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Paralegals May Hold the Key to Profitability

Does your firm make appropriate use of its paralegal staff? Although the roles and responsibilities of paralegals (or legal assistants) can differ widely by firm, these employees ideally spend minimal time performing clerical or other work suited to legal secretaries and administrative staff. By the same token, firms must be careful not to give their paralegals work that should be handled by lawyers.

It is important to get this balance right. Appropriate assignments make for happier staff and improved workflows. More important, your bottom line improves when attorneys are not wasting time doing work that could be handled by paralegals.

Growing Ranks

The paralegal profession is swelling as law firms look for ways to more profitably utilize their human resources. The ranks of paralegals are expected to grow 22% between 2006 and 2016, according to the U.S. Bureau of Labor Statistics.

How your firm uses paralegals may depend on the type of individuals you hire. Although some firms require paralegals to have formal legal assistant education or certification, others hire college graduates with little or no previous experience and train them on the job. Some of these recent graduates are considering law school themselves.

Definitions of the job vary, but the National Association of Legal Assistants states that paralegals “have knowledge and expertise regarding the legal system and substantive and procedural law which qualify them to do work of a legal nature under the supervision of an attorney.” As American Bar Association surveys have found, this vague definition is open to broad interpretation. For example, approximately 85% of paralegals spend some time performing clerical work on a weekly basis, but almost all of them (95%) regularly communicate directly with clients via e-mail and written letters. And while drafting basic court filings and contracts is a traditional paralegal duty, paralegals increasingly manage their firms’ technology applications and engage in marketing and business development activities.

Although paralegals can perform many substantive legal tasks, they must be careful not to overstep their bounds. Only attorneys can provide legal advice to clients, represent them in court, plan legal strategies, take depositions, set fees or accept engagements.

Price of Underutilization

To appreciate the potential price of underutilizing paralegal resources, consider performing a profitability analysis that allocates expenses (such as salary and benefits) to partners, associates and paralegals. Then, calculate revenues for each of these groups. When you compare revenues with costs (incorporating such factors as utilization and realization), you may be surprised to find that paralegals are your firm’s profit center. Setting paralegals’ billing rates based on experience often means that senior paralegals offer the best profit margins.

Although paralegals can be profitable if your firm charges hourly rates, the greatest financial potential of paralegal work typically comes in fixed and contingency cases. By enlarging paralegals’ roles in such engagements, you reduce your firm’s investment in them and free up associates to work on other matters.

Retention Guide

To ensure your firm is using paralegals properly, consider designating a paralegal coordinator, such as a senior paralegal or partner who understands the value that paralegals bring to the firm and its clients. The coordinator can be responsible for hiring, training and optimizing paralegal resources, by, for example, making sure that individuals are assigned to engagements that make the best use of their experience and skills.

Because senior paralegals often are the most profitable staff members, look for ways to retain them. This includes providing career path and professional development opportunities, such as continuing education and management roles. It is also critical to treat paralegals as knowledgeable team members by allowing them to contribute to practice group decisions and participate in client meetings. Also, be sure to provide a mechanism for paralegals to provide feedback or voice concerns about the attorneys with whom they work and how cases are managed.

Best Advantage

If you are unsure whether your firm is using paralegals to its best advantage, contact Steve Lewis.

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