LAW OFFICE MANAGEMENT FOR

PARALEGALS: UNDERSTANDING YOUR

ROLE WITHIN A LAW FIRM

Presented by: Peggy Gruenke

Owner – LegalBizSuccess

ABA GP Solo/ Small Firm Division, Chair Technology Committee

@PeggyGruenke on Twitter

www.legalbizsuccess.com

2/18/2015 Peggy Gruenke | LegalBizSuccess | pgruenke@legalbizsuccess.com 1

Role of the Paralegal – You are an Asset

to a Lawyer’s Practice

Perform tasks that allow the lawyer to engage in activities

that maximizes the lawyer’s training, experience and

business development.

Understanding two areas of concern a lawyer may have

related to the use of a paralegal:

• Economics of a paralegal

• How to financially incorporate a paralegal into their

practice.

• Trust and responsibility

2/18/2015 2Peggy Gruenke | LegalBizSuccess | pgruenke@legalbizsuccess.com

Role of the Paralegal – You are an Asset

to a Lawyer’s Practice

Economics

• Attorneys may have concern that utilization of a paralegal will result in increased cost to firm.

• Paralegals can pay for themselves if trained to work cases and billing rate is set correctly;

• Paralegals can assume other duties freeing up the lawyer’s time to engage in new business development and tasks only the lawyer can do.

Trust: • Maintaining control = minimizing risks.

• Lawyer is ethically responsible for the paralegal.

• Combination of “letting go” and training may present a daunting task for some lawyers.

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Role of the Paralegal – You are an Asset

to a Lawyer’s Practice

Paralegal vs. Law Clerk or Associate

• Investment in a paralegal vs. short-term gains of a law

clerk or an associate

• Paralegal will stay longer;

• More apt to take on non-billable tasks;

• Ability to help with marketing/social media;

• More continuity and expertise in the operation of the

practice/firm.

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Basic Law Firm Business Operations =

Law Practice Management

The Law Firm Operations Cycle

1. Client Intake/Selection

2. Work Gets Done by Attorney and Paralegal

3. Bills get prepared, reviewed and mailed

4. Client Pays – or doesn’t

5. Repeat steps 2 – 4 until Step 6

6. End of Engagement

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Your Role in Client Screening and Intake

Client Screening Goals

• Will they be a good client.

• Can they pay.

• Background check for any prior/pending lawsuits.

• Ask for a initial consult fee to test the waters.

• First step in client selection.

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Your Role in Client Screening and Intake

Develop a Client Screening Form

• Date Called

• Name of caller/phone number/address/email

• How did you hear about us?

• What is your concern?

• Have you discussed this with another attorney?

• Do you wish to meet with the attorney?

• Consult fee is $____.

• How will you pay for this initial consultation meeting?

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Your Role in Client Screening and Intake

Develop a Client Intake Form

• Set context for relationship.

• Opportunity to identify any Red Flags

• Clarify financial obligations and consequences.

• For some, it may be first encounter with an attorney and they

have no idea what to expect-explain the process.

• Describe course of action.

• How long things may take.

• Expected fees and expenses.

• What types of documents they may receive.

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Your Role in Client Screening and Intake

Components of a Good Client Intake Form

1. Once again, capture client contact information

2. Explain why looking for services of an attorney

3. List other parties involved

4. List of documents from client to help analysis case

5. Client’s expectations of outcome

6. Urgency in matter

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Your Role in Client Screening and Intake

Components of a Good Client Intake Form (con’t)

7. Other attorneys consulted regarding this matter

8. Have they ever been represented by an attorney

9. Marital Status/Drivers License Number/Social

Security Number

10. Where are they employed

11. How did they hear about the attorney

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Doing the Work: Billable Hours, Fees and Expenses

Billing Rates and Billable Hours

• Whether using hourly, blended (average or effective),

flat fees or other alternative fee arrangements, it is

important to understand their effectiveness and the

economics behind them.

Retainers and IOLTA/Trust Accounts

• Professional requirements for handling certain types

of retainers.

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Doing the Work: Billable Hours, Fees and Expenses

Retainers and IOLTA/Trust Accounts

• Client funds unearned get deposited into special bank

accounts

• At time of billing, when hours have been recorded, fees

earned and expenses paid, the retainer can be used to

pay invoice.

