Why Attorneys Hire Fractional Paralegals Instead of Employees (even when they charge more)

Speaker A: Welcome back to the Paralegal Business Podcast. Jacqueline Foster here, founder of the Paralegals and Business Society. Today we're going to talk about why it's not as easy to just simply say you're underpaid. As a paralegal working in a law firm, what you actually likely are is mispositioned. And we're going to talk about what attorneys who get it, who really get it, are doing through hiring fractional independent paralegals and legal assistants that run their own business. This is something I'm actively seeing paralegals inside the paralegal, Legals and Business Society figure out and align their marketing to. And as a result, they're building real momentum in getting attorney clients into their business and really taking off. While you're listening to this episode, if at any time you think I want to actually do this, I want to build a business as a paralegal or legal assistant, claim my own time, and earn exponentially more income, you can check out this month's bonus and join us inside PIBS for a low monthly subscription. Cancel any time. But I am certain you'll feel inspired, clear minded and confident once you go through the 21 day paralegal business plan pathway the moment you step inside. And again, there is a, uh, really awesome bonus this month, so make sure you go check it out before it expires. I rotate through my bonuses, so depending on when you see this, um, so depending on when you see this episode, there's going to be a bonus there that will be expiring and will not be coming back this year. So make sure you go check it out. And let's get into it. Let's talk about it today. Okay, So I have consulted over 500 attorneys in the legal staffing space. Primarily those attorneys, um, that I consulted were coming to me for support and in a fractional capacity. They're looking to add a paralegal to their team or a legal assistant or an intake coordinator, or just a client relationship management coordinator of some sort, and they want to add that individual into their firm in a fractional capacity. So what do I mean by fractional capacity now, different from a W2 employee that the attorney is committing to for full time, 40 hours per week, four weeks out of the year, offering PTO benefits, health insurance, what have you, whatever they are offering. A lot of people think that when we go, uh, into business as paralegals, we're just trying to replace a W2 employee, but get hired and paid as a 1099. That could not be further from the Truth. And in fact I advise my attorneys against hiring a 1099 for 40 hours a week. First of all, it kind of gets dicey in the is this really a 1099? Is this paralegal really in business for themselves? Second of all, it's just not cost effective. If you really compare apples to apples, a 1099 to a W2 full time, just comparing the that cost, chances are the W2 employee is going to be the more cost effective option. For attorneys, paralegals out there that are offering fractional services, we are seeing a median kind of your junior to mid level paralegal in that 65, $75 per hour range, senior level, more complex work, more autonomy, authority, management over the case, uh, charging beyond that. We're seeing legal assistance doing the admin work and that 50 up to the $65 per hour beyond if they're getting more into like tech consulting, systems implementation, tech stacking for a law firm and that type of work. And I do have a free paralegal business rate what you would realistically be able to charge. I have a free tool that you can access through my website, which I will link below to get gather all that information from you and exactly what level you're coming in at, what types of services you're going to be offering and then you can see what you would realistically be charging out there. So backing up to my original statement that uh, it isn't effective to market to attorneys or even talk to them about replacing their W2 employees with 10, uh, 99 often what I've found when attorneys come to me and ask me for guidance in how to fractionally elevate and support their existing team in their law firm is that what they have currently structured in their firm is a paralegal that is not only performing quote unquote billable work. I know the billable hour is sort of disappearing year by year, but just for argument's sake or for explanation sake is attorneys are placing paralegals that are expected to perform a high level of billable work. Now yes, most things we do for a client file is billable. You know, we e file that doesn't require senior level experience that's billable. We organize files, we prepare exhibits, we make copies. All those things that are more admin in function. But m really thinking about the value of that paralegal and what truly we're talking about in the billable hour is that of honestly beyond an associate level attorney drafting pleadings, motions, estate plans, trusts, they are prepping for trial, they're attending trial. We are expecting them to perform at this really high level. But then and as ah such we would expect that they would be uh, paid in accordance as a W2 employee. However, with most, many, I shouldn't say most but many paralegals especially working in that solo small law firm