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Outsource, Realign Tasks for Profitability
by Barbara Lewis MBA and Dan Otto MBA 

As a law firm grows, it requires more people with specialized skills.  The sole practitioner can survive with an assistant writing a few checks each month.  However, as a firm obtains more employees, additional equipment and more work, the tasks require more competency and skills.  The assistant, who wrote a few checks a month with a sole practitioner, may soon become inundated with the bookkeeping tasks as the firm grows.   

Although the assistant may not mind continuing with the bookkeeper function, s/he may not be trained in bookkeeping, may be slow and may make critical mistakes since it’s not his or her area of expertise.   Yet hiring a full-time bookkeeper is not practical because there is not enough work for a full-time person.

 So what should a firm do when it finds itself with a need for a specialty, but cannot justify the expense of a full-time person?  This is a question that we are frequently asked and that is especially prevalent now as firms that laid off people last year are seeing their work pick up again and are beginning to rehire.

 One of the best ways to determine if you need a full or part-time person is to have employees keep timesheets for four weeks.  During this time-frame, all of the monthly tasks will be completed.  The timesheets are analyzed and tasks are segmented by function.  If the assistant spends three hours a week on the bookkeeping function, then you should consider hiring a part-time bookkeeper or outsourcing the work based on the three hours that you’ve identified from the timesheet analysis.  

 Oftentimes employees can’t accurately gauge the amount of time that they spend on specific tasks.  It’s risky to use broad estimates for the amount of work that an employee says she or he may spend on a task.  Timesheets eliminate the guestimates and the risks.

 One of the most critical aspects of running timesheets is the employees’ understanding of the rationale.  Employees need to be briefed on the importance of accurately tracking their time for the purpose of realigning tasks and hiring additional people – whether full or part-time employees or outsourced assistance. 

 In a recent timesheet analysis, we discovered that 30 percent of partner work was secretarial in nature and 20 percent of the secretaries’ work was clerical.  This indicates a lack of delegation and incorrect alignment of tasks, which affects the profits of the firm.  Five hours a week were devoted to bookkeeping functions, which justified outsourcing the bookkeeping work, especially since the employee previously responsible for the work was overloaded with tasks. 

 Areas where outsourcing is viable include: collection, marketing, payroll, computers maintenance, photocopying, etc.  Legal work can be outsourced as well.  Contract attorneys and appearance attorneys are staples in many law firms. 

 Contact attorneys can be used as firms begin to ramp up with additional work.  Oftentimes, these are attorneys who were laid off from law firms that could not generate enough work for them.  Eventually, they may want full-time positions, but they take contract work from a variety of firms that don’t have full-time positions available.  Other lawyers may be permanent contract attorneys such as mothers who never want to work full-time or people who have life-styles that preclude permanent positions, such as those who actively pursue hobbies.

 Firms benefit because they are paying only for those hours that the contract attorney bills.  With 100 to 400 percent mark-up between the fee paid to the contact attorney and the amount billed to the client, the contract attorney is extremely profitable.   Furthermore, there are no benefits to pay.

 A number of law firms find it less expensive to use appearance attorney services for representation on routine matters in local and remote courtrooms.  For local appearances, full-time attorneys don’t have to sit in traffic and for remote appearances, they don’t need to spend a day traveling.  Using appearance attorneys allows law firms to employ only the specific amount of attorney time needed, which can reduce the total number of attorneys within a firm or which can redeploy an attorney’s time for more profitable tasks.

 If you want to increase your profits, conduct a timesheet analysis for every employee and partner and determine which tasks can be realigned and which tasks can be outsourced. 

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