For years we’ve known that behind every successful attorney, there’s a great paralegal. But will that always be the case?
The right paralegal can win client loyalty, keep you organized, and allow you to focus on higher-earning work. But increasingly, much of a paralegal’s job can be automated and outsourced to technology. One attorney notes: “depending on the case, by my using software rather than a paralegal, I can save anywhere from $50,000 to $100,000.”
With the legal industry in such flux, and advanced case management software becoming more prevalent, how can we know it’s the right time to hire another paralegal?
Here’s a quick guide to some metrics that can make the decision easier.
Best Hiring Metric: Revenue Per Employee
There are a number of metrics that give you information about whether the time is right to hire. But perhaps the best place to begin is with Revenue Per Employee (or RPE for short). HR departments across various industries recognize the value of this one number as a guide for hiring decisions.
RPE is a simple figure. To find yours, divide your yearly revenue by the average number of employees in the legal group that year. Hiring another employee will always make the RPE dip. The key is to make sure your RPE is high enough to handle this dip before hiring someone new, and to monitor RPE after the fact to ensure the number rises steadily again.
Current legal benchmark data suggests that a healthy RPE shouldn’t fall below $130,000. Before hiring a new paralegal, check to make sure your RPE won’t drop below this number. An even better range for RPE is between $150,000-$175,000.
Legal advisor Lee Rosin recommends that solo practitioners resist hiring their first paralegal until they’ve hit $300,000 in annual revenue. Hiring a paralegal after reaching that benchmark will drop the RPE to $150,000, but the extra staffing puts you in a better position for long-term, sustainable growth.
Deeper Dive: Time Audits
Your RPE can give a good baseline idea of whether your practice can handle an additional employee. But to know whether you actually need a new paralegal, you also need to know how you’re currently spending your time. You must evaluate which activities can be automated, and which activities still need a human touch.
Case management software and more advanced reporting tools like Filevine Periscope and Audit Reports can help you perform a full Time Audit. When you see which tasks are taking up your time, you can ask:
- How much time is spent answering phones or doing intake?
- If this is a significant time sink for attorneys or staff, you may want to consider outsourcing to a trusted virtual receptionist.
- How much work requires a law license?
- This is work that can’t simply be offloaded to a paralegal.
- How much time is spent on administrative tasks that can be performed by non-lawyers?
- Which of these tasks can be automated? Read here for tips on automation of each stage of your practice.
Once you remove work that requires a lawyer, tasks that are better off being automated, and tasks that can be effectively outsourced, determine whether you have enough work remaining to justify an additional employee. And obviously, if you currently lack modern case management software, consider making the jump before hiring more people.
Beware Managerial Feudalism
Unfortunately, firms eager to grow often dive into the hiring process too early, before their RPE and Time Audits can justify the expense. Sometimes this is because attorneys have too much confidence that hiring a paralegal will rapidly expand their revenue. But there might be other deeply-held beliefs which lead to unwise hiring.
Anthropologist David Graeber has found that within professional culture, status is often measured by staff size. He notes “the prestige and even sometimes the salary of any given manager is measured by how many people he has working under him.” In a process which he calls “managerial feudalism,” he finds that “executives who pride themselves on downsizing use the money saved to fill their offices with feudal retinues of useless flunkies.”
Though no paralegal should be called a ‘useless flunky,’ attorneys aren’t immune to this concept of power and prestige. While some metrics of growth are more abstract, the growth of staff numbers is always visible. This can give attorneys a false sense of forward progress — which will soon be shattered by growing payroll bills.
The mistake of over-hiring will become even more costly as more paralegal work is replaced by automation. Firms that have invested in automation technology instead of increased staffing will have a leaner overhead, and will be more dynamic and flexible moving forward.
Embrace Case Management Software
If automation alone can’t solve your workload problems, hire a paralegal with automation in mind. Find someone who is comfortable around technology and willing to learn new systems.
Most importantly, you should hire someone who’s committed to your case management software. If they ensure that all information is added promptly to case files, the firm will be able to run regular reports, find new areas for automation, and provide a better experience for clients.
As the legal industry changes, so will the job expectations of paralegals. The most dynamic legal teams will find paralegals who can enhance automation instead of trying to compete with it.