The Landscape of the Paralegal Business
The landscape of the paralegal industry is transforming, presenting a myriad of both challenges and opportunities for those looking to launch their own paralegal business. The paralegal profession, which has seen significant growth over the years, is now at a crossroads. With the rise of technological advancements in the legal field such as artificial intelligence, the ways in which paralegals serve their clients are being distinguished.
The current trends in the paralegal industry show a steady incline in demand for paralegals and legal assistants, a trend that is projected to continue for the foreseeable future. The U.S. Bureau of Labor Statistics (BLS) shows that employment for paralegals is expected to grow 12 percent from 2018 to 2028, faster than the average for all occupations. This increase is largely due to the cost-effectiveness that paralegals and legal assistants provide, as clients increasingly seek to lower their legal fees by using paralegals for routine tasks .
Despite these favorable projections, prospective paralegal entrepreneurs do face hurdles, and finding a niche in a competitive marketplace can be daunting. Paralegals must stay abreast of the relevant laws, regulations, and compliance issues while distinguishing themselves from the competition. New paralegal businesses often face struggles with establishing a client base and marketing their services.
To be successful, paralegals must maintain a high level of professionalism, continue their education, and build a solid reputation. Networking and developing strong relationships with attorneys, law firms, and clients are critical components of a successful paralegal business. Those looking to enter the industry must also be open to adapting their services to meet the changing needs of their clients and the demands of the legal landscape.
Fundamental Skills and Requirements
In order to offer your services as a paralegal and ensure you can operate a successful paralegal business, there are several qualifications and skills that are essential for the role. The mandatory skills needed for this job include having strong legal knowledge, the ability to work under the supervision of solicitors or attorneys, and exceptional organisation and communication skills – both written and verbal. In addition, being able to work efficiently and under pressure is important to make sure you can handle the various duties that a paralegal must fulfil.
Essentially, all of these mandatory skills are gained through working as a paralegal for a law firm or handling this kind of work in an in-house setting for an organisation. You also need to make sure you have an accredited paralegal qualification, which is usually either an Associate’s degree or a certificate from the National Association of Legal Assistants. Once you have the qualifications and experience to match the skills mentioned, the mandatory aspect of becoming a paralegal is sorted out.
To have a competitive edge and operate a truly successful paralegal business, you will need to develop several additional skills or qualifications. Firstly, you should seek to develop a specialism in one of the many paralegal subfields such as corporate law, criminal law, real estate law, litigation, intellectual property law and various others – depending on what you fancy doing with your paralegal business. This will allow you to set yourself apart from other businesses offering paralegal services, as clients will usually prefer the added expertise that a specialised paralegal can offer.
Furthermore, you should ensure you are constantly and consistently developing your soft skills when starting a paralegal business. There are many essential business skills that a paralegal can develop including analytical skills, problem-solving skills, research skills, technical skills, management and leadership skills, and so on. Investing time and effort into developing these skills will ensure you are running a successful paralegal business for as long as possible.
Legal Mandates and Certifications
Prior to opening your business, you should consult the ordinance associated with your state or country regarding the legal requirements and certifications mandated by your local jurisdiction. In the United States, there are no federal regulations requiring certification. There are however, credentials or certification offered through National paralegal organizations as well as through some states. Most states have their own laws governing the registration of someone who is acting as a paralegal. Many of these require that the prospective paralegal business owner or employee receive either a bachelor’s degree, or an associate degree in paralegal studies from an accredited institution.
I you are considering taking the plunge and starting your own paralegal business you should first contact your state attorney general to determine if you need to register as a paralegal or not. Be sure to contact your state or country’s law governing the business you plan to open. They should be able to provide information concerning paralegal ordinances for your state.
Developing a Business Plan
Taking the time to define your business and outline your goals can save time and money in the long run. Your business plan is a living thing that will help steer you as you make decisions in the future. It answers the important questions:
Company Description
Your plan should describe your business and how it will stand out above the competition. Details like who will be served, the need or demand for your services, and how you will meet that need are all explained in this portion of the plan.
