Compute The Real Costs Of Lawyer Telecommuting

Published on: 
03/08/2012
Telecommuting from a home office has become a highly touted strategy for reducing costs at a law firm. The basics have become well-defined: minimal expenditures on physical office space; contact with clients or professional colleagues largely through email, Internet portal or telephone; and use of "virtual assistants" at the firm or a remote location.

Telecommuting certainly appears to offer availability at a lower cost. Regardless of a law firm's size, office space is inevitably a large and complex expenditure — typically in the top three expense categories for any firm. Telecommuting in theory should reduce that cost, yet there are other areas in which telecommuting can have direct and potential cost-negatives of its own.

For office costs, realize that with telecommuting the firm is making a statement about running its operations. The direct message to clients is that a firm with telecommuting lawyers is sensitive to its cost structure. But will clients expect lower office-space overhead to translate into a lower fee structure? It is a valid question, because the cost of office space is a statement about the law firm itself, raising marketing and financial issues.

Telecommuting won't increase overall profits if it makes clients expect a lower billing rate. Likewise, if telecommuting is used to reduce overhead, office space should be similarly reduced to achieve cost savings. If your lease will not accommodate such a space reduction (and corresponding rent reduction), the cost savings may not be attainable.

Costs also could rise in the area of staff support. The telecommuting lawyer needs not only administrative staff, but help with responding to a client who calls the office but finds the telecommuting lawyer unavailable. This can put a bigger burden on paralegals. Having a paralegal respond to phone or written client inquiries by providing lawyer-approved answers, or at least assuring the client that their inquiry will be answered quickly, involves direct costs (paralegal work time) and indirect ones (lawyer supervision time).

If paralegal or administrative support staff are engaged as virtual assistants online for the telecommuting lawyer, there are other cost factors, from ensuring compatible technology to making sure the virtual assistant is an independent contractor who will not run afoul of the appropriate tax compliance issues. Some might respond by saying that the response will come from the lawyer … truly a sole practitioner. That's fine, but it also means that the number and size of client matters will be limited — again, providing a cap on both revenue and profit.

Finally, the firm could well incur additional technology costs directly from the telecommuting lawyer. Wireless laptops and smartphones have become a given for many lawyers, and should be a prerequisite for telecommuting. But consider the issue of data security. Ensuring client confidentiality is paramount, but if the telecommuting lawyer conducts online activities over wireless laptop or smartphone connections, is the client data really secure? Firms will likely have greater IT personnel, software and hardware costs for file encryption, data security programs to guard against malware and hacking, and backup data storage. While the cost of any one of these elements may not be large, the costs are significant when considered cumulatively.

I'm reminded of the major technology company that was a leader in the telecommuting movement. In the last year or so, they abandoned telecommuting and required all their personnel to report in to their closest physical location. I'm also reminded of the expectation that technology will make our lives simpler; I don't think there is anyone on this planet that believes that's true. While technology may allow us to do more — to be faster and lighter, without the bulk — technology certainly has not made our lives simpler.

The issues raised here are not meant to disparage the viability of telecommuting. But they emphasize that the bottom line for such an arrangement must make service and financial sense. No matter what technology makes possible, it is not the answer if it makes life more difficult for the client or the provision of legal services more difficult and costly for the firm.

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