Most students interested in becoming paralegals are concerned with how much they will earn. This is understandable since becoming a paralegal involves a significant investment of time and money. Unfortunately, just as with job duties, paralegal earnings vary greatly, so here, too, there is no “one size (rate) fits all.” A number of factors affect what a paralegal earns, including the education and experience of the paralegal, the area in which the paralegal practices, the type of legal specialty, and the nature of the legal practice. The wide range of employment opportunities for paralegals in the public and private sectors also affect levels of compensation. Furthermore, legal business cycles — periods of time when the demand for legal services is either sharply up or sharply down — can affect paralegal salaries.

How Employee Benefits Affect Paralegal Compensation

The rate of paralegal pay is only part of the compensation story. If you are thinking about entering the paralegal profession or are looking for a paralegal position, here are a few matters you should consider when evaluating paralegal pay:

• What is the value of the benefits offered by the employer? Most employers offer some standard benefits — vacation and sick pay; retirement plans; and life, medical, and dental insurance. These benefits increase the total cost of hiring a paralegal. Along with these benefits, consider other common expenses a legal employer might pay — parking, association memberships, attendance at continuing education seminars, or paid time off for pro bono activities.

• What are the opportunities for advancement? In some law firms, beginning paralegals often start in secretarial positions. The paralegal works in this position to learn the nature of the law firm's practice, the needs of the clients of the law firm, and to become familiar with a specific area of law. Paralegals in these positions are paid less than other paralegals because these duties are not charged to clients. The compensation rate increases as the paralegal gains experience.

• What are the employer's billable hour expectations? Typically, the work of a paralegal is charged to the client based on an hourly rate. Many firms expect paralegals to generate a specified number of billable hours every year. Since not every moment at work is billable to a client, the billable hour requirement may not represent all the work expectations of the employer. A legal employer with a high billable hour expectation is likely to offer a higher starting salary than an employer with lower billable hour expectations.

Compensation Surveys

A major source of information on paralegal salaries is compensation surveys. These surveys collect information from a wide spectrum of legal employers and paralegal professionals. In addition to salary and benefit information, most surveys include questions on job duties, minimum employment requirements, and billable-hour expectations. Three major sources of statistical data on paralegal salaries are the U.S. Department of Labor, the National Federation of Paralegal Associations, and the National Association of Legal Assistants.

The Department of Labor maintains salary information through the Bureau of Labor Statistics. The Bureau of Labor Statistics report deals only with reported salaries; it does not attempt to value benefits or work expectations. In 2002, the Bureau of Labor Statistics reported that the median annual income for a full-time paralegal was $37,950. The Bureau of Labor Statistics uses only national data in its calculations, and so these income statistics may not reflect paralegal salaries in your area.

The National Association of Legal Assistants (NALA) conducts its compensation survey on even-numbered years. The NALA report is available on its Web site, listed in Appendix A. The 2004 NALA survey reports that paralegals responding to the survey earned an average annual salary of $44,373. This figure represents an increase of $19,426 in the average annual salary since the NALA began reporting salary statistics in 1988.

The National Federation of Paralegal Assistants (NFPA) also conducts a biannual salary survey, conducted in odd-numbered years. The results of the current NFPA survey are available for sale on its Web site, listed in Appendix A. In 1999, the NFPA reported an average annual paralegal salary of $38,085.

Use these statistics with caution. Each of the studies has limitations that may affect their usefulness to you. Many paralegals entering the job market have salary expectations colored by survey results that are not accurate for their specific area of the country or experience level. Here are some things to take into account:

• The Bureau of Labor Statistics data weighs heavily toward large metropolitan areas. This is because more of the respondents are in these areas than in nonmetropolitan areas. Because metropolitan areas often have higher salaries, the average salary may not reflect actual salaries in other areas of your state.

• Over 70 percent of the paralegals responding to the NALA survey had advanced certifications. A paralegal who attains an advanced certification has met minimum educational requirements and has a minimum of two years of paralegal experience. The salaries paid to these paralegals are not comparable to the salary paid to a beginning paralegal.

• Only 4 percent of the NALA survey responses came from the New England/MidEast area. This low sample may affect the accuracy of the responses from this area of the country.

• The experience level of the average respondent to the NFPA survey was seven to ten years. Again, salaries tend to rise with experience, so the reported average salary may be higher than what a beginning paralegal can expect to make.