Legal Commentary

Average Hourly Rate or Ratio Analysis To Thwart Work Hoarding

By Patrick J. Lamb

My eyes were drawn to the bolded Law21 on my list of blogs.  A new post from Jordan Furlong.  Mind vitamins, to be sure.  I got my money's worth in the first couple of paragraphs:

First is this National Law Journal article about how law firms are responding to the recession (short answer: myopically). Among other things, firms are laying off staff and paralegals in droves, perhaps in part because underutilized associates are keeping for themselves the work they normally delegate to these para-professionals:

“It’s a desperate move to keep their billables up,” said [Chere Estrin of paralegal training company Estrin LegalEd], noting that paralegals have told her that some associates are doing their own document reviews, deposition summaries and other research. “It’s gotten worse lately, and it’s not good for anyone.”

Not good for the paralegals, vulnerable employees placed at greater risk of layoffs in an economic storm. Not good for the associates, whose legal skills atrophy as they rediscover how many words they can type per minute. And not, by the way, so good for clients who wind up paying associate-level prices for staff-level work. Pretty good for the firm’s bottom line, though.

I wrote about similar phenomenon, the one where partners start writing briefs for associates, and the other associates were typing their own briefs instead of delegating that task to paid professional assistants.  As firms become less busy, the incentives to hoard hours and do work that should rightly be delegated are profound, and cost clients plenty.

What should clients do?  I mentioned before the importance of watching the ratio of partner to associate hours.  Jordan Furlong's story convinces me that paralegal hours need to be included in that ratio.  So if you see changes in the ratio of partner to associate to paralegal hours, investigate further.  The same result can be obtained by examining the average effective hourly rate, since more hours by people charging higher rates will raise the effective hourly rate.

It's easy enough to find out if you're being victimized.  The real question is what you'll do about it.  One thought is to insist that the firm provide an analysis of the past two years and update it each month for you.  If its clear you're tracking the number, they should get the point.  If they don't, perhaps they deserve to be replaced.

Full post as published by In Search of Perfect Client Service on December 17, 2008 (boomark / email).