• Moving money from IOLTA/Trust account to firm operating

account.

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Doing the Work: Billable Hours, Fees and Expenses

Flat Fees

• Flat fee structures encourage more efficient work product.

• Consumers and technology is driving more flat fee

arrangements.

• Practice areas most commonly used in Flat Fee billing

arrangements:

• Estate planning

• Business transactions for setting up businesses

• Copyright or Trademark Work

• Employment Law transactional work

Tracking time and expenses

• Still need to even on flat fee cases.

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Doing the Work: Billable Hours, Fees and Expenses

Contingent Fee Cases• Require an engagement letter, specifically related to the contingent

nature of the case.

• Time is tracked at an hourly rate for later profitability tracking.

• A client pays a contingent fees to a lawyer only if the lawyer

handles a case successfully.

• The lawyer agrees to accept a fixed percentage (often one third) of

the recovery, which is the amount finally paid to the client.

• If case is lost, no fee is earned. Expenses usually paid by client.

• Commonly used in following cases:

• Personal Injury

• Workers’ Compensation

• Wrongful Death

• Medical Malpractice

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The Billing Collection Process

Understanding Realization Rates

• Billing Realization:

• It reflects agreed-upon discounts from standard rates, write-

downs (fee reductions taken before sending the bill).

• Billing realization is the percentage of recorded attorney or

paralegal time that actually ends up on the bill sent to the

client.

• Some paralegal tasks may be viewed as non-billable at time

bills are reviewed.

• Collection Realization:

• Write-offs (fee reductions after sending the bill).

• Usually a sign of a lack of a collection policy and failure to

follow-up on past due accounts.

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Drafting/Reviewing/Sending Bills to Clients

Tips for creating bills that clients will understand and pay.

1. Keep your time each day. Write it down/record it

somewhere.

2. The entries that show up on your bills should be

descriptive of your activities, accurate,

understandable. 4 typical categories of tasks.

• You communicate;

• You review or prepare documents;

• You perform legal and factual research;

• You prepare for trials.

3. Include “No Charge” entries.

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Drafting/Reviewing/Sending Bills to Clients

Tips for creating bills that clients will understand and pay.

4. Proofread and spellcheck.

5. Do not block bill or use excessive minimum units.

6. Keep track of time for contingent and flat fee matters.

7. Always identify whether the money is coming from trust

or owed.

8. Make sure your billing invoice template is professional

looking, includes a firm logo, full address, website and

phone numbers.

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Your Role in Collections and Profitability

Collection Realization

The goal for collections realization rate is 90% or higher. Here are

some ways to improve this rate:

• Encourage your attorney to request an adequate advance fee

deposit (retainer) every time.

• Use client intake forms and get better at case/client selection.

• Learn to say “no” when there are red flags in the initial consultation.

• Work with your attorney and clients to set realistic expectations of

the cost and possible outcome of their matter.

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Your Role in Collections and Profitability

Help prepare firm policies for:• Monthly billing.

• Monthly past due reporting.

• Develop a collections policy that goes into effect immediately

when an account first becomes past-due.

• Make sure the written and signed fee agreement details

expectations of payment, as well as what will happen if payment

isn’t received timely.

• Encourage your attorney to fire bad clients.

2/18/2015 19

End of Engagement and Thank You

Letters

• Officially ends representation which has been undertaken by

the attorney

• Writing a thank you letter - a routine part of your file closing

procedure

• A thank you letter at the end of representation is the ideal

way to:

• Assign an end date to your representation

• Remind clients of any remaining actions they need to take

• List the original documents you have enclosed

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End of Engagement and Thank You

Letters

A thank you letter at the end of representation is the ideal

way to:

• Remind clients of your file retention.

• Invite clients to comment on their experience with your

firm – Survey.

• Offer to be of service in the future.

• Express your gratitude for the confidence the client has

placed in you.

