The Real Cost of Hiring Associates

If you’re thinking of hiring a legal writing service but then have the thought: “no I’ll just hire an associate, it’s cheaper” … think again!

The real cost of hiring an associate far exceeds the salary. Most firms don’t consider all the extras that more than double the cost of having an associate on staff full time.

For this example, we’re using an associate salary of $100,000 because, let’s be honest, you get what you pay for.  While you can pay less for an associate, you would then have to increase the costs in virtually all other areas listed in this article. We will also be assuming that your hourly rate is $400 per hour but feel free to run these calculations using your hourly rate.

Caveat: The calculations used in this article are mostly arbitrary because there are so many factors that change each of the costs listed below. However, the costs associated with each area listed below are very much real and you will probably find that the total cost of hiring an associate is actual higher than projected in this article (because the article uses conservative numbers). Regardless, this article is merely meant to shine a spotlight on the often ignored and hidden costs of having employees versus the cost of hiring a legal writing service.

Hidden Cost #1: Recruiting and Sifting

New associates rarely just show up on your door without any work on your part. Typically, you at least have to spend your time drafting an ad. But most often it involves, drafting the ad, researching places to post it, posting the ad, and paying for the platform. Let’s be conservative and say this takes a total of 3 hours and costs $1,000 to post the ad in a few places. If your rate is $400 per hour, you’re looking at a total of $2,200.

And then the real costs start to accumulate!

Anyone who’s ever placed an ad on a major platform knows that the influx of unqualified applicants is jarring. You end up sifting through hundreds of resumes just to find a handful of applicants that may fit. Let’s say you make your way through only 50 resumes and each resume takes an average of 10 minutes. That’s 8.33 hours for a total of $3,332 of your time. In reality, you’ll probably go through way more than 50 resumes but we’re keeping it conservative.

Then the interview and vetting stage begins. Let’s say those 50 resumes yield 10 potential applicants. Now you have to reach out to each one and typically spend some time with each person further inquiring into their potential and setting up an interview. Let’s say that takes 2 hours (an average of 12 minutes per applicant). In the end, let’s say you only interview 5 of those applicants at about 1 hour each. That’s a total of 7 hours or $2,800 of your time. 

Total Cost of Recruiting and Sifting: $8,332

Salary and all the extras

Let’s go back to your $100,000 associate.

You’re probably also providing benefits such as paid leave, supplemental pay (bonuses etc.), insurance, retirement and savings plans, and legally required payments like FICA. This number will vary depending on the benefits you provide but according to the U.S. Bureau of Labor Statistics, benefits account for 29.5 percent of an employee’s salary. In other words, you’ll spend about $29,500 on top of the base salary.

Total cost of salary and extras: $129,500

Training, Coaching, and Policing

In big firms there are usually layer of systems and people that help train, coach, and police new associate. But with small firms the task of all this falls on you. In the beginning the cost of training is higher and it will vary depending on experience. But no matter who you hire or how much you trust them, you will spend time talking to them about their cases, giving advice, coaching them through difficult legal issues, clients, or hearings, policing them in general, and listening to their personal problems because —let’s be real— we’re all human and when you work in a small firm, you get close to your employees. If you have more than one employee, you also have to take time for office politics (and I don’t envy you there).

So, let’s be crazy conservative and say that you only spend 2 hours per week on training, coaching, policing, and the like. If your time is worth $400 per hour, you’re missing out on $41,600 per year! And let’s face it, you probably spend way more than 2 hours per week in this department.

Total cost of training, coaching, and policing: $41,600 (if you’re lucky)

Down time and waste

According to a study conducted on productivity, the average worker is productive for about 31%-60% of the time.  That’s approximately 2 hours and 29 minutes to 4 hours and 48 minutes of the day.  

I don’t know how accurate the study is, but I can tell you from my own personal experience that I am way more productive as a freelancer than I was when I worked as an associate in a firm.

Why? Because I had so many distractions. I always had a co-worker asking questions or “taking a break” in my office, there was always an issue, a meeting, a client interruption, and on and on.

Having 10 years of experience as a freelancer, I can also say that regardless of how many hours as I want to work in a day, I usually cannot work more that 4 to 5 hours on a consistent basis (and I have way more discipline, focus, and drive than your associate).  

So, let’s get back to your associate.

Your associate may be in the office 8 to 10 hours a day but she’s not being productive all those hours. If you don’t already know this, I hate to be the one to break it to you but, your associate is checking Facebook, Instagram, and Tik Tok multiple times per day! Your associate is having full blown text conversations with friends, family, and their partner. Your associate is mentally checking out a few times a day, taking coffee breaks, chatting it up with the staff, and on and on.

Let’s get wild and say that despite this, your associate is on the higher end of the spectrum and is productive 4 hours of the day, that’s half the day! So essentially half the salary and benefits you pay, or $64,750, is for absolutely nothing.

But that’s not all! If you bill your associate out at $250 per hour expecting those wasted 4 hours per day to be productive and billable, you just lost $50,000 per year. Add to that the times when the firm is slow and there isn’t much to do and this number becomes even large and more unquantifiable.

Total cost of down time and waste: $50,000

Do over costs

If you’ve hired associates, then you know they make mistakes. We all do, right? Of course! But how often does that happen and how much is that costing you?

This cost cannot be quantified because each mistake is different. Some mistakes are just a loss of billable hours when a project needs to be redone. But what about the mistakes with higher consequences like losing a hearing, missing a deadline, failing to make an argument or bring a claim, etc. How much do you lose on those?

For the sake of this example, let’s say your associate is only making simple mistakes that lead to “do overs.” And let’s say a mistake happens every quarter for a total loss of 5 hours per quarter. That’s 20 hours per year at the associate’s rate of $250, that’s $5,000 per year.

Total cost of “do overs:” $5,000

Total Cost of Hiring an Associate

So, here’s the hard truth about your $100,000 associate:

they cost a total of approximately $234,432

(using conservative numbers)

Add to that the fact that you’ve invested your energy (and have experienced frustration along the way) and the fact that the associate will most likely quit (or be fired) in a few years, and you can see why some firms decide to exclusively use legal writing services.

The advantage of hiring a legal writing service

When you hire a legal writing service all you pay is the hourly rate for the actual time you need. You don’t pay for training, benefits, sick time, vacation days, down time, waste, bonuses, etc. There are no office politics, coaching, or policing.

And the cost of a legal writing service -even if hired “full time”- is significantly less than having an associate.

If you were to hire a legal writing service for 4 hours a day (the same amount of time your associate is productive daily) for 50 weeks at a rate of $150 per hour, your total for the year is $150,000! That’s a savings of $84,432 (on the conservative side). Even at a rate of $175 you still save $59,432 per year.

Plus, with a legal writing service you get higher quality work from experts in legal research, writing, issues spotting, and analysis.

So, the next time you think about hiring an associate over a legal writing service you may want to take the real costs into consideration.

If you are ready to reduce the cost of running your firm while still maintaining efficiency and proficiency, reach out to us at 407-926-0167 and let us show you a better way to run your firm.