Increasing staff costs - can your firm afford it?

18 May 2012

From April 2011, both employee and employer National Insurance (NI) contribution rates will increase by 1%.  With staff costs typically the biggest single cost item within a professional firm, this will have a significant impact on overall cost levels within the firm.  Many firms are also under pressure to push up support staff and junior fee earner salaries to reflect inflation and the minimal or zero increases granted over the last two difficult years.  However, in the current market, the opportunity to offset these costs by increasing charge out rates is not so easy.

Then add to this the results from recent Law Society research that many firms will need to reduce payroll costs by 40%, whilst maintaining the same workload, just to standstill. Their advice is to act now to reduce payroll costs in a controlled way.

A solution to this cost pressure and an alternative to the employment of staff is to outsource non-core functions to deliver efficiency gains and fixed cost savings.  Utilising a specialist provider such as Voicepath can dramatically reduce the internal cost of transcription and turn a significant amount of current fixed costs into a variable cost that better matches workloads within the firm, whilst also allowing the remaining support staff to get involved in fee earning or other value added activities.

Richard Bate, General Manager of Voicepath comments "NI increases will only continue to put pressure on margins in all law firms, given the significance of staffing costs within the firm.  Using Voicepath to reduce salary costs and free up experienced support staff is the quickest way to increase fee earning capacity and deliver cost savings to the firm."

He adds "Voicepath have a host of clients who have made changes to their internal structures as a result of using our service. All of them have seen the benefit reflected in their profit and PEP numbers - a 40 Fee earner has made net savings of over £400,000 whilst a 65 Fee earner firm in London calculate that they have reduced costs by over £250,000 net  per annum whilst processing at least the same volume of work ."

For more information on how Voicepath could help your firm, click here or call us on 01926 821904.