Hiring Staff
For Your Law Practice
By Art Italo
There is little more critical to the success of your practice than the quality of your support staff. Whether you are with a large firm, or a solo practitioner, good support can greatly increase the quality and quantity of the work you produce. Poor support can cause inefficiency, bad work product, disharmony, poor client relations, bottlenecks and ultimately total disruption due to turnover.
This article will discuss whether and when to hire support staff, what kind to hire (clerical, secretarial, administrative, paralegal or associate) and factors to be aware of in the hiring process. Before discussing these tactical considerations, I first want address the best overall hiring strategy.
Hire The Best
The prevailing attitude among most lawyers is that they will hire the best support person they can afford. They set a salary which is within their budget and begin interviewing to try to get the most bang for their buck. This inevitably leads to difficulties.
I have worked with hundreds of lawyers and one of the most common complaints I get regards their dissatisfaction with their staff. Most of them are convinced that there are no good support people out there. When I question them further about their current staff, invariably I discover that they are being paid under market for their skills. The point I want to make with resounding clarity is that when it comes to support staff, you get what you pay for.
Most lawyers look at staff as a cost of doing business. That is totally incorrect. Staff is your most important investment. A cost is something inherent in the process of getting things done. Rent is a cost. Legal pads, paper clips and staples are costs. Law books and periodicals are costs.
An investment is a component of the business that substantially affects the value of the product or service. An investment has the capability of amplifying profits by many multiples of the investment's cost. I'll say it again. Your staff is your most important investment.
Costs should always be controlled carefully. Since they do not substantially affect the product, you can economize. Investments should be judged by potential return. Let's take computers as an example. If you are thinking about buying a computer for your business are you likely to buy a DOS based 386 with one meg of RAM? You can get such a computer for dirt (maybe for free). I'm assuming that since you are reading this on the World Wide Web, you would never consider economizing to that extent on your computer. You would probably look for a Pentium with a minimum of 128 meg of RAM. Why? Because you know that a 386 would greatly reduce your efficiency. Its limited versatility would hamstring your efforts to get your work done. It's slow clockspeed would cause you to have to wait forever for things you need now. It would be a lousy investment. Now take a look at your support staff. Are they Pentiums or are they 386's?
Whether you are a solo practitioner or a member of a large firm, always hire the best. You should seek support people whose salaries are currently 30% above market and offer them 40% above market. Thus, if an average secretary earns $25,000 per year in your area, look for people who currently earn $32,000 and pay them $35,000.
At this point most lawyers (especially solos) will start screaming, "I can't afford an extra $10,000 a year for a secretary!" Well, let's examine that. If you are billing at the rate of $150.00 per hour, you would only have to bill 66 additional hours per year to cover the additional cost. That comes out to about 15 minutes per day. Now ask yourself...is your current secretary wasting more than 15 minutes of your time per day with errors and the necessity for repeated instructions? When I ask most of my clients this question their honest answer is a thundering "yes".
A crackerjack staff support person can increase your billing capability by ONE TO TWO HOURS PER DAY versus an average staffer. That can mean 200 to 400 hours per year or $30,000 to $60,000 in additional billings per year. Not only that, but good support people can take on projects of greater complexity, enabling you to bill their time as well. Do you still think it is not worth the additional $10,000 investment??
When To Hire (Solos)
The hiring question I'm asked most frequently by solo practitioners is, "How much business should I have before I hire a full time secretary?" With the current state of technology, it is easier than ever before for solo practitioners to operate an effective law practice with no support staff whatever. The computer revolution has forced most lawyers to become at least passable typists, proficient enough to compose on a word processor instead of a legal pad. Letter templates make it easy to draft your own letters and create envelopes, CD ROM and online services bring law books to your desktop. Word processors, copy machines, fax machines and e-mail create and rush your correspondence to its destination. Voicemail answers your phone when you are on the other line or otherwise indisposed.
A lawyer with a modernly equipped office can produce an extraordinary amount of work with no support staff at all. My estimate is that a solo practitioner with no support whatever can produce about 1200 billable hours working about 50 hours a week and still take two weeks vacation. This is an office that can be run for about $35,000 of overhead per year. Even billing $100.00 per hour, this practice will gross over $100,000 per year (allowing for bad debt) and net over $65,000. This is not setting the world on fire, but if you're billing at $150.00 per hour, the profit turns out to be $115,000 which is quite respectable.
If you are a solo without a secretary, you must accomplish one thing before you consider hiring. You must reach your capacity and get your hourly rate up. The only way to accomplish this is by increasing your marketing activity and effectiveness (see my Business Development Section). You are not ready to hire until your gross revenues are at least four times the cost of a top notch secretary. Thus, before you hire a secretary at $35,000 per year, you should have gross revenues of at least $140,000. This person will provide you with about 500 extra hours of capacity. You will need about 250 hours of extra work to cover the additional overhead. Anything you generate over that will go to the bottom line. Thus, a good secretary can increase your profit by about double what you pay him/her if you get yourself working at your new capacity.
