You are HR director for a growing law firm, which currently has need of writing

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You are HR director for a growing law firm, which currently has need of writing 24 legal briefs every hour. Each of your company’s attorneys can write on average four briefs per hour. You are considering hiring four paralegals to shoulder the load; each paralegal is a bit slower than the attorneys and can write on average only three briefs per hour. You scan the current wages in the Shreveport-Bossier area (https://www.bls.gov/oes/current/oes_43340.htm) and notice that the attorneys in your company earn the local occupational median wage of $35.93 per hour, but that the prospective four paralegals will likely want to get paid their local occupational median wage of $21.84 per hour.

Question 6

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Would your company save money in the writing of the 24 legal briefs by hiring the four new paralegals and firing some attorneys?

Select one:
a. Yes. The marginal product per dollar for lawyers is less than the MPMP per dollar for paralegals, so the company should hire the paralegals. The total cost of writing 24 legal briefs using only lawyers exceeds the total cost of writing 24 legal briefs using four paralegals and three attorneys.

b. Yes. The hiring of the paralegals increases the marginal product per dollar of lawyers and reduces the MPMP per dollar of paralegals, so the company benefits when the MPMP per dollar of the newly-hired paralegals decreases.
c. No. The ratio of wages (lawyer wage divided by paralegal wage) is greater than the ratio of marginal products (MPMPlawyers / MPMP paralegals), so the company should prefer to retain lawyers and should not hire the paralegals.
d. No. Since the paralegals are less productive than the attorneys (in terms of writing speed), they would increase the cost per hour of writing. The company should not hire the four paralegals.

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The local Shreveport-Bossier Paralegal Union has observed that the Bureau of Labor Statistics projects that employment of paralegals over the next decade will rise considerably faster than the employment of lawyers (https://www.bls.gov/emp/ep_table_107.htm), and suggests that all paralegals now push for wages of $25.39 per hour. Feeling like their future is safe, most paralegals now reduce the stress in their lives by only writing on average two briefs per hour. If the other values remain the same (attorney wage and writing speed, need for 24 briefs per hour), would the company save money in the writing of the 24 legal briefs by hiring the four new paralegals and firing some attorneys?

Select one:
a. No. The cost of the four paralegals is less than the cost of two attorneys, so paralegals produce a single legal brief more expensively than attorneys.
b. No. The decreased productivity and higher wage results in the marginal product per dollar of paralegals being below the marginal product per dollar of lawyers. The cost of using only lawyers is now cheaper than using four paralegals and three lawyers.
c. Yes. The higher productivity of the attorneys matters less than the fact that they are more expensive to hire. The cheaper paralegals should be hired, even if their productivity is slightly lower, since the total cost is lower.
d. Yes. The four paralegals can produce a single legal brief at a cheaper cost than a single attorney, so hiring them leads to a lower total cost.

Explanation / Answer

Q6. No. The ratio of wages (lawyer wage divided by paralegal wage) is greater than the ratio of marginal products (MPMPlawyers / MPMP paralegals), so the company should prefer to retain lawyers and should not hire the paralegals.

Q7.b. No. The decreased productivity and higher wage results in the marginal product per dollar of paralegals being below the marginal product per dollar of lawyers. The cost of using only lawyers is now cheaper than using four paralegals and three lawyers.

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