Growing Your Practice and Profits with Freelance Lawyers
"Using my team of freelance lawyers “has allowed me to grow and scale my practice in ways I never imagined. Having a team of highly qualified lawyers available to spin up at a moment’s notice has been an absolute game changer for my firm!"
– Robert Wright, Intellectual Property Attorney
There are only 24 hours, and if you want to do something crazy like sleep or see your friends and family, then there are far fewer hours to work. This means that to grow your firm and profits, you need to leverage the time of other lawyers.
Traditionally, this was done by hiring full-time associates whose revenue from their billings were traditionally divided 1/3 to pay the associate, 1/3 to cover their overhead expenses, and 1/3 for your profit. This means that if you bill your associate’s time at $225 per hour, $75 of that $225 should be allocated for their pay, $75 should be allocated for overhead, and $75 should be realized as your firm’s profit. But this only works if your associate is busy full time and if you collect all of their billed time, which is rarely the case. When your associate is not busy full time and when you collect less than 100% of their billed time, the 1/3 that is supposed to be your profit ends up being consumed to pay the associate’s salary and benefits.
There is a better way! By using freelance lawyers, you can have the benefits of leveraging their time without the overhead, commitment, and lost profits of full-time employees.
Using the same metrics, if you pay your freelance attorney $75 per hour and you bill your client $225 per hour for their services, your profit will be $150 per hour because you do not have to worry about paying salary and benefits when they are not working.
Let’s take a deeper dive into some real life examples of how to leverage the time of freelance lawyers to make more money.
Our first example assumes you need a complicated motion in limine drafted (perhaps a Daubert motion). You could draft it yourself and consume days of your valuable time or you could have an experienced freelance lawyer draft it for you, thereby leveraging their time and allowing you to focus on meeting with potential clients, marketing, and growing your business.
Let’s look at the economics. If it takes your freelance attorney 20 hours to complete the complex motion and you bill their time to your client at the reasonable market rate of $225 per hour, the total billed to the client is $4,500. If you paid the freelance lawyer $2,000 ($100 per hour) to prepare the motion, your profit is $2,500, plus, you saved yourself 20 hours that you can better spend on developing your practice!
If you litigate, whether in family court, state court, or federal court, discovery is a necessary evil. Even if you do not hate doing discovery, there is no chance you think drafting or responding to requests for documents, interrogatories, or admissions is the best use of your time. This is the perfect type of work to outsource. First, instead of procrastinating until the end of the discovery period, you can keep the other side on their toes and control the pace of the case by quickly propounding your discovery. Second, you can leverage the freelancer lawyer’s time to make a profit for you while you spend your time focusing on your business and clients.
If it takes the freelancer lawyer 10.4 hours to draft your initial requests for documents, interrogatories, and admissions and you bill their time to your client at the reasonable market rate of $225 per hour, the total billed to the client is $2,340. If you paid the freelance lawyer $780 ($75 per hour), your profit is $1,560, plus, you saved yourself 10.4 hours, you didn’t have to draft the discovery, and you won’t be scrambling to get your discovery done as the discovery window closes.
Can you make a profit if you bill on a flat fee basis? Yes! Say you charge $1,000 to prepare a lease or a trust and it takes you three hours to prepare it. This equates to a $333.33 hourly rate. If, instead of drafting it yourself, you pay a freelance lawyer $400 to prepare the lease or trust and you spend one hour reviewing and finalizing the lease or trust, your effective hourly rate is now $600.00. This is nearly double your effective hourly rate when you just do it yourself.
Download our Ultimate Guide to Legal Outsourcing: Growing Your Practice and Profits Through On-Demand Virtual Associates to learn more!