Module 1
Why people decisions matter: the true cost of hiring, the roles in a legal team and when to hire
A law firm or a legal department is mostly people, and most of its money goes on them: pay is usually the largest cost, and the quality of the people decides the quality of the work, the happiness of the clients and the sanity of the managers. Yet many lawyers who become managers are given no training in it, and they learn by making expensive mistakes: a hire made in a hurry, a good person lost for want of a conversation, a problem left to grow. This first module sets the foundations: what a hire really costs (more than the salary), what a bad one costs (much more), the roles that make up a legal team and what each does, how to plan the workforce from the workload and the budget rather than from panic, how to choose between employing, contracting and outsourcing, and the legal framework that governs all of it, which varies by country and which you must find out.
Hover over an idea to light up what it connects to, click it for its definition, minimum requirements, an example and the usual trap, press Play to watch the map build step by step, or trace a short case through it.
Simplified teaching map, in general terms. Check the law where you work. On a small screen, scroll the map sideways.
By the end of this module you can
- Count the true cost of a hire and of a bad hire.
- Describe the roles in a legal team.
- Plan the workforce from workload and budget.
- Choose between employee, contractor and outsourcing.
- Know the legal framework questions to ask.
Part 1. The lecture
The true cost of a hire
A person’s salary is only part of what they cost. The full cost is higher, and the cost of choosing wrongly is higher still.
| Cost | What it includes |
|---|---|
| Direct pay | Salary, bonus and allowances. |
| Employer costs on top of pay | Employer taxes and social contributions, pension, insurance, paid holidays and sick pay. |
| Setting up | Equipment, software licences, desk space, a professional licence or practising fee, and the cost of recruiting (advertising, an agency fee, time spent by those who interview). |
| Management and supervision | The time of a more senior lawyer to train, supervise and review, which is real, particularly in the first months. |
| Time to reach full productivity | Most new hires take months before they work at the pace and standard the role needs. |
| Overheads | A share of rent, insurance, management and administration. |
A common rule of thumb is that the full cost of an employee is well above their salary, often by a quarter to a half, but the real proportion depends on your country and your firm. Work out your own.
What a bad hire costs
The salary and costs of a person who does not do the job well. The cost of the work that must be redone, the clients who are lost, the colleagues who carry the load or leave, the time of the managers who deal with it, and the process of ending the employment fairly and replacing the person.
It is often said that a bad hire costs a multiple of annual salary. Whatever the multiple, it is far more than most managers expect, and it is why taking time over the decision is not slowness but economy.
The roles in a legal team
| Role | Typically does | Remember |
|---|---|---|
| Partner or head of legal | Leads, wins and keeps clients, sets standards, carries ultimate responsibility. | Regulatory and financial responsibility rest here. |
| Senior lawyer | Handles complex matters, supervises, mentors. | Their time is the scarcest resource: do not waste it on routine. |
| Associate or junior lawyer | Does the bulk of legal work under supervision, and learns. | Needs training, supervision and a path. |
| Paralegal or legal assistant | Prepares documents, researches, manages files, supports lawyers. | Where permitted, can carry out a great deal of routine work at lower cost. |
| Legal secretary or administrator | Diary, correspondence, filing, billing support. | Prevents lawyers from spending hours on tasks others can do. |
| Legal operations and technology (in larger teams) | Process, data, systems, vendors and budgets. | The subject of the Legal Engineer Program. |
| Business development or marketing support | Helps win and keep work. | Often outsourced in small firms. |
| Finance, HR and office management | Pay, accounts, recruitment, premises. | In small firms, an outsourced bookkeeper and an adviser may do this. |
A healthy team has the right level of person doing each task. A senior lawyer doing filing wastes money; a junior doing complex work alone wastes the client’s trust. Work leverage (the ratio of junior to senior effort) is a theme of the Matter Economics and Pricing course.
Check your regulator’s rules about which tasks only qualified lawyers may do, and about supervision. They differ, and they limit what you may delegate to paralegals and non-lawyers.
Plan from workload and budget
Hiring in a panic is the commonest way to hire badly. The remedy is to plan from facts.
- Measure the workload. What work is coming in, by type, and how many hours does it take? Use real time records and forecasts, not impressions.
- Measure the capacity. How many hours can each person really bill or work on the matters (not hours at their desk)?
- Find the gap, and its nature. Is it a shortage of hours, of a particular skill, of senior supervision or of administrative support?
- Check the budget. What can the firm afford, with the break-even tool from the Starting a Law Firm course? What happens if work falls by a fifth?
- Consider the options (below) and the timing: a person hired now may not be productive for months.
