The Facts on Law Office Administration

Practice of Law in the Private Sector

The practice of law in the private sector represents varying interests between private individuals and corporations. The practice of law can function in a preventative or active manner. Preventative legal services come in the form of a lawyer's giving of legal advice. Active legal services include the drafting of contractual agreements, wills, and other legal documents. The most active form of legal services is litigation in which an attorney represents a client in court. All of these services require hours of research that could be delegated to paralegal professionals that help attorneys discover statutory and case law evidence to support a client's interests. Paralegals play a crucial role in the practice of law because they do the bulk of a lawyer's research. They work in a collaboration with an attorney working in a law firm or legal department of a corporation. Paralegals that work for corporate legal departments represent clients from within the corporate organization whereas law firm paralegals help attorneys represent clients that come from outside. Law, in the private sector, represents a diverse array of interests ranging from corporate transactions to criminal defense. Paralegals are equipped with research skills in either one or more aspect of the law depending on what aspect of the private sector they represent.

Legal Administrator

Legal administrators are responsible for the financial and managerial accounting of law firm staff and employees. They part accountants, part HR managers, and part business/production managers. They must have excellent communication skills and are the heart and brains of all non-attorney conduct of a law firm. They are responsible for the financial viability of a private legal organization. They must know tax laws, labor laws, and various accounting practices and concepts. Legal administrators are handsomely compensated for the multi-tasking oriented nature of the position. Aside from the lawyers, they are the most important employees of a law office.


Expenses

Private law offices are run and operated like regular businesses. They are focused on the goal of becoming profitable. Some law firms are even structured like a publicly traded corporation; however, most are private. Since profitability is a priority law offices must budget their expenses in accordance with their income. In short, they have to keep their balance sheets in the black and not the red. All office related expenses are known collectively as overhead. Overhead constitutes expenses related to staff, occupancy, reference costs, IT costs, and promotion. Expenses vary based on market influences like the price of commodities and geographic location. Expenses are crucial in determining the billing rates of legal services.


Time keeping Attorneys often charge hourly rates for their services. Lawyers spend hours doing research, spend significant time discussing the case with a client, and writing documents to courts and serving defendants. All these tasks take time and are billable accordingly. Attorneys, paralegals, and staff are each required to log in their hours working on a specific client's case. Keeping track of time spent on a client's case is a preoccupation of most law firms because it is one of the main sources of income for legal organizations. Before computers, attorneys were more likely to over or under bill a client.

This problem would either hurt the law office or offend the attorney; in either case, it was bad for business. Accountability, as far as time keeping goes, is better achieved with the aid of time tracking software. Computers have played a crucial role in the legal profession because all administrative jobs have been facilitated by the personal computer, leading to more competitive rates and better client satisfaction. Law offices have been better able to turn a profit with time tracking software as well. Computers are indispensable to the legal profession.


Kinds of Fees/Billings

Lawyers bill their clients either at an hourly rate or a flat rate. Lawyers charge an hourly rate ranging anywhere from $50/hr to $1,000/hr. Flat rates are not associated with time, they are more determined on what the lawyer thinks the legal services are worth. In addition to base prices, lawyers charge different fees like retainer fees and contingency fees. Retainer fees are money set aside for court costs and other legal expenses, they are called retainer fees because the initial transaction of money between a client and lawyer solidifies the temporary bond between the two parties.

Contingency fees are fees that lawyers charge based on the outcome of the case. Most often contingency fees are applicable to moneys gained from legal remedy. Most often contingency fees are based on a percentage of the total winnings. Lawyers cannot guarantee the estimated cost of a legal service because the difficulty of a case may vary and the time it takes to resolve one's legal issue also varies. Other factors influence the price of legal services like law office overhead, prestige, and difficulty of case.

Client Trust Accounts

Client trust accounts are basically insurance accounts on money law firms have yet to earn. State statutes determine the point at which a client's money becomes the legal possession of the law firm or the attorney. Client trust accounts are a safeguard against bank's seizure of a fiscally insolvent law firm. It ensures that only the property and money of the law firm itself would be garnished in the event that the legal organization cannot pay off their debts, either public or private.
State judiciaries determine the rules for placing money into client trust accounts. Most states require one account per lawyer. Retainer and contingency fees must be put into client trust accounts until a certain point. Most money that goes into the client trust account is not transferred to the full possession of the lawyer or law firm until the client's case has concluded. If a law firm over-bills a client, they are required to put the money into the client trust account until the problem was sorted out between the lawyer and the client. Most often a percentage of the over-billed money is returned to the client. Some states perceive over-billed money as partially in the possession of the law firm or lawyer.



Administrative Reports

When a paralegal is researching legal information in law libraries or legal databases, the paralegal may find important information pertaining to the aspect of a statute or case the lawyer had in mind. The paralegal is required to report his or her findings to attorney in an administrative report. Administrative reports are legal memorandums that take place during the discovery period of legal proceedings.
Discovery applies to both litigation and transactional negotiations. Legal research is required to ensure that there is either precedent or law that pertains to a given legal question. Administrative reports follow a strict format of citation and document citation. It is a formal document that is shared between the paralegal and the attorney for whom he or she works. Paralegals are trained to report back to their attorneys in ample detail the merits of the attorney's legal hunch. The administrative report is the cornerstone of the collaborative professional relationship between paralegals and attorneys.


Client File Management

Client File management is handled by both the paralegals and legal administrative staff. This aspect of law office administration is crucial because client files contain important information with regard to a client's case. If case files are lost, then much productive time would have been wasted. Paralegals and administrative staff devise organizational schemes that provide the optimal way of cataloging years of active and inactive cases. Paralegals are also responsible for keeping track of the clients' contact information because lawyers often delegate the responsibility of scheduling an appointment with a client to paralegals.

Contact information is also sensitive and confidential information that should only be shared between the paralegal, the attorney representing the client, and the client. Losing client contact information can be a detriment to client's confidence in the legal services provided at the firm. Losing important files can mean the difference between failure and success. Many law firms use computerized filing software and physical filing cabinets as a backup to ensure that all case files and contact information is accounted for.

NEXT: Understanding Client File Management