Organizations, large and small, are under constant pressure to improve operational efficiency. This often involves outsourcing certain tasks such as:
Why? Paying full-time employees just isn’t a financially feasible option for many smaller companies. Plan B? They outsource to pay-as-you-go services such as virtual paralegals on an as-needed basis to effectively meet their client needs.
A side benefit of outsourcing is that a paralegal does not have the same jurisdictional restrictions as the attorney, according to American Bar Association (ABA) guidelines. In other words, the physical location of the paralegal doesn’t matter as long as they’re working under the direct supervision of an attorney who is licensed in the jurisdiction of their practice.
Are you outsourcing the right way?
How do you know that you are charging correctly and ethically for these services?
According to the ABA guidelines for using paralegal services, “The Model Rules and most states require lawyers to make fee arrangements with their clients and to clearly communicate with their clients concerning the scope of the representation and the basis for the fees for which the client will be responsible.”
In other words, law firms should disclose what work will be handled by paralegals and how the client will be charged for these services. To ensure accurate billing and meet ethical obligations, a law firm should closely monitor the activity of and communicate regularly with the paralegal and ensure that nothing goes to the client without attorney approval.
The U.S. Supreme Court ruled in the case of Missouri v. Jenkins that a law firm may charge for paralegal services at market rates, not just the actual cost to the firm. In addition, the ABA states that paralegals must only be compensated for the quantity, quality and value of their work. Compensation must not be contingent on the outcome of a case.
Although the ABA does not provide specific restrictions for marking up paralegal fees, the law firm must follow ABA guidelines for establishing a reasonable fee for these services. Again, these fees must be disclosed to the client. These guidelines apply to any type of outsourcing. Failure to do so could result in client disputes.
According to The National Law Journal, the law firm Chadbourne & Parke charged Virgil Waggoner $20,000 for legal research services that cost the firm only $5,000. As a result, Waggoner’s attorney, Patricia Meyer & Associates, filed a lawsuit, alleging “unfair business practices, unjust enrichment, fraud and deceit.”
Criteria for paralegal compensation varies from jurisdiction to jurisdiction, so it is important for law firms to understand their jurisdiction’s criteria before hiring and billing for paralegal and other services.
Virtual Paralegal Services makes it possible for solo and small law practices to better serve clients and control costs while meeting ethical standards. Contact us to schedule a consultation and to learn more about our on-demand paralegal services.