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How to Save Serious Money with a Paperless Law Firm

paperless law firm

Special Guest: Justin Nifong

paperless law firm

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Ah, the “Paperless Law Firm.” The unicorn of the professional world – a creature of myth, impossible to capture. Beautiful to behold, from afar…

While many law firms seem to view becoming paperless as some impossible feat, it seems that most regard it as a novelty. A few have dedicated the resources and determination necessary to succeed, but much more common are the stories of half-hearted attempts and small initiatives.

paperless law firm

Who has time to think about going “Paperless” anyway?

So when I wanted to discuss a Paperless Law Firm on the Legal Technology Review Podcast, I knew that I wanted to talk to someone who actually did it. As a strong advocate of a digital practice, I wanted to see what success in a paperless law firm looked like, to show others both that it could be done, and how it could be done.

To be able to do that, I wanted to know how they succeeded, and what success looked like.

Turns out, it looks like an extra $5,000 per month. Here’s how they do it:

Justin Nifong and NK Patent Law.

Justin Nifong, founder of NK Patent Law in Raleigh, North Carolina, has succeeded in creating a Paperless Law Firm. More importantly, he has succeeded in creating a digital system that puts extra money in the pockets of the attorneys, and does so on a regular basis.

paperless law firm

I wanted to know how. But before I could understand his law firm’s practices, there was a little something that needed to be addressed:

What Does It Mean to be a “Paperless Law Firm”?

Ask around, and pretty much everyone will tell you that there’s no such thing as a truly paperless law firm. “Paperless” really means “less paper.” There are still tasks that require paper – unfortunately most of those “tasks” involve dealing with lawyers who continue to insist on using paper.

So when we talk about the “Paperless Law Firm,” we mean a law firm that has procedures and workflows that reduce the need for paper considerably – in Justin’s case, a 90% reduction.

So what is the defining characteristic of a Paperless Law Firm? It’s all about your case files. A traditional law firm’s case files are in paper, on pleading boards, in red wells, and filed in massive file cabinets. A Paperless Law Firm’s case files are digital.

With that out of the way, here’s what I really wanted to know?

How much money does NK Patent Law save by being a Paperless Law Firm?

Justin estimates they save/earn an extra $4,000-5,000. Each Month.

paperless law firm

How does NK Patent Law save $5,000 a month by being a Paperless Law Firm?

As it turns out, there are a few basic ideas that are under appreciated and under-utilized in the legal profession:

1) Began with a clear goal in mind: Client Files Always at Your Fingertips

The essential component to Justin’s paperless systems is that client files and information must always be at the attorney’s fingertips. The traditional law firm system just doesn’t allow him to accomplish that. With centralized file rooms and massive printers, you need to hire someone just to manage the documents.

If you need a file, and you’re not at the office, you’re out of luck. Or if someone else has the file, you’re out of luck. Or if the file is missing, you’re… you get it.

The traditional model didn’t allow for the attorneys at NK Patent Law to have instant access to their clients’ information. While that may not be critical to many lawyers, when you’re focused on being as efficient and effective as possible (kind of important in the 21st century), it matters.

That’s why Justin’s approach doesn’t start with becoming paperless. The paperless law firm is a means to an end – it’s the way his practice achieves its business goals.

2) Find the most cost effective ways to reach the goal: The Paperless Law Firm

The reason NK Patent Law went digital was entirely economical. The comparison between a digital setup and a traditional law firm setup was a no-brainer. A Paperless Law Firm is less expensive to operate, plain and simple.

However, it’s not just any paperless system that allows Justin to boost profits. There are several key components:

Identify the essential tools

The tools of the NK Patent Law Paperless Law Firm aren’t all that much different from your home office. All it takes is a little focus. Justin’s essential office tools are:

  • Computer (laptops – with a workstation approach, very little stored locally)
    • Multiple Monitors
  • Cloud-based server
  • Smartphone
  • Inexpensive data backup
  • Basic printer/scanner
  • Software (Office, Adobe, Time tracking software)

Each attorney has a laptop computer, and all files are stored in the cloud – accessible from anywhere with an internet connection. With multiple monitors set up, work can be done much more efficiently than with a single screen alone. Some consider multiple monitors to be essential to a paperless office.

NK Patent Law uses cloud solutions through Amazon.com and a third-party provider, and they rely on local data backups, saving a lot of money. Every attorney has a smartphone with the appropriate time tracking apps. Every laptop has the basic software necessary for the job – Microsoft Office, Adobe Acrobat, and their cloud provider’s software.

