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By: Daniel Gans

We have a new contributing writer stepping up onto the TPS stage today! Daniel Gans is here to enlighten our readers (many of whom we hope will be esquires receiving this post via shares from paralegals) to share a bit of wisdom regarding the unsung heroes in big law…and elsewhere, in my humble opinion…of the ‘new normal.’ Nothing says big changes stirring like the words: ‘new normal.’ [Insert collective paralegal sigh here] Lift that caffeinated beverage. Keep reading.

As previously published on Alonso Marketing: http://www.alonsomarketing.wordpress.com 

 

By 2009, the Great Recession caught up with attorneys-at-law, starting the first mass layoffs in a profession once thought recession-proof. By most accounts, law firms mainly thinned their support staffs, although the lock-step process for associates to make partner in their 8th or 9th years at a firm was now history. Many partners were “de-equitized,” asked to work more billable hours, or asked to retire—leading to an exodus of established partners starting their own offices and taking their clients with them. The business of law would never be the same. And how did many firms explain the end of Big-Law’s golden age? … A meteorite named Technology.

Nearly anyone who has worked with the defense bar or outside counsel understands that attorneys usually inhabit a dimension called the Billable Hour. Lawyers in the Billable Hour usually cannot predict costs of legal services, and the longer they take to wrap up a case or deal, the more the client pays. The fact that we still have the billable hour—while ignoring or under-utilizing countless advances in technology that lead to more efficient workflow, predictable legal spend, and a real-world focus on productivity rather than hourly totals—speaks volumes about the romance between law firms and the billable hour. Yet, “technology” is often singled out as the bad guy behind the need for reduced head counts and outsourcing solutions.

Bearing in mind Big-Law’s love for the billable hour, it should not surprise us that non-billing, soft-target support jobs underwent the most change and restructuring. And the role that’s endured the most change may likely be: the paralegal.

The American Bar Association does not distinguish between paralegals and other legal assistants, giving this definition: “A legal assistant or paralegal is a person, qualified by education, training, or work experience who . . . performs specifically delegated substantive legal work for which a lawyer is responsible.” The ABA and I do not see eye-to-eye on this definition.

This Present Revolution

Not that long ago, nearly every lawyer had his own dedicated secretary, and each office had at least one paralegal. It was unusual to see a legal secretary working directly with more than one lawyer. A lawyer needing to have something done often would say, “my secretary can handle this” or “my secretary will let you know when this is ready.” Not many years ago, I can’t recall hearing the phrase “the secretary” or “one of the secretaries”—just “my” secretary.

After the Great Recession and a lot of layoffs, a ratio of four or five lawyers per secretary became more common. Those at law firms tasked with speaking to the survivors of mass layoffs would often say that a seven-to-one secretarial share was around the corner. By necessity, the Great Job-Responsibility Shift followed.

By 2012, most of the Am Law 200 had decreed their lawyers proficient with software such as Word, Excel, and PowerPoint, and that they hardly needed secretaries or even a word processing department any more. Yet I knew associates who did not know how to log into their computers and would phone assistants to log them in while they were coming up in the elevator. Some legal secretaries, usually the ones assigned to more seasoned partners, were rebranded as “professional assistants” with timekeeper numbers so they could start tracking and billing their time. Other secretaries and word processing staff were assigned to a resource center overseen by a manager; while saying this was forward-thinking, these firms were actually recreating the “steno pool.”

Some law firms offered buyouts to legal secretaries that included lump sums of $25,000, up to 26 weeks’ pay, and subsidized health insurance for up to 18 months. One firm offering a much less attractive package retired around 40 secretaries, for a one-time severance payout conservatively estimated at $1.4 million. Another firm’s very attractive buy-out had about 30 accept, costing the firm well over $2 million. This was a time when some firms were seeing double-digit increases in gross profits and profits per partner (PPP). Some who took buyouts rode off into retirement, while others secured jobs at competing law firms. However, some secretaries with about 10 years’ experience who left firms with a nice check were rehired within six months.

The Forgotten Paralegal

While millions were spent on reducing headcount, paralegals were mostly overlooked in the training budgets, with an assumption they would keep up on their own with the ever-changing technologies driving all this change. Paralegals were now expected to do associate-level work, such as first-pass document review, more in-depth legal research, attending trial, and summarizing the transcript of the day’s testimony. Some paralegals were even expected to create graphics and present videos and documents at trial.

