Few things sap profitability and efficiency from law office operations more than having the wrong people doing the wrong legal work. In some law departments and law firms where Altman Weil, Inc. has worked, we have observed as much as 25% of a senior attorney’s time spent performing tasks that junior associates or paralegals could perform just as well, and at significantly lower cost. The impact on cost-effectiveness (in law departments) and profitability (in law firms) is subtle, but it can add up quickly. Consider the following simple example.
A partner charges $200 per hour, and bills 2,000 hours per year. If 10% of her work can be performed competently by a paralegal, that totals 200 hours per year, or $40,000 in fees. If the partner delegates this work to a paralegal, charging $100 per hour, that frees her calendar to take on another 200 hours at her standard rate. The firm loses $20,000 when the rate on the original 200 hours drops from $200 to $100; but it gains back $40,000 from the “new” work that the partner can now perform.