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Basic Law Firm Business Operations =

Law Practice ManagementEconomics of a Law Practice

Determine Hourly Rate to Cover Expenses and Make Money

Desired Attorney Compensation $ 85,000.00

Taxes $ 8,000.00

Total overhead expenses $ 84,000.00 7000/mn

Emergency Fund $ 5,000.00

Desired Profit $ 20,000.00

TOTAL REQUIRED REVENUE: $ 202,000.00

Billing Realization Rate: (% of hours recorded that

end up on the invoice) 90% Affected by discounts at time of billing

Collection Realization Rate: (% of fees billed that

are collected) 85% Affected by writing off fees after billing (AR)

Gross Fees Collected (85% collection rate) $217,382.40

Total Hours Billed 1536 1536 48 wks, 32 hrs/wk

Current Hourly Rate $185

Total Fees Billed (assume 90% billing relaization

rate) $255,744.00

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Basic Law Firm Business Operations =

Law Practice ManagementEconomics of a Law Practice

Flat Fee Profit/Lose Tracking

Hours worked Expenses Avg Rate Total Cost

Flat Fee

Quoted Profit/Lose

Case #1 5.5 $50.00 $185.00 $1,067.50 $500.00 -$567.50

Case #2 3.5 $125.00 $185.00 $772.50 $750.00 -$22.50

Case #3 5 $75.00 $185.00 $1,000.00 $750.00 -$250.00

Case #4 17 $275.00 $185.00 $3,420.00 $2,200.00 -$1,220.00

Case #5 7.5 $125.00 $185.00 $1,512.50 $2,000.00 $487.50

2/18/2015 23

Basic Law Firm Business Operations =

Law Practice ManagementEconomics of a Law Practice

Financial Effect of Not Recording Time

Billing rate $185.00Per Minute $3.08

If you lose 15 minutes per day $46.25Per day

5 days per week $231.25Per week

48 weeks $11,100.00Per year

Financial Effect of Not Recording Time

Billing rate $185.00Per Minute $3.08

If you lose 45 minutes per day $138.75Per day

5 days per week $693.75Per week

48 weeks $33,300.00Per year

2/18/2015 24

Your Role in Client Engagement and Managing

Cases

Create Checklists to Increase Efficiency

• Client Screening Forms

• Client Intake Forms• Basic Forms

• Develop Practice area specific

• Divorce

• Bankruptcy

• Foreclosure

• Collections

• Evictions

• Estate Planning

• Open File Checklists

• Closed File Checklists

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Your Role in Client Engagement and Managing

Cases

Open File/New Matter Checklists

• Conflict Check Completed

• New or Existing Client

• File/Matter Number Assigned

• Client Contact Information

• Other contacts, judges, attorneys

• Assigned to Attorney

• Entered into Practice Management System

• Paper file and electronic folders created

• Practice Area

• Billing Rate/Fee

• Engagement Letter Returned/Signed

• Deadlines and dates docketed on calendar

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Your Role in Client Engagement and Managing

Cases

Close File Checklists

• A file cannot be closed until all outstanding fees are paid or discharged.

• A file cannot be closed until there is a final distribution and accounting of all trust account balances relating to the file.

• Determine the Appropriate Retention Period for the Matter

• Purge Files of Certain Non-Essential Documents

• Return Original Client Documents

• Advise Client in Writing of His/Her Opportunity to Obtain Copies

• Advise Client of Anticipated Destruction Date

• Maintain Firm File of Such “Closing Letters”

• Store Files so as to Protect Client Confidence

• Destroy Files in a Manner Designed to Protect Client Confidences.

2/18/2015 27

Client Engagement and Setting the Stage

1. Initial Client Meetings

• Develop New client welcome packets/folders

2. Using Engagement Letters as a:

• Client service tool

• Financial management tool

• Risk management tool

3. Types of Engagement Letters

• Hourly Fee Agreements (sample included)

• Flat Fee Agreements

• Contingent Fee Agreements

• Pro Bono Agreements (sample included)

2/18/2015 28

8 Components to Include in Engagement Letters

1. Who is the client and what legal services are you providing

2. How will you handle the situation of a conflict arising during representation?

3. Attorney’s duty to protect the confidentiality of email communications with one’s clients.

4. Fees: Is this a flat fee case, hourly or contingent (which requires a special fee agreement)?

• What does your flat fee include? Are expenses included?

