Cutting legal costs with paralegals.

Behind every great lawyer often there stands a great paralegal. This saying is increasingly true for corporate legal departments and law firms which are learning to curb costs by increasing the amount of work carried out by paralegals.

Corporations often turn to law firm attorneys for specialized legal expertise. Top attorneys can be worth the $200 per hour or more charged for legal advice. However, it is much less clear whether attorneys should bill these rates for performing basic legal tasks. Paralegals can perform many routine legal assignments at a fraction of the hourly rate typically charged by an attorney. Law firm billing rates for paralegal work average about $80 to $90 per hour. Companies can also hire their own paralegals or retain temporary paralegals at rates of about $20 to $30 per hour.

Paralegals can assist attorneys in tracking regulatory filings, interviewing clients and drafting routine contracts and court filings. While not every project is appropriate for a paralegal, businesses and attorneys can save money by utilizing paralegals for document-intensive litigation and for work during the initial so-called discovery phase of litigation. Paralegals can index and review documents, summarize depositions and maintain a computer database; they can prepare witness notebooks, draft responses to interrogatories, and cite-check legal briefs. There are also paralegals who specialize in specific areas of the law, such as entertainment, environmental, First Amendment, insurance defense, personal injury, bankruptcy, immigration, medical malpractice, real estate, finance, criminal and intellectual property law.

Southern California Edison attorney Margaret L. Sommers finds "paralegals help attorneys do their job more effectively." The electric utility's legal department utilizes a combination of in-house paralegals, outside counsel paralegals and temporary paralegals to cut legal costs. "We tell our law firms to use paralegals where appropriate. When our legal department selects an outside counsel for a major matter we encourage them to use paralegals rather than entry-level associates for routine tasks. Our in-house paralegals handle most matters, but for major litigation it often makes sense to use an outside law firm or temporary agency paralegals," Sommers said.

There is a growing use of paralegals in Los Angeles and elsewhere. Boston Edison Co., for example, estimated that it saved approximately $1 million over a three-year period by using temporary paralegals. The Massachusetts-based utility hired a team of twenty temporary paralegals to assist attorneys and organize four million pages of company documents. One tremendous advantage of using temporary paralegals was flexibility. These cases could have settled at any point, but ended up lasting several years. When certain "crunch" periods passed, temporary paralegals were released to their agency.

Boston Edison's legal costs were lowered by eliminating the steep mark-up charged for paralegals from outside law firms. A few simple calculations show the significant cost savings. When three paralegals billed at $75 per hour by law firms were replaced by temporary paralegals invoiced at $20, the daily cost savings was $1,320.

The recessionary economic climate supports the concept of hiring temporary paralegals. Many temporary paralegals are law school graduates awaiting their bar exam results while others are veteran paralegals who were recently laid off due to the economy. A $30 per hour temporary paralegal may even be more experienced than a $120 per hour law firm paralegal. Many paralegals have received formal training at one of the several local paralegal programs. These paralegal programs are generally broken down into two categories: American Bar Association-approved and non-ABA-approved.

"Even in a slowly recovering economy the demand for paralegal graduates continues to be strong," said Richard S. Shaffran, director of UCLA Extension's Attorney Assistant Training Program. The UCLA program is ABA-approved, which means "all of the program's academic content and student services meet the strict standards of the ABA," Shaffran said. "Graduates of our program receive specialized training which enables them to be even more efficient and cost-effective in their work and to hit the ground running."

A recent study involving Southern California Edison found that paralegals save time and money. As a result, "the company has created an internal effort to maximize the use of paralegals," said Allen E. Kelinsky, an SCE attorney and chairperson of the utility's paralegal committee. Paralegals can perform a critical role in producing legal work in a more efficient and economical manner. "During these economic times, businesses are working hard to control their legal costs. By increasing efficiency with the use of paralegals," Kelinsky said, "the entire legal department will benefit."

Donald A. Swanson is the owner of Five Star Paralegals, a paralegal placement firm based in downtown Los Angeles. He received a masters degree in Finance from Boston College and earned an ABA-approved paralegal certificate from the University of San Diego.