Leveraging Paralegals to Increase Profitability

According to the National Federation of Paralegal Associations (NFPA), a paralegal is a person with the requisite education and/or expertise in the legal field. This means that such a person understands legal concepts and therefore can perform some of the legal tasks performed by lawyers or other professionals in the field. Such tasks generally require specific skill set such as excellent communication, organization, evaluation and analysis skills. For this reason, most paralegals specialize in legal niches such as business, immigration, real estate, bankruptcy corporate, family law, labor litigation, nurse paralegal and freelance paralegal. Some of the employers that hire paralegals include for-profit and nonprofit organizations, law firms, governmental agencies and even individual lawyers. What’s more, a court, statutory or administrative authority may mandate a paralegal to perform legal tasks. With that in mind, here is some more information on this topic.

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The Origin of the Concept of Paralegal

Public services agencies came up with the concept of paralegal in the 1960s in an effort to extend legal services to the vulnerable populations, particularly the poor. However, on realizing that the concept was actually a practical and profitable way of offering specialized legal services at discounted fees, private legal entities quickly adopted the idea and the concept has played a vital role in the legal realm to date. Of course, the roles and responsibilities of paralegals have evolved with the industry over the years.

Paralegal Roles and Responsibilities

The type, size and range of services a firm offers determine the role of a paralegal in an organization. In a typical law firm, paralegal roles may include case management, drafting correspondence, calculating legal deadlines, preparing cases, drafting pleadings, document responses and discoveries, contacting and conferencing with clients, analyzing and summarizing documents, fact check, performing research and attending to office matters. Other duties may include interviewing clients and maintaining contact with them under the attorney’s supervision, drafting and signing informative legal correspondence devoid of legal opinion or advice, preparing for and assisting at trial, locating and interviewing witnesses, as well as attending legal functions such as executions of wills and trials with the attorney. It is worth noting that a paralegal may also represent a client before a state or federal administrative agency if permitted by law.

Paralegal Limitations

The roles of paralegal vary across the states depending on the local government regulations. For instance, most states across the US require paralegals to work under an attorney. Additionally, all states require paralegals to uphold the virtues of ethics and confidentiality at the workplace. On the role limitation front, paralegals cannot offer legal counsel, accept new clients, sign legal documents, represent clients in court or at depositions and retain clients or set fees.

Job Outlook and Compensation Statistics

According to paralegal411.org, the demand for paralegals is set to grow through 2022. More specifically, the industry will create 47,000 new jobs for paralegals and legal assistants from 2012 to 2022. Additionally, the employment of these professionals is likely to grow by about eight percent from 2014 to 2024, the BLS reports. On the remuneration front, the median annual salary for paralegals stood at $48,810 in 2015, according to the Bureau of Labor Statistics (BLS).

The Legal Services Profitability Formula

Created by David Maister, the legal services profitability formula calculates how a law firm can leverage paralegals to grow its profits. The formula is denoted NIPP = [1+L] [U] [R] [BR] [M] where NIPP represents the net income per partner/shareholder. [1+L] or the leverage is the ratio of all non-owner fee earners, including paralegals and associates, to partners/shareholders. [U] stands for utilization and it represents the potential revenues (billable time) generated by every fee-earner in a law firm, including the partners. [R] stands for realization percentage and it represents the rate at which a firm converts billable hours into fees collected. [BR] can be the average billing rate of a group or an individual. [M] represents the net percentage profit realized.

Getting the Most out of Paralegals

For paralegals to benefit your law firm financially, you must recruit the right paralegals, assign them the right assignments, ensure they understand the firm’s objectives and deliver quality services, ensure they uphold workplace virtues and ethics, and price paralegal services for profit.

The Benefits of Hiring Paralegals

Utilized properly, paralegals can be an extreme valuable human resource to a law firm. This is because they can handle a wide range of tasks and responsibilities. By leveraging paralegals, a law firm would be able to grow its profits whilst cutting its expenses at the same time, increase caseload since its lawyers would be available to handle new cases, retain clients and keep them happy and offer clients specialized services at a discount. Paralegals can also improve office productivity and efficiency, assist lawyers working on pro bono cases, handle sensitive legal tasks under the supervision of an attorney such as interviewing clients and locating witnesses. Moreover, by assigning some of the workload to paralegals, associates and partners would be able to focus on complex tasks.

Paralegals have become increasingly valuable in the legal industry over the years. Although paralegals were initially meant to provide legal services to poor, law firms are increasingly leverage these professionals to grow profits. In fact, David Maister developed a formula that calculates how law firms can increase their profits by hiring paralegals. Since paralegals understand legal concepts, they can perform myriad tasks in a law firm including case management, drafting correspondence, calculating legal deadlines, preparing cases, drafting pleadings, document responses and discoveries, contacting and conferencing with clients, analyzing and summarizing documents, legal fact checking, performing research and attending to office matters. The potential benefits of hiring paralegals include higher profits and lower operating expenses, better service delivery, wider range of service offerings, more clients and a more productive office. To enjoy these benefits, you must hire the right paralegals and ensure they deliver quality services to clients whilst upholding the industry’s standards and ethics. Finally, the BLS projects the demand for paralegals to grow 8% from 2014 to 2024.

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