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A few months ago members of the council of a certain municipality in Canada - best left unnamed to protect the innocent - had a tough decision to make.
They felt they couldn't afford to continue to authorize the circa $700,000 per year they were paying out in legal fees. They decided to discontinue using the services of their long-time law firm. They opted instead to spend $450,000 per year and open their own in-house legal department.
One of two things must have happened to induce those sitting on that Council to make that decision. Either (1) they were unhappy with the services provided, secretly wanted to switch lawyers and needed a good excuse to do it; or (2) someone at that law firm was asleep at the wheel.
The clients obviously felt that costs were too high, and could be lowered in-house.
The first question that comes to my mind is, What was the law firm doing to reduce the client's costs?
Yes, that's right. To reduce the client's costs, as opposed to their own overhead.
Think that's a strange goal? Your clients don't; in fact, at this very moment they expect that you're doing just that. Your clients are presuming that any work you perform for them you are taking in the most cost-effective, least wasteful route.
Are you? Many firms don't give this a second thought when they look at how they spend money. They may try to reduce their own overhead, but any items incurred as disbursements come from someone else's pockets.
Take a simple example to start with: long distance calls.
Most firms disburse all toll calls made on the client's behalf, true to the "Had It Not" theory of billing (Had It Not been for the work I am doing for this client, I would not have incurred this expense.)
While the justification for incurring the disbursement may be clear, the amount involved is another issue.
Are you buying that long distance call at the cheapest rate? Are you giving your client the savings of your long distance plan, or do you save those for yourselves? Are you using a bulk rate carrier when you can, so you can pass savings on to the client? Do you first try the toll-free numbers before the toll ones?
"Petty cash," I hear you say. "It's not worth the cost of administration to break it down so finely." (Worth it to whom, I wonder?)
Well then, let's go to a more costly example: production, delivery and receipt costs of correspondence.
We all know of cases where a lawyer has dilly-dallied before sending out a piece of correspondence, and then is forced to rush its expedition at the last moment.
Instead of sending the letter by regular post (45¢), it's sent by messenger ($5), increasing the price of delivery 1000 percent. To add insult to the client's injury, the firm disburses this amount instead of swallowing it.
You could prepare your client ahead of time, of course, advising you will send all your mail by private messenger, but then your services would be rather costly compared to the competition, who only use it when circumstances warrant.
The same reasoning should apply to the use of electronic mail over paper sheets and envelopes. In the electronic age, sending and receiving information over the wires is less expensive than the alternatives. While not suitable for every piece of correspondence, it can save you - and your clients - some money.
You've probably already considered the costs of conventional outgoing correspondence: pre-printed letterhead and (usually hand-fed or typewritten) envelope prepared by support staff, stamped and hand carried by someone from the desk to the Out bin, and from there to the postbox.
Have you considered the cost of incoming mail? Envelopes are first opened by the receptionist or mail-room staff, then sorted manually into piles. Each pile is hand carried to the appropriate secretary or department, which sifts through them again. If a secretary sorts them, a pile is dropped onto the lawyers desk, which is sorted again. Very quaint, when you think about it. Rather inefficient. Clearly expensive.
E-mail, in contrast, gets routed right to the lawyer's desktop, delivered, sorted and opened automatically. Saves time and money.
Not just for you, but for your clients. At least one lawyer in the U.S. has announced that he is discounting fees for his clients that use e-mail.
And why not? More important than the amount of the discount is the message that lawyer is sending the client: "I will make an effort to perform quality services for you in the most cost-efficient manner, and I will take care not to increase your costs needlessly." Even clients with deep pockets don't like to reach into them when they don't have to.
If the City Council hasn't set up its in-house legal department yet, the situation may still be salvageable for the old firm. The rest of us can be proactive with our clients.
Lewis S. Eisen is a computer trainer and consultant to the legal profession, and the author of The Canadian Lawyer's Internet Guide. He can be contacted at leisen@pfx.on.ca, or http://www.magmacom.com/~leisen/index.html.