The printer/scanner? A $200 Dell printer. Sure saves a lot compared to the enterprise printer in your office right now!

Adopt an Efficient Business approach

Efficiency is a buzzword right now in the “New Law” movement, trumpeting the deregulation of law and the influx of non-legal providers. It actually makes efficiency look like a political tool. It’s not. A truly efficient practice is interested in cutting waste and developing the best possible systems.

If it’s not necessary to your practice, it’s not a justifiable expense

While Justin knows that there are certain things that might be embraced by NK Patent Law in the future, such as a CRM system, it’s not necessary now, so why use up resources on a platform that’s not going to be used, and is going to require time and expense to train?

Explore new tools to replace existing systems

Instead of setting up a traditional phone line for the law firm, NK Patent Law operates a Voice Over Internet Protocol (VOIP) phone system. The quality is just as good, and VOIP’s potential dramatically exceeds a regular phone (more on that later).

Fax machines may not be huge capital expenses, but if you’re truly going for efficiency, every dollar counts. Fax software is considerably cheaper than purchasing (and repairing) or renting (and replacing) a fax machine. And it meets all the court requirements too!

The expenses incurred due to mailing out paper correspondence that most people would rather get by email anyway is absurd. Chief among those expenses is that postage meter system that you have to rent. Seriously, it’s a freaking rip off, and I don’t know of anyone who is happy with theirs. Send everything you can via email, only use postage for what you absolutely have to, and you’ll no longer need that meter.

Existing files don’t NEED to be made digital immediately!

Probably one of the biggest mistakes that can be made attempting to be a paperless law firm is to think that going all-in is the best way to go. It’s not. Pick a starting point, and all new files after that point will be all digital. Older cases remain paper, until it’s convenient to digitize them.

Trying to scan in everything you have, especially if you haven’t first taken the time to truly test out your digital capabilities, will cause your paperless plan to collapse under its own weight.

Sometimes, spending some money now to get a digital version of a document may be better for the bottom line than losing time and productivity looking for it.

The example Justin cited was PACER, but there are others. The PACER version goes like this: I can download for 7 center per page. OR I can look around the office to find this document and scan it in. The “responsible” person inside you doesn’t want to charge the client for a document you already have. But…

… how much time are you going to lose looking for that document. There comes a time where the loss in productivity is worse than the expense of paying for a new digital version. Know which is which.

Know Your Costs

One of Justin’s strengths is that he’s a numbers guy, and he’s very business oriented. So I knew that when I asked him about his savings, he’d have numbers ready. However, regardless of your business acumen, you should be able to understand how your money’s being spent.

As an example, Justin is able to identify the following savings due to the processes they’ve implemented:

  • Basic cost of paper, postage, folders – ½% of revenue;
  • Labor costs for creating and maintaining paper files – 1% of revenue;
  • Productivity Cost (lost files, wasted time, loss of efficiency over multiple locations) – 2-3% of revenue;
  • Productivity Gain – improved access to remote files, increased employee happiness.

Total Savings/Gains: 3 ½ – 4 ½% of revenue. Of Revenue.

For NK Patent Law, that’s $4,000-5,000 per month.

Take advantage of your digital tools

One of the biggest things that NK Patent Law does is use the digital tools it has to their fullest. Many of the newer systems we use to replace less efficient systems are more efficient than their predecessors. However, you’re missing out on a lot if you don’t also explore how they do more than their predecessors.

For example, NK Patent Law was able to find amazing added value in their VOIP phone system:

Initially, it was already better than a traditional phone system on a cost basis. In addition, the VOIP system allows multiple extensions and remote connections, something the traditional phone line only does for considerably more money. NK Patent Law allows its attorneys to work remotely every Friday, with all calls redirected to their remote location.

Their phone system has become a recruiting tool!

Moreover, they’re able to add multiple extensions without adding multiple phone lines (another way law firms try to bypass the traditional receptionist). Did you know that installing multiple different phone lines can actually hurt your Google SEO ranking?

Understanding that a Paperless Law Firm requires training

There are parts of the paperless law firm that bring new challenges. The biggest unexpected bump in the road is realizing that this isn’t a system people are familiar with right away. People need to be trained, not just on using the new systems, but on how the new systems interact with the realities of a law firm.

For example, despite the digital preference, there are still some documents that need to be kept in their original form. This is something you never worried about when every original document was being saved. Now, you have to make sure to train.

In the end…

The paperless law firm is something that more and more law firms will try to create in the future. Want an excellent example how it’s done right? Justin Nifong and NK Patent Law.