• What is your hourly rate, your paralegal’s hourly rate?

5. Expenses: what kind of out of pocket expenses will the firm incur and pay on the client’s behalf, if any. List these types of expenses. For example, a client may have no idea that it actually costs $280 to file a document with the court.

2/18/2015 29

8 Components to Include in Engagement Letters (con’t)

6. Retainer requested

7. Billing and Payments:

• Monthly, quarterly; via email or regular mail;

• Forms of payments you accept;

• What happens when the account becomes past due;

• Do you charge interest on past due accounts;

• Can you terminate the relationship, withdrawing under

applicable rules of professional conduct, for failure to pay

invoices.

2/18/2015 30

8 Components to Include in Engagement Letters (con’t)

8. File retention policy and termination:

• How long you will retain documents, in what form

(electronic vs. hardcopy);

• Maintaining confidentiality of the documents retained.

• Add a sentence allowing you room to terminate this

agreement in the case of non-payment or the client has

become difficult to work with.

• If client terminates the relationship, outline their

responsibility of payment of legal services rendered and

expense incurred before termination.

2/18/2015 31

Non-Engagement and Disengagement Letters

Non-Engagement Letters

• Avoids the problem of the “unintended client” and

potential malpractice claims

• What to include in the letter• Must clearly state that the lawyer has not been engaged by and does

not represent the client in the matter

• Notify the would-be client that there may be time limitations that apply to

their matter and they should seek legal advice from another attorney

Disengagement Letters

• Sent when relationship has deteriorated

• Client does not pay bills

• Lawyer has withdrawn from case

2/18/2015 32

Your Role in Risk Management

Helping Manage Risk in a Law Office

• Learn the practice management software.

• Know the clients, cases and contacts at courts.

• Help track expenses for client cases.

• Setup a document/file management system.

• Manage a system for tracking engagement letters.

• Use your calendar and set up a system for managing statute of

limitations.

• Understand conflicts of interest.

• Help maintain good client relations.

• Assist attorney in confirming all important questions and decisions

in writing.

2/18/2015 33

Your Role in Risk Management

Helping Manage Risk in a Law Office

• Triple check all outgoing documents and files.

• When clients drop off documents, get signed acknowledgement.

• Return original client documents ASAP.

• Do adequate research.

• Maintain high ethics and standards.

• Stay up-to-date on technology and ethics related to online marketing.

• Under revised ABA Model Rules of Professional Conduct (08/2102

from the Ethics 20/20 Task Force)

2/18/2015 34

Understanding Cloud Computing for Legal

Professionals –An Overview of Terminology and

Definitions

What is Cloud Computing

• Cloud computing is computing delivered as a service over

the Internet, with less need for software on your desktop

computer.

• Shift to cloud-based services typically offers increased

security, reduced overhead and IT costs

• First cloud based technologies:

• Hotmail

• Yahoo mail

• Gmail

2/18/2015 35

Understanding Cloud Computing for Legal

Professionals

Figure 1 2013 ABA Legal Technology Survey Report.

2/18/2015 36

Benefits of Cloud Computing

1. Low cost of entry and predictable monthly expense

• Cloud computing’s cost savings are largely driven by reduced

hardware and software costs.

2. Robust data back-up and recovery

• Cloud computing offers a level of security and data protection

superior to on-premise solutions.

• Cloud computing vendors typically store data in highly secure,

specialized data centers.

• Most cloud computing providers will offer geographically

redundant storage of your data, meaning your data will remain

intact and secure even if a data center suffers a catastrophic

failure.

2/18/2015 37

Benefits of Cloud Computing

3. Budgeting • Fixed monthly costs

• Avoids the emergency situation of having to quickly buy a new server

installing it and hoping you can recover all of your data.

4. Scalability/Mobility • Cloud computing offers “live” access to your cloud computing software

and data via a mobile-optimized website or application.

5. Ease of Use • One of the biggest benefits of cloud-based solutions is the speed at

which they can typically be deployed into a law firm.

2/18/2015 38

Ethics and Security of Cloud Computing

In a law firm context, the use of cloud computing raises

ethics issues around storing confidential client data on a

system the attorney may not own or otherwise control.

