You’re budgeting $70,000 for that paralegal position.
Here’s what you’re actually spending: $110,000 minimum, and that’s if everything goes smoothly.
The salary is just the beginning. Add employer-paid payroll taxes (7.65%), health insurance ($8,000 to $15,000 annually), 401(k) matching if you offer it (typically 3-6%), paid time off (15-20 days is standard), and workers compensation insurance. Then there’s the office space, computer, software licenses, and the time you’ll spend managing, training, and reviewing their work.
Most firm owners interviewing candidates right now don’t run these numbers. They think about the salary. They miss the rest. This article breaks down the real all-in costs and what you’re actually buying for that money, because Q4 budget planning season means you’re making decisions right now that will define your overhead for the next year.
What That $70K Salary Actually Costs You
Start with the salary, but don’t stop there.
According to the U.S. Bureau of Labor Statistics, the average cost of employee benefits adds 29.6% to base compensation. For a $70,000 salary, that’s an additional $20,720 in benefits alone.
Here’s the detailed breakdown:
Mandatory Costs:
- Social Security and Medicare taxes: $5,355 (7.65% of salary)
- Federal unemployment tax: $420 (0.6% on first $7,000)
- State unemployment tax: $500 to $2,000 depending on your state
- Workers compensation insurance: $700 to $1,500 annually
Standard Benefits:
- Health insurance (employer portion): $8,000 to $15,000 per year
- Dental and vision insurance: $800 to $1,500
- Paid time off (15 days): $4,038 (based on daily rate)
- Paid holidays (10 days): $2,692
- 401(k) matching at 4%: $2,800
Operating Costs:
- Office space (150 sq ft at $30/sq ft): $4,500 annually
- Computer and equipment: $2,000 first year, $500 annually thereafter
- Software licenses: $1,200 to $3,000 (case management, Microsoft Office, etc.)
- Supplies and miscellaneous: $600
The Hidden Cost: Your Time
- Initial training: 40-80 hours
- Ongoing management: 2-3 hours weekly (104-156 hours annually)
- Performance reviews and HR administration: 10-15 hours annually
If you bill at $300/hour, that training and management time represents $34,500 to $51,300 in billable hours you’re not capturing.
Total First-Year Cost: $109,000 to $130,000 for a $70,000 paralegal.
That’s before accounting for turnover risk, which the Department of Labor estimates costs 30% to 50% of an employee’s annual salary when they leave.
What You Get for $110,000 per Year
Let’s be specific about the return on that investment.
A full-time paralegal gives you approximately 2,080 hours of scheduled time (52 weeks × 40 hours). Subtract paid time off, holidays, sick days, and breaks, and you’re down to about 1,800 hours of productive time.
That’s $61 per productive hour ($110,000 ÷ 1,800 hours).
During those hours, a good paralegal handles:
- Client intake and initial consultations
- Document preparation and filing
- Case file organization
- Calendar management
- Basic legal research
- Client communication
- Administrative tasks
They work Monday through Friday, typically 9 to 5. They take lunch breaks. They need vacation. They call in sick. They have doctor appointments. They need training on new software or procedures.
They’re human. That’s not a criticism. It’s reality.
What $12,000 per Year of Custom AI Delivers
Now compare that to a properly implemented AI system designed specifically for your practice.
For $12,000 annually (roughly what Smart Chimp AI clients invest), you get:
- 24/7 availability with zero downtime
- Instant response to client inquiries
- Consistent quality with no bad days
- Unlimited scaling during busy periods
- No benefits, no payroll taxes, no office space
- No management time required after initial setup
The AI handles:
- Immediate client intake through conversational forms
- Instant document generation from templates
- Automated follow-up sequences
- Calendar coordination without back-and-forth emails
- Basic legal research compilation
- Client communication in your firm’s voice
- Data entry and CRM updates
That paralegal processes maybe 30 client intakes monthly, working during business hours. Custom AI can handle 300 client interactions monthly without breaking a sweat, capturing leads at 2 AM when someone Googles their legal problem and finds your website.
The math is stark: $110,000 gets you 1,800 productive hours. $12,000 gets you 8,760 hours of availability.
This Isn’t About Replacing Humans
Before you think this is anti-hiring, let’s be clear about what it’s not.
Paralegals bring judgment, empathy, and relationship-building that AI cannot replicate. They read between the lines in client conversations. They notice when something feels off about a case. They build rapport that turns one-time clients into long-term relationships.
If you’re running a high-touch practice where every client interaction requires nuanced human judgment, you need people. If you’re doing complex litigation where case strategy shifts daily, you need experienced staff who can adapt.
This article isn’t arguing you should never hire. It’s arguing you should know exactly what you’re buying and what alternatives exist.
Many solo practitioners and small firms hire administrative staff to handle tasks that custom AI could manage for a fraction of the cost. They’re spending $110,000 annually on work that doesn’t require human judgment, because they don’t realize there’s another option.
When Hiring Makes Sense vs When AI Makes Sense
Hire humans when you need:
- Complex judgment calls on case strategy
- Relationship building with high-value clients
- Courtroom presence and in-person representation
- Sophisticated negotiations requiring reading the room
- Mentorship and firm culture development
Use AI when you need:
- High-volume intake and initial screening
- Document generation from standard templates
- After-hours client communication and lead capture
- Routine follow-up sequences
- Calendar coordination and scheduling
- Basic information gathering and data entry
Most firms need both. The question is ratio.
If you’re a solo practitioner spending $110,000 on a paralegal who spends 70% of their time on tasks AI could handle, you’re overpaying by $77,000 annually. You could hire a part-time paralegal for the 30% that requires human touch and use AI for the rest, cutting your overhead by $60,000 while improving response times.
The Timing Question: Why This Matters Right Now
You’re reading this in Q4, which means you’re either:
- Actively interviewing candidates for a January start date
- Planning your 2026 budget and deciding whether to add headcount
- Feeling overwhelmed and convinced you need another body
Take a hard look at what’s overwhelming you. Is it tasks that require human judgment, or is it volume of routine work?
If someone’s sending you resumes right now and you’re thinking “I really need help,” spend three hours mapping out what that help would actually do. Write down the tasks. Be specific.
Then ask: Which of these tasks require human judgment, and which are just time-consuming but straightforward?
The answer might surprise you.
What to Do Before You Make an Offer
If you’re seriously considering hiring right now, do this first:
- Calculate the real cost using the breakdown above with your specific numbers
- List every task you expect this person to handle in their first 90 days
- Mark which tasks require human judgment and which are systematic processes
- Talk to firms using AI about what they’ve automated and what they haven’t
- Test AI solutions for 30 days before committing to a full-time hire
You might discover you need a $30,000 part-time person plus $12,000 in AI instead of a $110,000 full-time employee. Or you might confirm that you genuinely need that full-time paralegal for judgment-intensive work.
Either way, you’ll make the decision with full information rather than just knowing you’re busy and need help.
Getting Started
Smart Chimp AI works with law firms to build custom AI systems that handle intake, client communication, document generation, and administrative work at a fraction of traditional staffing costs.
We’re not selling you software. We’re building systems specifically for how your firm works, with your processes, your templates, and your voice. Most implementations pay for themselves within the first month by capturing leads outside business hours that you’re currently missing.
If you’re making hiring decisions right now for 2026, let’s talk about what custom AI could handle before you commit to $110,000 in annual overhead.
Legal Disclaimer: This article provides general information about law firm hiring costs and AI alternatives and should not be considered legal or financial advice. Every firm’s situation is different. Costs and outcomes depend on specific circumstances, location, and practice needs. For advice about your specific situation, consult with appropriate business advisors.