environment, even into the mid size environment is they're not just performing the complex work that you would imagine would command a much higher W2 salary. They're also blending into a hybrid role where they are performing performing admin function, client relationship management function, they're taking calls from clients, they are updating clients on case status, they're e filing, they are preparing boilerplate forms, notice of representation, they're organizing files, they are m scheduling depositions, drafting notices of depositions. Do I need to keep going? I think you get what I'm saying here. So what that, that puts the attorney and let's just get in the mind of the business owner. There's which is the attorney in that moment. What that ends up resulting in is them trying to find this blend. Okay, I can't pay them $100,000 a year when they're 98, 50% of the time even handling admin work. I can't even afford $80,000 a year because they're not really generating the amount of revenue that I need to justify that. When they have this hybrid, I call it a hybrid mess to put it bluntly, of a paralegal slash legal admin, slash intake coordinator, slash client relationship manager, slash office manager, slash bookkeeper, slash trainer of the new intern. That's like hanging out for the summer. They can't really justify an ROI at a higher salary. They can't find the ROI there. So that paralegal ends up becoming just straight cost. And they do not get that real classification in the business as a revenue generator because the margin's not there when they pay them for the highest value of the work they perform. So let's back up. When attorneys come to have come to me and like I said, I scaled my own. For those of you don't know me, I scaled my own paralegal agency to a half of a million dollars before selling it. When I was working in the agency piece of it, I specialized in consulting my attorneys on their staffing structures and their staffing growth plans. How are we going to get from point A to point B while keeping people in the perfect role for that individual, what they are paid to do without blending them into multitudes of roles? Because that can happen. On the flip side Too. A, uh, legal assistant can come in and then be asked to perform paralegal work, which they are not equipped to handle at the time, especially not handle it independently, uh, without a ton of like, micromanagement or oversight or massive edits and reviews from either a senior paralegal or the attorney themselves. And so they're really where there is a time in place. We need to evolve our employees and give them harder tasks to develop themselves. We're also blending the admin into that function. So they're wasting attorney oversight time. More edits from the paralegal, the attorney, what have you. So it can happen on both ends. The hybrid mess, right, is what I call it. So let's get back on track here. Get back on track. I told myself I was going to make this a very short and sweet episode because I don't have a ton of time today. When they come to me, it is. This particular attorney has figured it out through attending law firm growth conferences, following podcasts, paying, uh, attention to where this industry is headed, seeing more and more paralegals enter the business space and going into business for themselves, supporting attorneys in fractional capacity. Legal process outsourcing is growing tremendously year over year as an industry. They're paying attention to it and they're realizing that they have more and more access than they ever could have imagined, maybe circa six years ago even to access fractional support and make smarter hiring decisions for their W2 role. So when I say that backing up to the beginning of this episode that we try sometimes too hard to compare apples to apples, we look at a $70 per hour paralegal rate as a business to business relationship. The paralegals business to the law firm business as a B2B relationship. We try too heavily. Some attorneys miss the mark and they, they focus too much on the comparison of a W2 to a 1099 hourly rate. But what the attorneys who actually get it and why this industry has become such an open door for paralegals that want to join and go into business for themselves is the attorneys out there. And I'm going to be as bold as saying the smart business attorneys, or ones who are trying to run their law firm like a business, are seeing that they can bring people in for very specialized roles in a fractional capacity. So let me paint an example of that. A solo attorney that maybe is a year to three years just starting out their law firm. They're, they're gaining good momentum, they're gaining good visibility, referrals are starting to come through. They've hired a marketing agency. The marketing agency is getting them great leads through the door. They might have an admin or a receptionist or somebody they poached from Target or somewhere else and said hey I'm a new person in business, I would or a law firm, I'd like to hire you as my receptionist slash admin slash. You might learn some paralegal stuff. I'll have you take a stab at interrogatories. I'll have you take a stab at this or that. What they now can do is instead of sacrificing, I can't afford a full time paralegal at that rate. What they're now able