While Formal Ethics Opinions (FEO) ultimately endorse the

use of cloud computing technology in a law firm provided

that “reasonable care is taken effectively to minimize the

risks to the confidentiality and to the security of client

information and client files,” the onus of evaluating a cloud

provider’s security infrastructure is placed on the law firm.

2/18/2015 39

Date Security Covers Four Primary Areas:

1. Encryption

• Secure Sockets Layer (SSL):

• Secures communications between your computer/device and the cloud

• Industry standard technology that enables secure banking and e-

commerce

• Allows for completely secure communications even over public Wi-Fi

connections.

• Look for “lock” icon to indicate a website is using SSL.

2. Server security

• Cloud based provider’s server security

• Ask for evidence of a third-party security audit

2/18/2015 40

Date Security Covers Four Primary Areas:

3. Client Security

• Security of the mobile/laptop/desktop devices from which you are

accessing the SaaS applications

• Password protect devices

• Internet Firewalls

• Antivirus protection

• Operating system security updates

• TureCrypt: Protects data even if device is stolen

4. Password Security

• Use a password generator and manager application:

PasswordSafe or LastPass

2/18/2015 41

Date Privacy Considerations

1. What is the privacy policy?

• Carefully read through the provider’s Service Level Agreement

(SLA)

• How information supplied to the service is housed, protected,

shared or disposed of.

2. Who owns the data and server locations?

• Find out where servers are located, and if there is geo-redundancy

• Realize that servers located outside of the United States may be

subject to international laws.

2/18/2015 42

Date Privacy Considerations

3. Can you get your data?

• Return of law office data should be in a readable format, preferably

encrypted; and, data should be returned within a reasonable

amount of time after request is made by the attorney.

• What is the policy on making a request for data return?

• Find out what happens to data after the relationship between

service provider and attorney is terminated.

4. Data Backups

• How often is your data backed up? To multiple locations (it better

be)? How do you get access to the backups?

2/18/2015 43

Online Collaboration Tools for Paralegals to Know

About

1. Adobe Acrobat

• Create PDFs

• Convert Word Docs to PDFs

• Create fillable PDF forms

2. Electronic Signatures

• RightSignature (www.rightsignature.com)

• DocuSign (www.docusign.com)

3. Case and Client Management

• Clio (www.goclio.com/)

• Rocket Matter (www.rocketmatter.com)

• MyCase (www.mycase.com)

2/18/2015 44

Online Collaboration Tools for Paralegals to Know

About

4. Document Management

• DropBox (www.dropbox.com)

• Box.net (www.box.net)

• NetDocuments (www.netdocuments.com)

5. Online Document Storage and Backup

• Mozy (www.mozy.com)

• Carbonite (www.carbonite.com)

6. Remote Access

• GoToMyPC (www.gotomypc.com)

• LogMeIn (www.logmein.com)

2/18/2015 45

Online Collaboration Tools for Paralegals to Know

About

7. Productivity

• Evernote (www.evernote.com)

• Google Apps

• Google Drive

• Gmail

• Google Voice

• Google Alerts

8. Social Media Platforms to Learn

• LinkedIn for Lawyers

• Google+

• Blogging

2/18/2015 46

Resources for Being in the Know About

Legal Technology and Trends

• Attorney at Work: http://www.attorneyatwork.com/

• Law Office Management http://masslomap.org/

• Kevin O’Keefe http://kevin.lexblog.com/

• Jim Calloway http://jimcalloway.typepad.com/

• ABA Law Practice Division on Twitter @LawPracticeTips

• Small Firm

Innovation http://www.smallfirminnovation.com/

• 3 Geeks and a Law Blog http://www.geeklawblog.com/

• http://www.onehrblog.com/ Blogging in an Hour for

Lawyers

2/18/2015 47

Thank You Very Much

Presented by: Peggy Gruenke

pgruenke@legalbizsuccess.com

ABA Social Media Coordinator, ABA GP Solo/

Small Firm Division

@PeggyGruenke on Twitter

2/18/2015 Peggy Gruenke | LegalBizSuccess| pgruenke@legalbizsuccess.com 48