By being paid a percentage of the estate agency fee, you can guarantee a profit on every property that sells, and no overhead for those that don’t. When we undertake such work for another law firm, we of course sign non-compete agreements and set out very clear guidelines as to whose clients are whose. It may seem like an extreme route to go down, but guaranteed profit on estate agency is not something that many people can boast at the moment!

IT: software-based v web-based

With internet bandwidth becoming considerably cheaper, and business broadband lines benefiting from low contention ratios, web-based client management and case management solutions are far more attractive now than they used to be. If you have a PC and an internet connection then you have access to your information wherever you are, synchronised and updated in real time, allowing multiple office locations and flexible home-based working.

Wonderful web-based client/case management and estate agency software exists that drastically reduces workload and allows more junior staff to do more sophisticated tasks under supervision, thereby further reducing overheads. Much is subscription-based, so there are minimal setup costs and you only pay for the users using the service. You also save a considerable IT support bill for when things stop working, as it’s the responsibility of the person providing the software.

If you need to share information with colleagues, or save documents to a central location, this can also be done through low cost web-based solutions. Free-to-use services like Google Docs, and paid-for services, usually based on Microsoft Sharepoint, allow collaboration amongst members of your team and multi-user access to information over the web.

Typing

Do you still rely on administrative staff to type dictated letters? It might be worth considering digital dictation with voice recognition software (some of which boast 99% accuracy), or even sending existing fee-earning staff on touch typing courses. Years ago I used a copy of Mavis Beacon Teaches Touch Typing that came free with a magazine. The ability to now type at over 100wpm means that I have less need for a PA or secretary.

Can you do without a secretary/PA altogether?

This is the question that gets the most emphatic response from most principals I speak to in law firms, and it’s usually a very resolute “No way!”

It is, however, very often the largest efficiency that they could make.

“Virtual PA” services exist, and I’ve already touched upon outsourced methods of call handling, both of which can take messages and pass them on, and even give out scripted information.

Even if you have a generic email account (e.g. sales@xyz.com or mail@xyz.com), software exists that can route emails intelligently to the correct destination within your firm.

Like most things that people think that they can’t do without, after a short adjustment period most people find that they can cope just fine. Could you do the same?

Expensive high street premises?

More and more estate agents south of the border are moving towards operating away from expensive high street shop front premises.

The vast majority of property buyers these days start their property search online. In our experience at MOV8 Real Estate, operating without a major high street presence has never been an issue with our selling clients. Property sellers these days seem more concerned about what their estate agent is proactively doing to market their property than whether someone will chance upon their property in a window.

Web-based client management/ case management solutions allow some support staff to work at home, which cuts the amount of office space required too, further reducing costs.

In short, and this is especially relevant for solicitor/estate agents, does having high street premises generate more financial benefit than it costs? If not, is there a way that you could move away from the high street and reduce your overhead whilst maintaining your market presence in another way?

What else can you cut back on?

It can be the simplest things that make all the difference to overheads. Review all utilities (websites like Uswitch.co.uk are very useful for this). Phone your existing suppliers (especially broadband, mobile and landline telephones as well as gas and electricity) and ask them if they can do you a better deal. Especially with mobile phone tariffs changing on a virtually daily basis, my experience is that they almost invariably can.

The small things, like cutting back on taxis, meeting clients in the office instead of going out for coffee, and refilling printer cartridges instead of buying new ones all add up. It’s amazing what you find that you can happily do without after a short while!

Space constraints mean that I can only touch the tip of the iceberg in this article. However I honestly believe that these simple steps could actually lead to the survival of firms who otherwise would have had to cease trading in the current market conditions: they certainly have made that difference for us. They are simple and quick to implement, when you know how, and many people apart from me can help you put them in place within your own firm. If you would like to discuss any of these ideas further, please don’t hesitate to get in touch. I wish you all success in the current conditions and thank you for taking the time to read this.

Robert Carroll is Managing Director of MOV8 Real Estate, Estate Agents and Solicitors, which markets properties throughout Edinburgh, Fife and the Lothians. He also heads MOV8 Consulting which helps law firms and estate agency businesses to cut overheads and increase profit margins. t: 0845 217 97828