Law offices are like any other business. Their balance sheets must remain in the black and not the red. The source of income for law firms are quite obvious as attorneys are reputed to be expensive for their services. However, law office expenses may influence the billing process in providing legal services. Law office expenses are collectively known as overhead.
Overhead consists of office administration expenses such as paying rent, staff, paralegals, equipment, reference, and promotion. Large law firms have the capital to hire accountants. However, small law offices may keep their books themselves or delegate that responsibility to a trusted paralegal. Office expenses are directly correlated to the overall cost of legal services.
Since office expenses play a large role in determining the cost of services, law offices devise strategies to reduce costs and manipulate their budgets in such a manner to eventually turn a profit. Most law offices in America are not mega firms; they are small to mid-size law firms. Office expenses vary according to geographic region and market forces.
The average office expenses for promotion is $7,135 annually. The average office expense pertaining to reference resources and database subscriptions is $4,655 per year. Staff and paralegals are usually the most costly office expense at $73, 058. Rent and occupancy costs average at about $26,500 a year. Other miscellaneous costs range from $30 to $40 thousand.
Paralegals can help reduce office expenses in discussing with manage if there are any databases that are inefficient or unused. Paralegal feedback to management is indispensable to reducing costs that drive the profit incentive and maintain the solvency of the law firm. Unfortunately, paralegals and staff may also be cut if a law office is not doing well financially.
This is primarily because staff and paralegals are among the most costly of legal office expenses. However, paralegal job security is rather firm given the training. Paralegals make good money given the extent of their training the invaluable role they play in the administration of legal services. On average an individual paralegal makes about $40,000 a year. The hours are long and the work is difficult but not many other individual’s with associates degrees make that much more. Associates degrees yield a mean of about $35,000 a year.
Due to the need to be competitive within the legal services market, there is a whole industry that helps businesses reduce costs with logistical solutions. The information technologies industry has helped law offices reduce their expenses to be more competitive with the larger firms.
Many prominent law firms also own the office they occupy instead of renting because the commercial real estate could be leveraged as an asset. This business maneuver can reduce office expenses. The objective for private law firms is to turn a profit and be more competitive against the many law firms in a given market.