My firm’s current monthly overhead would have made a younger version of me curl up in a ball and cry.
Personal injury lawyers hate guaranteed monthly expenses. Contingency fee work is unpredictable, so keeping overhead low feels safe.
When I started my firm I was in that camp. I wanted to play it safe and keep expenses down as much as possible. The thought of hiring even just one person terrified me. Each person I hired had me convinced I was one step closer to not being able to meet my expenses and going out of business.
I would have never dreamed I would have as many employees as I have or that my currently monthly overhead would be what it is.
But what I learned was this: not all costs show up on the monthly P&L. There are hidden costs that don’t appear as line items, but they are real costs nonetheless, including:
- Cases that aren’t worked as well as they should be
- Missed opportunities to increase case value
- A smaller referral base because of limited bandwidth
- Referrals that never happen because the experience wasn’t exceptional
- Burnout from doing work you should have delegated
- The quiet pressure to settle cases you’d rather try
Those costs don’t show up as “expenses,” but they absolutely affect the bottom line in the long run.
Today, our firm has a diversity of case types, case sources, and case values. Our success isn’t tied to any single case. That gives us flexibility, both financially and strategically.
It also allows us to hire people to take on work that would otherwise fall on my shoulders (or the shoulders of someone else who would be having to wear too many hats).
I am not saying that everyone should focus on growing their firms and add people for the sake of doing it. That would be a mistake.
What I am saying is there are tradeoffs to whatever decision you make when it comes to hiring people and making investments in your firm.
Just be aware of what they are and make the decision that's best for you.
How do you approach overhead at your firm? Join the conversation with me on LinkedIn.