- Decide, with a trigger. For example: ‘When billable work exceeds 90 per cent of capacity for three months running and cash covers six months of the new cost, we will hire.’
- Do not hire to a peak. A busy quarter is not a reason for permanent cost if the work is temporary.
- Fix the process first. Often the gap is partly waste (Process Mapping and Decision Design) that a better system removes.
- Plan succession and growth, so that people can see where they might go.
Employee, contractor or outsourcing?
| Option | Strengths | Risks |
|---|---|---|
| Employee | Commitment, culture, control, training, continuity. | Fixed cost; employer duties; dismissal rules; supervision responsibility. |
| Part-time employee | Flexible cost and hours. | Availability; the same duties as for others. |
| Contractor or freelance | Flexible, no long commitment, specialist skills. | Less control and continuity; confidentiality; and the law may treat a person as an employee if the real relationship is that of one. |
| Outsourced service (accounting, IT, marketing, paralegal service) | Expertise on demand, no fixed cost. | Confidentiality and data protection; quality control; dependence on a supplier. |
| Technology or process improvement | Lower cost per task, consistency. | Setup effort and the controls it needs. |
Be careful with the contractor label. In many countries the law looks at the substance of the relationship: control, integration into the business, financial dependence and the right to substitute. A person described as a contractor but treated as an employee may be an employee in law, with the rights and the tax consequences that follow. Take advice before relying on a contractor arrangement for core, ongoing work.
The legal framework you must find out
Employment law is a large and changing field, and it differs from country to country, and sometimes within one. Do not assume that what applied in your last job applies in your new one. Before hiring, find out and take advice on:
- Who counts as an employee, and the rights that go with it.
- Equality and discrimination law: what you may and may not ask, advertise, test or consider in recruiting and in managing people.
- Right to work and licence checks: verifying that a person may lawfully work for you and, where relevant, practise.
- Contracts and written terms: what must be provided, and when.
- Pay and working time: minimum pay, overtime, rest, holidays and leave of various kinds.
- Tax, social contributions and pensions on employment.
- Probation and notice.
- Dismissal and redundancy: the grounds, the process and the protection of employees.
- Data protection of applicants’ and employees’ information.
- Health, safety and wellbeing duties.
- Professional rules on supervision, conflicts, confidentiality and the conduct of staff.
Get advice, early and cheaply
A short consultation with an employment lawyer or a reputable adviser before the first hire, and again before any difficult step, is among the best-value spending a small firm can do. Many regulators and trade bodies also publish guidance for employers.
Part 2. Lab: What Does a Hire Cost?
Sort each item into a direct cost of employing someone or a cost that is often forgotten.
Situation 1 of 6
The employee’s salary.
Where does this belong?
Part 3. Lab: Hire, Contract or Outsource?
Choose the best option in each situation.
Situation 1 of 3
A small firm has a busy quarter caused by one large project that will end in three months. Its regular workload is steady.
What is the best response?
Part 4. Lab: Spot the Planning Flaw
Click the workforce-planning statements that are weak.
A manager’s notes
Click every sentence that causes a problem, then press Check. There may be 3 problems, and some sentences are fine.
Part 5. Check your understanding
Ten questions drawn from a larger pool. Sign in to have your score saved towards your certificate.
You have finished the free module
Here is what you can do now, and where the course goes next
Module 1 gave you
- Count the true cost of a hire and of a bad hire.
- Describe the roles in a legal team.
- Plan the workforce from workload and budget.
- Choose between employee, contractor and outsourcing.
- Know the legal framework questions to ask.
Next, 6 more modules and a capstone
- Module 2: Defining the job and finding people: the role, the advertisement, the sources and fairnessYou will learn to Analyse the job before advertising.
- Module 3: Selecting well: structured interviews, work samples, references and a scorecardYou will learn to run a structured interview.
- Module 4: Offers, onboarding and the first ninety days: starting people wellYou will learn to make a clear, fair offer and contract.
- Module 5: Developing and managing performance: goals, feedback, training, careers and underperformanceYou will learn to set clear goals.
- Module 6: Keeping good people: why they leave, what makes them stay and how to ask
- Module 7: When employment ends: resignation, dismissal, redundancy and leaving well
- Capstone: Capstone: a people plan for a small firm
Each module has its own practice labs and a graded quiz, and a Certificate of Completion follows when you pass them all. The whole course is $15 once, or included in an All-Access Membership.
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General education on managing people in a legal practice, using invented people and organisations. It is not legal, employment or HR advice. Employment, discrimination, pay, working-time, dismissal and redundancy law differ between countries and change: take advice before any step that ends or changes employment.
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