At the same time, work that had been almost exclusively for paralegals was now done by the new “technology experts” previously known as attorney associates. This often ended in problems such as collecting and Bates-stamping documents outside of a database, which prevents any track-back system to the original documents—something a paralegal would avoid with a load file and coded fields. Associates were also now working with huge, multifunctional devices on their desks, doing tasks formerly performed by the drastically reduced ranks of legal administrative assistants, formerly known as legal secretaries. Some associates would work a loophole where they could use a partner’s professional assistant when doing work for the partner.

During the shuffles in job titles, responsibilities, and expectations, most paralegals were in a limbo without clear-cut job duties, while now billing 1500 hours a year to justify their employment. To “reward” paralegals’ work to both generate revenue and modify their work for the new normal, some firms cut paralegals’ pay by  20%, with incentives to recoup their former incomes by meeting higher billable-hour marks.

Due to these and other recent events, there has been a “time famine” for associates who are looking to make partner as well as for paralegals in certain niche disciplines. This scramble for billable time has led to a loss of mentoring and a resistance to cross-training of paralegals, leaving the paralegals once again to fend for themselves.

In addition, paralegals’ practice specialization does not lend itself well to cross-training. For example, when real estate work dried up, the practice’s paralegals—who often spent their days working with title companies completing closing checklists and preparing closing binders—had a difficult time metamorphosing into litigation paralegals—who often work in a file room preparing witness binders for deposition and trial. Some paralegal disciplines involve travel, while others have more predictable business hours. I was once tasked with cross-training a paralegal on document-review software, so she could be involved in a large litigation matter. This person was very competent with wills and estates, but struggled with reviewing thousands of discovery documents and creating an index of privileged documents.

What can be even more amazing is how a paralegal that bills 1500 hours per year at even $250 per hour makes an employer $375,000 annually, before partners start discounting their clients’ bills. With a high-end salary of $75,000, a paralegal often generates higher profit margins for the firm than most associates. We must remember that associates have higher hard and soft costs, including insurance, membership dues, continuing education, and investments in marketing and promoting their services inside and outside the firm. On the other hand, paralegals often pay professional association fees from their own pockets, attend brown-bag “lunch and learns,” and do not network and entertain clients over dinner. The cost to recruit and retain a paralegal is far less than a firm’s investment in an associate, with most paralegals covering their annual pay in their first three months of employment.

Most significantly, paralegals rarely have the “up or out” mindsets of many associates, as they cannot become co-owners of any law firm. For this reason, their hours are usually the easiest for partners to write off when they need to reduce the total legal bill. Placing paralegals in a general “support services” role makes it easier to discount bills while leaving associates’ and partners’ time untouched—to not remove value from the legal services or impact the partner realization-rates, which ultimately could result in lower profit-per-partner numbers.

The Coming Saviors of Big-Law?

In the new normal of the legal industry, the winners and survivors will be the firms that courageously and tenaciously pursue project management and process improvement—as their clients have been doing for decades. To accomplish this, firms need to look to their paralegals, who have been finding new and better ways of working, even with little or no training or support from above.

Big-Law’s greatest yet hidden resources for project management skills are their best paralegals. As paralegal blogger Jamie Collins has said: “If you are truly embarking on an utterly impossible project, then you will accomplish all that is humanly possible within the time allotted. . . . Paralegals do not surrender; they go down in a blaze of glory.”

© 2014 by Daniel H. Gans.  All rights reserved.

Dan Gans is the Director of Trial Support at TransPerfect Legal Solutions. Previously at boutique firms and in the Am Law 100, Dan has spent more than 15 years aiding and abetting attorneys with litigation support, IT, and paralegalism.  He can be reached at: dgans@transperfect.com.

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Hey TPS readers – Do you have an opinion to share on today’s topic?  Do you agree? Disagree? If so, we’d love to hear about it! Just hit that comment button and tell it like it is. 

Until then, keep making that caffeinated paralegal shuffle toward that blaze of glory…

Duty calls. (Or was that the esquire?)