Therefore, if you have more work than you can handle and you are billing at a sufficiently high rate to apply the four to one rule, you should begin looking for a strong secretary.
When To Hire (Firms)
If you are with a firm, the chances are you already have a secretary. The question now becomes when to hire additional support staff. Just as above, you first need to examine whether you are at capacity. Most partners working 50 hours per week with a secretary should expect to max out at about 1700 to 1800 hours per year. At $150.00 per hour, this yields a healthy $250,000+ practice. If you are not at that level, you need to examine whether you need to improve your own efficiency or whether you need a better secretary.
If you are at that billing level and you still have more work than you can handle, and there is no other member of the firm that can bail you out, it's time to hire. The key question here is whether you should hire a paralegal or an associate. This has a lot to do with the nature of your work. If the work is very formulaic and redundant, a paralegal is probably the best solution. If the work is unique for each matter and research oriented, an associate would be a better choice.
Your reason for hiring is not to increase your personal billing capacity as it was with the solo practitioner. It is to stratify your work so you are working at a higher hourly rate on the most complex facets of your matters. You build revenue by adding the billing capacity of the extra staff member. When you hire a second staff member, your hourly rate should immediately increase by an amount necessary to break even on the new staff member's salary.
For instance, if you are $150.00 per hour and billing 1800 hours per year, and you hire an associate at $50,000, you should raise your rate by $25.00 per hour. This would give you an additional $45,000 (1800 X $25.00) in revenue to cover the additional overhead. The effect on the clients' bills will be minimal because some of the clients' work will be done at your new higher rate, but much of it will be at the lower rate. This means that the total cost per matter to the client will be about the same (sometimes even less). Many attorneys fail to raise their hourly rates when hiring an associate or paralegal only to find that their revenues go down (due to work done at the lower rate) while their expenses increase. This can have a devastating impact on profit.
Once you have hired him/her, your emphasis will be on getting the new billing staff member up to capacity by pushing billable work down while marketing for more new business. When the new staffer is at capacity, hire another. Depending on where your hourly rate stands versus the market, you may want to raise your rates again to cover the additional overhead. If this is not possible, the staffer's excess capacity might be utilized by other partners to justify the expense.
Hiring Administrative Staff
At a certain point in the growth of your firm, you might decide that you need additional administrative staff to handle non billable matters, thereby maximizing the efficiency of those billing. This will mostly be an issue for firms, but can come into play for a solo practitioner with a substantial practice.
Examples of these types of staffers include receptionists, clerks, accountants, marketing specialists, office managers, etc. The most typical decision for the solo is whether to hire a clerk/receptionist to do light typing, filing and telephone work. This is usually the second hire for a solo after a top notch secretary. Hiring a clerk/receptionist will help elevate a strong secretary to become a de facto paralegal. Since the secretary will be relieved of the constant interruptions from the telephone and from mundane filing and typing tasks, she can concentrate on billable matters, thereby increasing her billing capacity. This will allow a certain amount of stratification of work for the solo and it will expand revenue potential.
In law firms, the key hire is usually an office manager who will wear a number of administrative hats including accounting, payroll, billing, personnel matters, purchasing office supplies, handling vendors, etc. These are time consuming tasks that multiply with the number of partners and are often assigned to a managing partner (whose billable hours promptly go right in the toilet). Hiring a strong administrative manager to handle these details can shift 2000 hours of non billable tasks away from the partners and onto a salaried employee. This effectively increases the billing capacity of the firm by 2000 hours. Again, if the partners are billing at $150 per hour, the office manager will increase the revenue potential of the firm by $300,000.
As the firm gets larger, the volume of non billable administrative work might necessitate an administrative department including functional specialists for billing, payables, general accounting, marketing, etc.
Considerations In Hiring
One reason lawyers have so much trouble with their staff support people is that they are not adroit at hiring. Most lawyers disdain the hiring process and rush through it just to get it over with. They hire the first person who comes through the door and seems halfway decent. The result is a bad hire and constant headaches followed by a quick return to the hiring process they hate so much.
When hiring staff support personnel, it is important to qualify candidates carefully and talk with a sufficient number of candidates to be able to make a good decision. The process might take longer, but it will decrease the likelihood that you will have to do it again in six months.
There are various factors to consider when reviewing candidates' qualifications including:
- Pedigree - This is of greatest importance with prospective associates right out of school or with less than 5 years experience. What is the reputation of the schools he/she attended? Were there any honors, law review, awards? Where did the candidate graduate in his/her class? Success in school is not an accident. It is an excellent predictor of success in your firm. Hire the best.
