Hire a paralegal! Over the years, lawyers have become more knowledgeable about the utilizations of paralegals in their law firms. In order for your office to become a profit center, we offer some suggestions which you and your paralegals may find helpful.
Purposes For Hiring A Paralegal: Paralegals play a key role in your firm’s profitability, scalability and increase client satisfaction. The use of paralegals allows the attorney to focus on important issues through delegation, and more client capacity, to name a few.
Profitability: A paralegal career can provide long term profits. It takes time before a new associate can become profitable to the firm. Then after a few years working at your firm, the associate desires to become a partner. Paralegals never want to be your partner and will continue to produce profits for the firm for their entire career. A paralegal’s time can be billed out to your client at a rate that is higher than your costs, returning a profit for your practice. This financial impact is significant. Some measure this profitability by applying David Maister’s formula which discusses five ratios:
1. Leverage is the ratio of paralegals, associates and other non-owner fee earners to partners;
2. Billable rate is the average billable rate of all earners;
3. Utilization is the average number of billable hours for fee earners in a year;
4. Realization is the percentage of work done that is billed and collected; and
5. Margin is the firm’s net income expressed as a percentage of the gross income.
Each ratio helps determine how paralegals are impacting the firm’s bottom line.1 An increase in required billable hours for paralegals won’t change your costs, and the extra revenue goes directly to the bottom line. Median required billable hours disclosed in a recent Illinois Paralegal Association (IPA) salary survey reveals ranges from 1600-1699 hours.2 A billable rate from the same survey for Illinois Paralegals is broken down into regions: Cook County, DuPage/Lake, and others. The survey takes into consideration the experience of the paralegal, minimum, median and maximum rates. The rates range from a low of $65.00 per hour to a high of $375.00 per hour.3
In fixed fee cases, the profits will be related to the ability to deliver the services at a low rate. The contingency fee case has a huge potential for paralegal profits. One of the goals is to minimize the firm’s investment in the case. This can be achieved by expanding the role of the paralegal. In order to maximize profitability, the firm should know the exact skill level of the paralegal. The paralegal should be given opportunities to participate in continuing legal education as well as professional development through local and national organizations. Paralegals that are treated as professionals have greater job satisfaction which leads to greater productivity.4
Lower costs: A paralegals’ salary is generally lower than an associate. This is crucial when there is not enough work to support a full-time associate hire.
Scalability: You can hire a contract or freelance paralegal. This too can be billable to your client, and you only need to hire them as the work load increases, or on a case specific basis.
Increase client satisfaction: Lawyers are often out of the office on business. An experienced paralegal with a working relationship with the client can meet their needs more promptly and effectively.
Paralegals often work with a small group of attorneys who maintain the same clients for years. Clients who develop confidence in the paralegal not only strengthen the relationship to the firm, but also save money.
Ability to focus on important issues through delegation: When you delegate substantive legal work to a paralegal, under supervision, you can handle your workload more effectively, which allows you to focus on the most critical tasks. This is especially true for contingent fee billing. If you don’t plan on billing out the paralegal, utilizing them to handle routine tasks allows you to focus your time on other issues.
More client capacity: As you learn to use a paralegal more efficiently, you will be able to take on more clients.
Paralegal Fees: Courts recognize the value of paralegal professional services. In Missouri v Jenkins5the United States Supreme Court held that in setting a reasonable attorney’s fee, a legal fee may include a charge for paralegal services at “market rates” rather than “actual cost” to the attorneys.
The courts include some requirement which include (a) the services performed must be legal in nature; (b) the fee statement must specify in detail the qualifications of the person performing the services to demonstrate the paralegal is qualified by education, training, or work experience to perform the assigned work; and (c) evidence that the work performed by the paralegal would have had to be performed by the attorney at a higher rate.6
So, if you have a law firm that actually bills out paralegals, how do you know the fair market value for a paralegal? There are several salary surveys conducted nationally; however, the one that is most representative of our area is the one conducted by the Illinois Paralegal Association (IPA).
Win-Win Factor: The benefit of hiring and using a paralegal effectively is increased job satisfaction for both the paralegal and the lawyer. Experienced paralegals perform many routine duties from document drafting to the dreaded propounding and answering of discovery. Use of the paralegal allows the lawyer to focus their time and efforts in legal analysis, case strategy and building client relationships.
1 Is your firm utilizing paralegals as profitably as possible; http://www.fdcpa.com/PSF/0908/lawnews-paralegals-profitability.htm.
2 Illinois Paralegal Association 2013 Survey of Salaries and Benefits.
3 Illinois Paralegal Association 2013 Survey of Salaries and Benefits.
4 The Economic Benefits of Paralegal Utilization, D. Jeffrey Campbell; American Bar Association Standing Committee on Paralegals, 2005.
5 Missouri v. Jenkins, 491 U.S. 274, (1989).
6 Comment to Guideline 8-ABA Model Guidelines for the utilization of paralegal services.
Mary Kay Lieberman, RP®, ILAP, is the current Chair of the Paralegal Committee for the DuPage County Bar Association, past president of the Illinois Paralegal Association (IPA), an American Association for Justice, (AAJ) Affiliate member and a member of the National Federation for Paralegal Association (NFPA). Mary Kay is a graduate of The American Institute for Paralegal Studies at Wheaton College. Mary Kay is the owner of MK Paralegal Services, providing paralegal services to plaintiffs.
Arnold Ramirez is the current Vice-Chair of the Paralegal Committee for the DuPage County Bar Association and council member of the College of DuPage Paralegal Program. Arnold is a graduate of Northwestern Business College. Arnold is the senior paralegal with the law firm of Mirabella, Kincaid, Frederick & Mirabella, LLC in Wheaton, Illinois.