to do is say I can hire a fractional paralegal for 10 hours, 15 hours per per week, some even 10 hours per month depending on their need. And that person that I hire fractionally in a remote business to business relations is going to stay in the zone of specific high level work or a legal assistant. They have a paralegal and they want to keep the paralegal in their firm focusing on that high level work. They will be able to access a legal admin and intake specialist, whatever they could possibly be needing to fill gaps in in their firm to avoid that paralegal within the office from taking on the hybrid mess of admin function and really capitalize on that individual employees ROI for their firm. So I had somebody message me about my paralegal business rate calculator tool and they said well I make X as a paralegal employee and the attorney bills me out three times that. So how would that work if I charge double what I am making at my m law firm or almost three times what I make at my law firm and then they have to bill me out three times what they're charging. That's the other misconception that attorneys are figuring out is that when they hire fractional they don't need to 2 1/2 3x the cost. So they don't need to charge their clients 2.5 to 3 times what they are paying that paralegal for in order to get a real clean roi. Why? Because when they're hiring fractionally, first of all, like I stated, they are hiring that person to perform a very specific set of tasks and set and set of deliverables for their firm. That is very much trackable. It's not diluted by a lot of different things that you're managing from day to day. It's a very spoken focus set of support. That's number one. Number two, they're not paying that individual for unneeded hours. They have a gap to fill. Their current existing employee is overloaded but they don't have the budget to get to that next level of hire. So if they were to jump to that next 40 hour employee then they're running into the issue of they have a 40 hour per week employee but they only have 10 hours of actual work to give them. Their ROI gets diluted. That's the other is that attorneys are learning they can hire paralegals in business to be able to get them through those growth phases. Number three is they are not paying for the paralegal to have a seat, uh, to have an office space for a computer, for benefits, for pto, for payroll taxes, all these extra things. So that hourly rate is a very, very crystal clear roi. And what they make from their, from their client work, from their client invoices back to the firm. So there's a huge variety of factors that come into play when an attorney is trying to figure out exactly who to hire for what and to what volume and when is it the right time to go ahead and enter that W2 employee and when is it not. And here's why I think you're seeing less and less. I'm not saying they're gone, they are still very much there. But I've been paying attention to surveys and things I see in massive paralegal groups about what are you making? And I'm seeing that number go up and up over the six years that I've been in in business as a paralegal and paying attention to that market and paying attention to what paralegals out there are truly making. It's gone up. I'm seeing more and more reporting. I make 80k a year. I make 90k a year, 75 a year which is more better than the average of 50 that I was seeing as the norm. Why now? I think we're seeing more jobs out there that are actually a decent offering for a salary is because attorneys aren't having to rush that full time hire and lowball what they're paying them because they don't have to factor in unnecessary hours, they don't have to factor in hybrid blends. They're going to be spending 100% of the time focused on things that actually generate revenue in the law firm. They can hire very strategically and very fractionally so they're not rushing into posting the $40,000 a year job for a five plus six plus year experience. Paralegal that is become insulting across the industry for the value that paralegals provide to law firms. Freelancing has been around for years. Right? We've heard that a lot of people will say that, well, I've been freelancing since 1990. Yes, it has been around for years. The difference is, is what happened was Covid amplified attorneys figuring out remote work. And that's why those two things paired together. Where the attorney is now realizing they have more access now than ever. They know how to run a firm remotely. Tech implementation has greatly improved across law firms, small to big. I can remember starting my business and back in 2020, and attorneys out there having all of their files, stairs, like, on their desktop, like there was no way for me to access them. And it was like, there's no way we can remote collaborate. So attorneys have gotten a little bit more sophisticated in their accessing of tech tools and systems and remote capabilities. On top of it, they were starting to learn through Covid when they were furloughing and they had to send their people home and they lost their employees. Like, okay, I can actually access virtual paralegals fractional, fractional support. Which again goes to the conversation of you can. They are not comparing a 1099 to a W2. And how they decide to hire it isn't this