Market Analysis
Your analysis should include information on your target market, competition and the demand for your product or service. Potential clients will want to see this research to determine if your business will be successful. In this portion of the plan, you can also set a marketing plan that outlines advertising, social media and other ways to reach your target audience.
Organizational Structure
Your plan should include an overview of how your business will be organized. If you are working on your own, you might just include your own basic information. If you plan to hire other paralegals or staff, you will need to establish what type of business you will create (if a legal entity) and who will manage the other employees. As you develop your business plan, you may wish to consult with an attorney to ensure everything is covered.
Services Offered
You may plan to use the business to focus on a single area of law or multiple areas of practice. If you plan to specialize in one area, you must determine whether the need exists in your community. If you plan to offer your services in multiple areas of law, you will need the same type of analysis. Sometimes branching out into more than one practice area can be confusing to potential clients, so you want to make sure it is clear what services you provide.
Financial Details
This portion of your plan should detail how your business will be financed, including financial projections and when you expect to make a profit. If you are applying for financing from a lender, they will want to see this as well. You can include other details here like estimated start-up costs and operating costs.
Once you have your business plan in place, you can refer back to it as you build your paralegal business.
Selecting the Appropriate Business Organization
There are several types of business structures that can be established in order for you to open your paralegal business. The type of business entity you choose is usually based on many factors; the most important factor is what local, State, and Federal laws have to say about setting up a home or office business. Below are some options that you have to set up your paralegal business, and the pros and cons for each.
Sole Proprietorship
A sole proprietorship means you work as an individual. You are the only owner of the business and you pay taxes on any income received from clients. Your paperwork will list your name on all client forms as the primary person representing the business, but you can have others working for you collecting fees. Some pros for a sole proprietorship are that your initial start-up costs is less than other types of business entities, the process to open a sole proprietorship is fairly easy, and you have total control over the business and most importantly you are not required to file a separate business tax return. On the opposing side, there are also some disadvantages. The first disadvantage is that you have unlimited liability, meaning if the business fails your creditors can come after your personal assets in order to recoup some of their losses. You are also required to keep very detailed business records for yourself and your clients, which can be time consuming. Then, of course, there is always the issue of paying extra income taxes if you decide to hire employees.
Partnership
A partnership is similar to a sole proprietorship in that your income from the business is reported on your personal taxes. However, most partnerships are made up of two or more people. All partners share in the business profits and responsibilities. As in a sole proprietorship, one partner can sign contracts and negotiate fees independent of the other partners. There is no limit to the number of partners you can form a business with, you can be a partner in several businesses at the same time, and one partner can buy out another, or acknowledge a third party partner easily. Some pros to forming a partnership are, it is easy and inexpensive to form, you have the ability to collect on other partners’ debts, and there are no complex legal formalities when it comes to running a partnership. The disadvantages are that there is also unlimited liability, all partners must agree on business decisions and as the number of partners increase so does the trouble with one person having full control and authority.
Corporations
There are two types of corporations, a C corporation and an S corporation. A corporation is a legal entity that is owned by its shareholders which are formed under the laws of its State of residence. Depending on the State, a corporation must maintain certain books and records, hold annual meetings and be subject to government regulation. A corporation is its own entity; therefore it is also subject to corporate taxes. Some pros of incorporating are that the business has its own identity, the principals of the corporation are not personally liable for the debts of the corporation, you have limited liability, you have perpetual life, and the ability to easily transfer ownership. A large disadvantage of forming a corporation is the cost it takes to incorporate and obtain all licenses and permits. Also, there is the administrative requirement to keeping up with all bookkeeping and mandatory filing of articles, annual meeting minutes, book, and records with the Secretary of State.
Promoting Your Paralegal Firm
With your in-house resume in place and all your "i’s" dotted on the legal research and writing side of your business plan, research your marketing strategies and methods to develop a plan that will best suit your needs. Knowing your target market will help determine the best ways to reach them.
This is where the difference between in-house paralegal services and traditional law firm marketing strategies is extremely important. In-house Paralegals can, for the most part, do everything a regular law firm can do – except market themselves! While you may not be the owner of the law firm, you are providing a huge benefit to that firm with your knowledge and skills. Think for a moment how you would go about marketing yourself if you were going out on your own as a solo practitioner. Now change your mindset and assume that you are the owner of the law firm, what would you tell your new in-house attorneys to do?
