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In difficult economic times, a law firm administrator is expected to find new ways to generate profit. The traditional law firm management team thinks about maximizing profit by leveraging associates and adjusting attorney billing rates. What’s often overlooked as a source for improving profit margins is the legal assistant program. By using the traditional leveraging techniques and reviewing the structure of your program, you may be able to expand income sources and save money for clients at the same time. Leveraging has been used in law firms for decades, most often for managing the ratio of associates to partners, to increase overall profit. More recently, firms have found that managing the ratio of legal assistants to attorneys offers similar bottom-line benefits. Law firm leaders already know that the concept of using legal assistants to deliver cost-effective legal services makes good economic sense. For example, a particular activity that would take an attorney 25 hours, billed at $200 per hour, costs the client $5,000. Add a legal assistant to the task, and the cost to the client is reduced, even if that change increases the total number of hours. To accomplish the same task, the paralegal can work 20 hours, billed at $100 per hour, and the attorney can work only 10 hours. The total client cost is $4,000, a savings of 20 percent for the same service. Under this model, the firm has the opportunity to increase the hourly rate of the attorney and still cut the cost to the client. By raising the attorney rate to as much as $250 per hour, the cost to the client for the same service is $4,500 � a 10 percent savings to the client but a 25 percent increase in the realizable revenue from the attorney’s work. The client and the firm both win. And by sharing the task with a legal assistant, the attorney has handled it in 40 percent of the time it would have taken her alone, allowing the firm to take on more cases without adding attorneys � and overhead. RAISE BILLABLE HOURS The second reason to leverage with legal assistants is that the amount of profit generated by a legal assistant can rival that generated by a new associate. In the most recent survey of salaries in the Washington area, conducted by the Legal Assistant Management Association (LAMA), the median number of billable hours recorded by legal assistants was approximately 1,400 hours per year. The median hourly billing rate was $150 for senior legal assistants and $120 for legal assistants, resulting in a median revenue of $210,000 and $168,000, respectively. Now, let’s look at salary, traditionally one-third of the employee’s total cost. The LAMA salary survey reports the D.C. area median salary for senior legal assistants as about $60,000 and for legal assistants as about $37,000. After benefits and overhead, the senior legal assistant is generating profits of $90,000; $94,000 for the legal assistant. Increase the billable hours to 1,500 per year, and profit rises to $105,000 and $106,000, respectively. Not a bad return for a professional who is not expecting to share one day in the profits generated by his or her work. ADD NEW TIERS To structure your legal assistant program so as to maximize profits, develop a tiered system. Since the needs and structure of each workplace varies, your firm’s culture is an important factor in determining how many tiers to add to your program. A large firm may use as many as six tiers to denote different levels of experience and responsibilities, not including the legal assistant manager or coordinator, who monitors the profitability and performance of the entire program. Smaller firms may find two or three tiers are adequate to differentiate responsibilities. • Legal Assistant Clerk/Project Assistant. Working under the supervision of a legal assistant, this person is normally involved in the organization of materials that usually do not require substantive knowledge of cases. • Junior Legal Assistant. This level of legal assistant is typically a recent college graduate who does not have formal legal assistant training. Working under the combined supervision of attorneys and more senior legal assistants, this person understands and participates in substantive client work. • Legal Assistant. This level may include graduates of legal assistant training programs who have no work experience and experienced junior legal assistants who are motivated and capable of handling more responsibility. Legal assistants participate in the daily tasks related to client services, including factual research, cite checking, drafting documents, interacting with clients, and handling substantive projects under the direct supervision of an attorney. • Senior Legal Assistant. This level of employee has advanced experience and skills in a particular area of law, and may have some responsibility for supervising and training other legal assistants. • Case Manager/Project Coordinator. This level of employee has significant responsibility for managing tasks and personnel for one or more cases. She will coordinate projects, as well as do substantive client-related work. • Legal Specialist. A legal assistant who has advanced knowledge and works entirely in one specific practice area. Generally, a legal specialist does not have primary or incidental responsibility to supervise other legal assistants. This person usually has several years of experience in the practice area and may have an advanced degree (e.g., a nursing degree in a medical malpractice insurance group). IMPROVE EFFICIENCY, RETENTION Creating or adding tiers benefits not only the legal assistants, but also the attorneys and the firm. Instead of using legal assistants indiscriminately, an attorney will be able to request the appropriate level of legal assistant to perform a particular task. Further, the attorney will feel confident about delegating a higher-level task to a legal assistant who has the necessary knowledge and experience. For the legal assistant, the tiering system provides a career path. Employees want to feel valued and appreciated as they progress in a job. For legal assistants, that traditionally has meant being given more responsibility and increased compensation, but not necessarily a promotion or extra benefits. A firm with a tiering system recognizes the legal assistant’s growth and value to the firm � and that recognition is repaid with appreciation and higher morale, says Christy Stouffer, manager of practice support and paralegals at Steptoe & Johnson. For the firm, retaining legal assistants avoids the high costs associated with employee turnover. According to an article in the September 2002 issue of Compensation & Benefits for Law Offices, the cost of replacing an experienced legal assistant is about $100,000 � half of what it costs to replace a second- or third-year associate. Suddenly, a new title, and perhaps an enhanced benefit or two, becomes a very smart business decision. Legal assistant managers who have tiered programs report improved use of legal assistants. Laurie Burk, legal assistant manager at D.C.’s Patton Boggs, for one, finds that tiers encourage attorneys to give more work to legal assistants and that they work more efficiently. Julie Hooper, paralegal coordinator at Reed Smith’s D.C. office, says that attorneys at her firm have appropriate expectations of individual legal assistants. RAISE BILLING RATES From the perspective of the firm administrator or management committee, a tiered program introduces the flexibility to match billing rates to the actual responsibilities and work product of the legal assistant staff. Keeping legal assistant billing rates in a narrow range based solely on the fact that they do similar work fails to recognize the higher client value generated by your top employees. Resources such as the LAMA salary survey, which reports billing rates by geographic region, years of experience, and specialty, will help you to make informed decisions on the most appropriate rates for different legal assistants. In order for leveraging to maintain momentum over time, your legal assistant program needs to bring in intelligent and motivated employees, train them in advanced paralegal duties, and retain them. Training, along with the recognition and structure offered by a tiered system, will encourage retention. When a legal assistant is trained and managed effectively, that person can be a long-term employee who consistently contributes to your client services and to your profits. Gary Melhuish is legal assistant coordinator at the D.C. office of Fried, Frank, Harris, Shriver & Jacobson.

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