- Continuity of Previous Employment - A candidate's pattern of previous employment is a very reliable indicator of future turnover. If a candidate has had seven employers in the last nine years, there is a reason for it. Either his/her skills are not good or he/she has a problem working with others. Generally, you should not hire a candidate whose history shows an average of less than three years per employer. There may be scattered exceptions, but in general this rule will serve you well.
- Reputation of Previous Employers - If an employee has had a long stay (more than five years) with a reputable firm, you probably have a jewel. Top firms demand a great deal from their staff and if the candidate has stuck it out, he/she is probably battle tested and up to the task.
- Salary Level of the Candidate - Generally speaking, lawyers hate paying money for staff. If a candidate is currently getting paid well above market, there is usually a reason for it. However, beware of the high paid job hopper. This is a person who stays with an employer just long enough to move on for more money. There is no reason to believe this person will stay with you unless you are so far above market that he/she can't possibly find anyone to pay more.
- Performance on Skill Tests - This is an area where most firms fail miserably. They do not test the candidate in even the most perfunctory way. Giving skills tests will avoid major surprises. If you require dictation, you should give a dictation test. If you require typing, a typing test is in order. If you require an associate to write, a writing sample should be reviewed. If the associate will be doing research, a research project should be assigned from a previous matter that has been exhaustively researched to see how comprehensive and astute the candidate's work is.
Checking References
I am constantly amazed at how many candidates get hired by law firms without a single reference ever being consulted. There is nothing more predictive of the candidate's performance than the impressions of a previous supervisor. Without this input, you are taking a great risk in hiring the candidate.
The most important thing to remember when checking references is to speak to a previous supervisor and not a co-worker. Co-workers are usually friends. They will sugar coat the truth and often simply lie to help their friend. You are not hiring the candidate to be a friend, so you do not want that perspective. You want the perspective of someone who had to manage the candidate and who had to depend on the candidate to get work done. Supervisors who are questioned closely will reveal their disappointments or enthusiasm for a candidate, even if they are trying to be even handed.
Before you begin asking the supervisor questions, you should give him/her an outline of the position for which the candidate is being considered. This will help the supervisor better assess the candidate's fit for your position. Here are some questions that can get you valuable information from a supervisor:
- Verification of Employment - "What were the candidate's position and duties with the firm? What were the dates of employment?" You will be surprised how often candidates will cheat by as much as a year or two to hide another employer, a failed solo launch or a period of unemployment.
- Verification of the Reason For Separation - "What were the circumstances of the candidate's separation from the firm?" The supervisor's story might differ drastically from the candidate's version. Beware if the answer is "I'd prefer not to say." If so you should immediately ask if it was performance related. If the answer is "no" then the problem generally involves difficulty working with others or the supervisor. Sometimes this is just a personality conflict or a difficult supervisor, but sometimes it is a problem candidate. You should question other supervisors about this to see if there is a pattern.
- Strengths and Areas of Development - "What are the candidate's greatest strengths? In what areas does the candidate need more development?" These questions will reveal information you can get nowhere else.
- Team Player - "Is the candidate is a team player? How does the candidate get along with other members of the firm? Is he/she well liked?" If the candidate fit in with team members at other positions, it increases the likelihood he/she will fit well on your team.
- Productivity and Timeliness- "Did the candidate get work done in sufficient volume and on time? How is the candidate's work ethic? Is he/she willing to stay late to get the job done in the clutch? Does he/she work well under pressure?" These are all important considerations that you want to know before hiring.
- Overall Recommendation - This is a key question. Listen carefully not only to what the supervisor says, but how he/se says it. Ask, "Given the following choices, how would you recommend the candidate?"
- Marginally Recommended
- Recommended
- Highly Recommended
- Acid Test Question - "If given the opportunity, would you hire this candidate again?" I call this the acid test question. If there is the slightest hesitation here, you know there was a problem. If you have more than one supervisor who is struggling with this question, be very careful.
Conclusion
There is no more important business decision you will make than choosing support staff. Good staff can take you to your full potential while poor staff can keep you in a constant state of crisis. Hire the best, pay them well and demand excellence from them and your practice will soar.
Select
this link to see Art Italo’s Practice Profile
Art Italo is a consultant working exclusively with attorneys in the areas
of business development and strategic planning. He speaks internationally on
legal marketing and strategic planning.
He has developed and refined the concept of Leveraged Networking after
over 15,000 hours of individual consultations with attorneys. He has personally consulted with over 250
attorneys in
For on-line help with your marketing questions, e-mail Art Italo at
italco@mindspring.com or contact Art
Italo at:
Italo Consulting®
P.O. Box 680474
Marietta, GA 30068
(770) 859-0600
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