You would probably want your in-house attorneys to get to know the local attorneys in your area – so have lunch with attorneys! Sometimes it’s better to spend time with the bigger firms, as they will need you more often than the smaller firms will – at least until they get too big, then they will hire their own teams of in-house paralegals. You might also find that they will be willing to pass along your business card to others who may need your services. You also want to market to corporate counsel – send them a personal letter with a business card in it. Try offering them a no-obligation consultation. Traditional "legal marketing" doesn’t work for the in-house paralegal.
Unless you own a law firm yourself , your legal marketing strategies just won’t work. Traditional paralegal consultants aren’t able to do much when it comes to increasing their market share.
You will want to go to local bar association meetings and events. Many smaller localities have their own paralegal association and even attendees at large paralegal association events are willing to speak to potential clients. Keep in mind, however, to have business cards available to give to everyone you meet!
Join in with other networking groups you might belong to and advertise in their newsletters and at their functions. You also want to make sure you have a good online presence. Work with a website designer (I do this for a living – feel free to contact me!) to make sure you have an easy to navigate, well designed website with great content. Make sure your site is mobile device compatible and always build your site using a Content Management System (CMS) like WordPress! This will ensure that your site looks good regardless of the device being used to view it. It’s worth the extra money if you currently have a WordPress site and you are thinking about updating your website – at a minimum take the time to make sure that you have a mobile device compatible version of your site!
Join social media channels – Facebook, LinkedIn, and Twitter – to keep in touch with current clients and to reach out to prospective clients. Create depository sites such as a blog and submit articles to online journals and periodicals. And as I mentioned for in-house paralegals – MAINTAIN A DATABASE OF YOUR CONTACTS! Use a tool such as Constant Contact to send out regular newsletters to your contacts to keep yourself at the forefront of their minds.
Establishing a Professional Network and Clientele
Networks are built when you can meet with people face to face. I’ve read articles where people encourage you to join all the groups you can on social media and "network" there. I am not of the mind. You really need to know who you are working with and having an established relationship is worth a lot more.
So, how do you build a network when you are working from home?
One way is to offer free workshops. Let them know you have a paralegal services business if they ask. But I don’t think that should be your main focus. My personal preference for workshops is to educate them on whatever your area is. I’ve seen paralegals hold workshops on business law, entertainment law or even complex family law. You are the subject matter expert. You choose. Give them a few tips in the workshop and let them know you are available to help them. If they ever need you, they will remember your face. If they don’t need you, they will know someone who does. It may not be a direct referral, but they could recommend you as a contact they have used before and it will be as good as a referral. When you put yourself out there like this, it’s easier for you to find clients and it’s easier for clients to find you.
I know a few paralegals who get clients exclusively by word of mouth. They’ve built up a good reputation and when a lawyer they know has a client who needs a specific type of paralegal, they will refer them to them. Find yourself a niche. Make yourself indispensable. Soon enough people will come to know you as their go-to for paralegal services.
Utilizing Technology and Software
A good paralegal business is usually developed over time and not overnight. You have to find out what works for you, your practice, your tools, systems, and clients. As you know, technology is changing and constantly evolving so you have to be able to determine what would work for you.
As a solo or small firm, it is always critical to manage your time to be more efficient. By being more efficient, you can provide better services to your clients at a lower rate. While some systems can be very pricey with monthly fees, I would suggest "free" or low-cost tools and systems that can significantly cut your costs and time.
Most paralegals or small paralegal businesses do not need expensive AV software if they are not producing trial or mediation materials. Any good presentation software, such as PowerPoint or Prezi, can be used to create excellent presentations. If you need to produce trial or mediation materials (for example: a family law or immigration law practice), you can use the free version of TrialPad or Legaler. (TrialPad has been purchased by Lit Software. I have not used it yet since I paid for the TrialPad as the app was evolving.)