or that. It's a blend of, uh, I have the capacity for a full time. I have the budget to actually pay somebody a decent amount that will get them to save, stick with my firm and not leave for the next job. I have the ability to offer benefits, but I want to get to that next level. Now I'm going to hire fractionally to get me through that so I don't have to go post the $45,000 a year job. Right. I just wanted to make this episode because I do think that there's still a, uh, misunderstanding of paralegals out there. What they're really getting into when they join the paralegals in business, quote, unquote, movement, if you will. I don't want to call it a movement, but it kind of is. I mean, more and more paralegals are starting businesses every single month. I run the paralegals in business society. I know firsthand I'm coaching handfuls and handfuls of new paralegals at a time, starting their business journey, going through their business plan design. That's what I help them get through. Inside the society. More and more are entering. And I've always declared this, it is a rising tide lifts all boats scenario, because now we're going to see the employee market increase because attorneys are hiring smarter. They're not hiring. Throwing spaghetti at a wall and saying, I just need help. $40,000 a year. If you don't like it, don't apply. You know, it's beyond that. It's saying, okay, this paralegal that I hired fractionally has gotten me to the level where I have resources, I have good, solid revenue, I have the work for them. So steady and consistently coming in. My new bottom line has been met. I can actually go out there and take my time to recruit a perfect, ish, quote unquote, perfect paralegal for this role right now. And I can keep them in a zone of genius and make their ROI stretch 10 times exponentially what I could when I was just throwing spaghetti at a wall, hiring a hybrid mess to just help me, just help me. I don't care what you do, just help me. Right? Just to kind of resurface everybody on where the value actually lies in paralegals in business. And it was inspired by that email I got. I asked paralegals, you know, like, how did it go? I saw you grab my free tool. What did you think about, you know, what you, what you got as a result for your, your pricing, what you should be charging? Um, most of them are like, wow, I actually think I'm underselling myself. Or I didn't realize, like, I could do something like that, or I could create a business just around that niche or that specialty and make great money. It also has, within that tool, and again, this is free, so go grab it. Um, in that tool, it has like a scalability estimator for you to see, you know, based on hours or what type of model you want to go down, how much you could really make, ah, as a paralegal in business if you stayed the course and really went to scale it. And no, none of this is about theory for me. I, I did it. I did it. I have coached paralegals. My most successful paralegal, uh, course taker was $750,000 paralegal business agency, within a few years surpassed my own business, which is amazing. So I definitely talk the talk because I've walked the walk. And I designed this tool to be smart and interactive. I leveraged AI to help me make it work based on my knowledge. So it was a lot of adjustments, uh, to make it really accurate. And I think you'll love it. But again, why I wanted to make this episode is because paralegals will see that and they'll doubt it. They'll say no. Why would they Hire me at that at $75 an hour or $70 an hour if they can go higher in the market for 25 an hour for that exact same support. There's so many factors is what I'm trying to get across here. This episode could have been an email, right? So many factors that an attorney is considering in why they bring that, that business to business relationship in their firm with a paralegal. They find the specialty. What always bottlenecks their firm is it discovery. There's paralegals building specifically discovery support businesses. They're flat feeing it, they're making it incredibly predictable for a firm. So it's like, consider it handled. It's predictable. You know exactly what you're going to spend on discovery every single month or every single case. Some paralegals are doing that for medical records, medical record retrieval and summarization demand letter drafting. Paralegals are coming in. Legal assistants are coming in to say I am just exclusively going to support your back end of your client relationship management to save you countless lost billable attorney time because you're flooded in clients mad at you or clients asking for updates or crap, I forgot this. I let that slip through the crack. They're. There's paralegals out there that are coming in to solve very specific bottleneck issues or overarching quality of firm and quality of practice and reputation issues. And then there's paralegals that are offering direct support but niching in for firms who really need overarching case support as delegated as needed, but fractionally so that they can get through growth phases, so that they can manage. Don't even get me started on access to talent in what they are trying to do, right? Access, proximity, um, you know, not every attorney wants to hire out of state and deal with payroll