One of the questions that I’ve run into a lot lately has been, “what is the true cost of my staff?” Also as a follow up the question I always ask is “what should you really be paying for with that staff member?”
To answer the first question, I’ll begin by simply looking at dollars out of pocket. As a general rule of thumb, you should add a minimum of 10% on top of a full-time employees pay to let you know what you’re truly paying once you add in payroll taxes, unemployment, worker’s comp, benefits, etc. Depending on how generous your benefits package might be, that number can easily work its way up to the 15% range.
So if you have a full time paralegal and you’re paying him or her $45,000/year, you’re really looking at the $50,000 – $52,000 as the true out of pocket cost for that employee.
It’s important to know the true cost of an employee; however it’s as important to know what that money should be getting you. Like anything else, cheaper can be better, but it’s not always better. For example, when evaluating a paralegal you should look at whether he and she can perform the duties reasonably expected from that position and also look at what type of attorney/support staff ratio that money is getting you.
Have an idea of what type of capacity that person should have. A paralegal that costs $55,000 and has the efficiency to support 3 attorneys is a much better value than one that costs $40,000 and can only handle the work load of 1.
A law firm, like any other business can find economies of scale and optimum efficiencies. It’s important to learn what these are and work to make your firm a size that can properly use those efficiencies.