An online practice management system can help your paralegal business. While you do not need a practice management system if you already have your own practice management and filing systems, cloud-based practice management systems can allow you to have your data at your fingertips and from anywhere in the world. You will need access to the Internet or have a tablet to use cloud-based practice management systems. Some of the legal, paralegal and practice management systems (such as MyParalegal.com, Smokeball and Clio) provide a few free months, discounted services, or even free services and support to legal service professionals and law firms so you can try before you buy. Most of these systems have apps that can be used mostly via a smartphone or tablet for both iOS and Android.
File management and document assembly programs can save you a lot of time and money whether you run a solo or small paralegal practice. You can assemble and check documents for errors. It also provides for e-filing in some courts (although always check with the court’s rules). If you have a large paralegal business, you may wish to have a private server or virtual servers in the cloud. Cloud-based systems come with unlimited storage and many other features. Many of them have apps that can be used on your smartphones or tablets (i.e., iOS or Android).
You will need to determine what your paralegal business needs. There is nothing wrong with having a mix of technologies and systems or going old school. A cloud-based practice management or document assembly program is not for everyone. You have to decide what is right for you and your paralegal business. Paralegals and law firms tend to be creatures of habit. You have to be willing to break those habits and to try new things.
Determining Fees for Paralegal Work
Setting the right price for your paralegal services can be a challenge for some people, and they simply want to pick a number and go from there. However, the price you charge your clients for your services will depend on your target market and the services you are offering. The rapid expansion of available paralegal services has increased the competition, and your prices will have to be competitive.
Are you going to be offering those services to corporate legal departments, law firms, or the general public? Where are you located? Each of these will play a part in how you set your prices. A paralegal who does mostly litigation in large, urban centers is probably going to charge higher fees than a paralegal providing the same litigation services in a rural area of a less populated state. You will need to know what your competitors are charging and be prepared to show the business people how you are better for less money, or more value for the same money.
There are basically 5 pricing strategies that you can adopt when starting your paralegal business:
You don’t always have to be the lowest price, but not so low that you fail to make a profit. Charging an hourly rate is good for attorneys who have a large amount of work that requires many hours of time, but flat fees also work well for some people. For example, you could offer to prepare a container transaction for an investor for X dollars no matter how many hours it takes. For an attorney, this might involve gathering all the required documents, going to the Register of Deeds office or examining title to the property, or even drafting an opinion letter. This can either be a flat fee or a fee that is calculated on a contingency basis. (i.e., if the deal closes, you charge a certain percentage; if it doesn’t close, you charge nothing.)
Charging by the hour is the most common method paralegals use when establishing their rates. The goal is to accurately project your number of hours needed to complete the work and then add in the desired profit. Other factors that will determine your price might include:
Your offered services
Location and setting of your practice
The skill and expertise level of you and your administrative assistant
Experience and education
Overhead expenses (i.e., overhead, utilities, clerical support, etc.)
Your competitor’s fees
Your desired profit margin
The going hourly rate for services rendered in your area
The first thing you need to do is determine what your desired profit margin is and then get a sense of what is currently being charged for similar paralegal services in your area. Then, price accordingly.
Pursuing Further Education and Training
Continuing education and professional development are essential for paralegals to stay abreast of changes in the law or the rules of court. Client expectations are that you have the knowledge and skills to perform the work.
Many paralegal professional associations offer training and certification programs. Oftentimes the programs feature real attorneys instructing and evaluating students on their performance. As you develop your practice, it is also a good idea to seek out attorneys who are less experienced than you are and serve as a mentor to them. Professional development and continuing education lend to your reputation as a professional in your field and your competence in serving your clients’ needs.
It is important to be aware of any legal or ethical issues that may apply to your specific service offering. For example, some areas of the law require strict adherence to confidentiality standards . Make sure you have the technical skills, tools, and processes to protect client information in this age of cyber threats.
Building a strong network is a great way to gain support and grow your business. Support from other paralegals, attorneys, and other professionals in your industry is critical to your success. In addition to formal support from professional and community organizations, online paralegal communities are a great way to connect with your peers and to stay informed about new developments in the field.
Stay connected with the American Bar Association and law-related professional organizations such as the National Federation of Paralegal Associations. Take advantage of the networking opportunities they offer to meet professionals in your field and keep up with what other paralegals are doing and how you might be able to collaborate with them.