Staff Compensation

by Terri Olson

Congratulations! You've grown your firm to the point where, for the first time, you're considering adding a staff person to help you. (Actually, most of the points covered here apply equally to someone who already has help but is adding more, so read on ....). For most lawyers, competent as they are at handling their own profession and its fees, the idea of dealing with a new employee and setting a fair compensation for that person can be perplexing and even frightening.

Compensation in general

Hourly compensation varies considerably from locale to locale, so if you practice in Young Harris, don't ask your friend in Midtown Atlanta what he's paying his secretary. The new employer will frequently attempt to set salaries either too low (correctly figuring someone will be willing to work for peanuts but disregarding the fact that you usually get what you pay for) or too high (correctly assuming this will attract quality applicants, but ignoring the fact that the firm currently can't afford it). My suggestion for the first-time employer is to offer a rate that is low but not bottom-of-the-barrel for your locale, and to attempt to combine this low salary with whatever benefits, perks, continuing education, and flexibility you can offer to make the position more attractive. In addition, make it clear to your employee that salary will be reviewed and reconsidered from time to time, and follow through on this promise.

Some don'ts:

Don't offer bonuses as a way of compensating for a low salary. You'll end up making these bonuses "mandatory", instead of what they should be -- a way of rewarding genuinely extraordinary performance -- and you'll be worse off than you were to begin with. Set a fair rate of compensation and save bonuses for your best employees at their finest hours.

Even though it may seem logical to reward employees based on how well the firm is doing, be aware that you CANNOT compensate non-lawyers using any formula that is based on firm revenue. This would include, for example, giving paralegals working on a trial a percentage of the judgment or giving each secretary one percent of what the firm made this year as a Christmas bonus.

Don't use one raise system for one employee, and a different one for another. Believe me, no matter what promises of secrecy you exact from your staff, anything you are doing or not doing in your firm will become common knowledge in fifteen minutes. Be consistent.

Part-time versus full-time and its effect on compensation

On paper, there are many advantages to hiring part-time employees instead of full time ones: less money and fewer benefits. Most part-timers don't expect any benefits beyond paid holidays and perhaps pro-rated annual leave or sick leave. Many don't even expect (or get) that. In addition, part-time employees are frequently paid less than full-time salaried employees.

If you've just read the above, you may be thinking: Hot dog! I'm going to rush out and hire only part-time employees and save myself a bundle in the process! Well, wait a minute. It's true that you can often get your employees for less money (certainly less if you factor in the average per employee cost of a benefits program), but you are also probably going to get employees with fewer qualifications and/or experience, and almost certainly going to get employees with less job loyalty. The main exception to this is someone who for one reason or another needs or wants to work less than forty hours a week, and does not expect this situation to change, classic examples being mothers with small children, college students, and retirees. In addition, if you can for some reason offer an unexpected benefit -- like health insurance -- to a part-timer, they may stay with you for life.

Benefits

So, what benefits are commonly offered by employers? They would include (in approximate decreasing order of appearance):

  • Paid holidays
  • Vacation leave (usually from one week to three weeks a year, depending on length of time with the firm)
  • Sick leave (usually the same as or slightly less than vacation leave)
  • Flex-time
  • Personal holiday taken at the employee's discretion
  • Health insurance, life insurance, and disability insurance
  • Paid continuing education, parking, and other small perks
  • Retirement plans of one type or another
Many new employers can't offer benefits such as health insurance or retirement plans, which cost the firm a considerable amount. But there are other things your employees may value just as much. Be creative! For example, maybe you rent in a high-rise that gives your office three parking spaces. You use one and clients are offered one -- but the other could go to an employee. Or, perhaps the work you need done doesn't have to be done between nine and five, and you have an excellent typist who'd like to work from noon until eight. Perhaps even though you can't afford health insurance, you can absorb the "soft costs" of two weeks' sick leave per year. Even firms with no cash to make up-front payments for the more expensive benefits can usually afford items such as the above.

Teri Olson is the former Director of the Law Practice Management Program.