“It’s been a good year. We’ve added three lawyers and four paralegals since March,” bragged the lawyer to my right. I nodded and dug into the creamed spinach. The lawyer turned away to tell someone else his good news.

I swallowed the last bite of the spinach and turned to my left to continue a different conversation.

The Rise of the Machines

“We’ve got 800 people doing what it used to take 6,000 people to do,” he said across his salmon and mashed potatoes. I was sitting next to him at a holiday party.

He explained that he got a universal reaction to this news. People say “wow” as they realize how the computers and machines have replaced the humans.

He doesn’t think people should react with “wow.” “We’re not alone in doing this,” he said. “Everyone is doing it. It’s a universal business reaction to the economic changes over the past years.”

He’s right. Reducing personnel and replacing them with machines is happening across a broad spectrum of industries. Those jobs are gone, and they’re not coming back.

Voodoo Economics

However, that’s not true in law firms. Yes, some law firms are shrinking. They’re letting go of personnel as their revenues decline.

Other firms, the growing firms, are adding to their headcount. In fact, many law firms grow in lockstep with their revenue growth: if revenue goes up 10 percent, headcount goes up 10 percent. Efficiency isn’t on the radar screen. Replacing people with automated processes isn’t part of the plan.

Lawyers are oddly proud of increasing their headcount. It’s weird. The rest of the world brags about increasing profits. We brag about adding people. That would make sense if adding to headcount automatically added to the bottom line. Unfortunately, that’s not always the case.

Cutting headcount can increase profits. For 2014, consider cutting personnel. Look at how you can bring up your revenues, drive down your costs, and increase your profits.

We’re always looking at a range of options, including the following:

1. Implementing practice technology. Practice management systems reduce the need for middle management and supervision. Document assembly gets more drafting done in less time. Document management systems eliminate the need for file clerks and save time hunting for documents. E-discovery systems literally replace warm bodies.

2. Outsourcing. Shifting legal work offshore reduces costs and introduces variability in payroll. Costs rise and fall along with revenues. Management costs are reduced, and benefits are eliminated. You benefit from the expertise of specialists working with other specialists.

3. Cutting real estate. You don’t need as much space if you have fewer employees. You can also reduce your space by using what you have more efficiently and by shifting personnel away from working in central locations and toward home offices.

4. Cloud-based technology. By eliminating servers you eliminate a huge portion of your local IT team. You’ll recover real estate previously devoted to housing computers, and you’ll gain the reliability and economies of scale offered by cloud-based vendors.

5. Systems adoption. Lawyers resist checklist-based systems. They tend to believe that every piece of business is like a unique and delicate snowflake. It’s not. Systems are efficient. Efficiency drives down the need for people. Checklists are your friend.

If you’re going to brag, then brag about increasing the bottom line. Profit is worth talking about. Adding personnel, increasing headcount, and sounding bigger are not worth discussing. Let’s brag about the right stuff.