in another state. Not every attorney can compete with big city salaries on the hundreds plus thousands solo. Small firms and more rural, quieter cities and towns need access to talent, but they just can't get that full time. So they're being smart in how they incorporate it uh, into their firm. They're piecemealing their staff so it operates more cohesively as a team model where every single person is in their zone of not only genius, but highest profitability for what they're being paid. Revenue driving. Right? So that's today's episode. I just realized it has been some time since I've really talked about what's going on in the attorney's brain, um, from a business standpoint. And I, you'll hear, you know, when you get inside the paralegals and business society. I actually shared a recording, an uh, anonymous recording which was consented to by the attorney, whatever of uh, a discovery call that I had with him and the conversation, we talked for over an hour about his struggles and staff, staffing his firm and what he's really needing and his considerations to. I'm shutting marketing off because I don't have the overflow support. I don't have the support when it ebbs and flows. I can't justify a full time hire. So you'll hear it from the m voice of an attorney that this is not theory for me. This is not theory for me. This is truly rooted in the feedback, the conversations, the 500 plus attorneys that I have spoken to on a zoom call about their staffing structure and what is going through their brain and making the decision to bring in fractional paralegals or legal assistants, admins, whatever, consultants into their business, into their law firm to help them grow in a less sucky way, in a less constantly struggling, constantly panicking about payroll type of way. Really, I hope attorneys listen to this episode. They probably won't, but because it's not targeted to them. But really this is what law firms in this day and age with the access to talent and the access to safety, specialized businesses and services that exist out there that are powered by actual paralegals themselves, by the people actually doing the thing, um, for the law firm, what they have access to and the world is their oyster as a result. So I hope you consider. And one more thing before I hop off here, I really want to end this on is now do you see why I hate using the term freelancing? I understand freelancing is a universally understood term for taking project work on, but to me freelancing is inconsistent vibes. It's grabbing something off of upwork or taking a project here, taking a project there. The industry that I am helping empower paralegals through in starting businesses in is something that is more sustainable than you could probably imagine. Most of my paralegals that, that launch their business, that start doing and follow my, my marketing tips, my marketing trainings, um, my scripts, all the things that have, they have access to inside the society. They're getting clients within the first two to three months of really actually getting it out there. And that's usually about a month of just dealing with imposter syndrome and trying to figure out what to even create a business. And which is that 21 day pathway that, that includes that uh, 21 days of before they even have their business plan once they start getting out there, messaging attorneys. I just had a paralegal inside celebrating her official. I put my notice in. I'm going full time in my business because she got up to her clients. And I'm kind of ranting here, but just to say it's not inconsistent work here and there and here and there. This. This industry is. Has drastically evolved. Paralegals owning businesses and offering a B2B relationship for attorneys is more acceptable and norm than you might think. It is truly an industry worth looking into. Starting a paralegal business changed my life. I started it because I was sick of opening foreclosure notices. I, um, was sick of looking at my bank account every time I went grocery shopping to see if I had enough money. I was tired of struggling financially. Daycare options were limited around me. Earning potential was 15 doll an hour max. Barely paid for daycare. I started that business on March 23rd of 2020 after subcontracting for $12 an hour for a couple of years. And it changed my life. We built a house from the ground up. I scaled that business to half of a million in three years. I sold that business and now I, um, empower paralegals to. To follow in those footsteps. So that's what I do. Like I said, if you've never heard anything about me before. All right, well, thank you so much for tuning in today. Everything I mentioned will be linked below. Also, be sure to check out. I don't say this often enough. Be sure to check out my book, Paralegal should be Millionaires. I don't promote that book enough. Paralegals are loving it. It's on Amazon. I will link that below as well. Um, learn about my space. Learn about what I'm all about. I, um, promise you I will definitely inspire you somewhere along the way, and I hope to have you be my next success story and saying I did the thing and it paid off. So thank you so much for tuning in. Be sure to follow and subscribe for notifications on upcoming episodes. And until next time, have great days ahead of you.