Outsourcing Your Law Firm’s HR Functions
It’s fair to say that number one goal for attorneys running their own practice is to be profitable. Depending on your vision, a close second is to grow your firm and bring in people who can increase the firm’s earning capacity and create great outcomes for your clients.
While having associates and support staff can make your firm more productive, not all attorneys are cut out to (or should) handle the administrative and human resources functions of running a business. If your days are filled with acquiring new clients and revenue-generating activities, that leaves little time for HR distractions that reduce the time you’re available for clients. Further, lawyers know how HR compliance issues can get tricky and troublesome for any business. With complexities like the Affordable Care Act and the recently released overtime regulations, which take effect December 1, 2016, keeping track of the ever changing regulatory environment requires time and expertise that a small business owner simply doesn’t have time for.
According to the US Department of Labor, 70% of employers are non-compliant with wage and hour laws, signaling that there are many errors and oversights happening, despite best efforts. Many small law firms entrust their HR tasks to the office manager or administrator—to gather and maintain the required onboarding paperwork like I-9s and W-4s, perhaps track hours, time off requests, sick days, and payroll. They may also be the one vetting employee benefits like health insurance and short term disability policies, along with mandatory worker’s compensation policies. This same person is also performing critical firm functions like running reports, tracking realization, calendaring and booking appointments, among other things. And if you’re an attorney who is doing all of this, you know that you’re losing valuable time you could be billing for.
So where do businesses go when they want to move from best efforts to best practices? To get expert payroll, HR, benefits and compliance support without hiring a full-time HR generalist, many firms choose a PEO. A Professional Employer Organization is exactly what it sounds like. PEO’s are in the business of employment, which, if functioning properly, allows you to simply focus on your strength—lawyering. There are over 700 PEOs in the US, with a few heavy hitters like ADP Totalsource, TriNet and Insperity, each with their own advantages and drawbacks. All PEOs handle functions in human resource management, payroll administration, risk management, and employee benefits.
For a technology-driven firm, like one that uses cloud-based practice management software, PEO’s that offer cloud-based HR management tools make it easy to access these services from anywhere.
The PEO becomes like a business partner, and “co-employs” anyone on your payroll. While they become the employer of record for benefits, tax, and payroll purposes—dealing with the administrative side of employment, you continue to direct the duties and performance of your staff at work. Attracting and retaining top talent is easy when your employees gain access to fortune 500-caliber comprehensive benefit plans. No more dealing with a broker every year, or having to shop and vet plans on your own.
On the compliance side, a good PEO should take care of your worker’s compensation coverage, SUTA and FUTA compliance and filings, and offer compliance guidance when it comes to the hiring and firing of employees backed by Employment Practices Liability Coverage and a Legal Defense Benefit in the event of employment-based litigation.
When considering a PEO, consider the total cost versus value: the cost savings compared to providing some of these services on your own, and the quality of not only the enhanced benefits package, but the overall service and attention that comes with it. Some PEO’s charge for their entire package as a flat fee per month or as a percentage of your total payroll. Always ask for a complete breakdown of all fees and services before you decide to work with a PEO.
Outsourcing your HR administration through a PEO gives you the freedom to focus, minimize your risk, and provides access to big firm benefits that can help you attract and keep top talent. Making sure your people are taken care of will ensure that they have less distractions, that you have less distractions, and that everyone is able to do better work for you and your clients.