January 13, 2020

Is legal tech & legal operations increasing demand for paralegals?

As the role of legal technology and operations have grown in recent years, legal departments and law firms are increasingly seeking to standardize and automate their processes. With venture capital investment into legaltech breaking $1.2 billion in 2019, we wanted to understand how these changes are impacting talent markets in the legal industry.

Since paralegals have historically been responsible for administrating important processes in law firms and legal departments and have leveraged technology to do so, paralegals seem to be an important talent pool in the legal operations market. Is the adoption of legal technology and legal operations systems increasing demand for paralegals in the U.S.?

What’s the employment profile of a paralegal in the U.S.?

Before we get into our anlaysis, we want to provide a brief economic overview of the paralegal profession. According the U.S. Bureau of Labour Statistics, there are 309,940 paralegals and legal assistants employed in the U.S. as of 2018 with an average income $50,940. The top 10% of paralegals earn $82,050 on average.

The top five paying states for paralegals are Washington D.C. ($80,470), Connecticut ($62,760), California ($61,240), Washington ($60,940), and Massachusetts ($60,320).

Historical Demand for Paralegals

To understand the historical employment trends for paralegals, we analyzed Occupational Employment Statistics from the U.S. Bureau of Labour Statistics between the years 2000 and 2018. We wanted to understand the paralegals in the broader context of legal services and labor market dynamics, so we also extracted data for employment demand for lawyers.

Between 2000 and 2018, average demand for paralegals (2.96%) grew at twice the rate of lawyers (1.49%). We can see from the below chart that paralegals are hit harder during significant economic downturns than lawyers, with 5,100 paralegals losing their jobs during the 2008 recession compared to relatively flat lawyer employment in the same period.

Projected Demand for Paralegals

Between 2016 and 2026, the U.S. Department of Labor is projecting that demand for paralegals will increase at twice the rate of lawyers resulting in an increase of 41,800 new paralegals added by 2026 for a total of 351,740.

It appears that the legal technology and operations movement that started in the years following the 2008 recession, is not materially increasing demand for paralegals at a faster rate than lawyers. In fact, the U.S. Department of Labor is projecting a slowing demand for both lawyers and paralegals between 2016 and 2026. In the previous ten-year period prior to the 2016–2026 projection, the number of employed paralegals increased by 23.59% and the number of employed lawyers increased by 15.56%, compared to projected increases of 14.60% and 8.20% respectively. Rather that inflating demand for paralegals, legal technology and legal operations may be empowering paralegals, lawyers and other legal professionals with better tools and processes to be productive with fewer resources in the delivery of legal services.

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