If you’re the CEO and CFO of a growing multi-state law firm, you face immense pressure to minimize costs and risks while providing quality legal services to your clients. Human resources management can feel like a distraction from your core business, but it’s extremely important. Partnering with a Professional Employer Organization (PEO) could provide major benefits for your firm’s operations, costs, and employer risks.
Outsourcing HR Saves Time and Money
Running payroll, managing benefits, ensuring compliance with labor laws — these tedious tasks devour your HR team’s time. A PEO takes over these responsibilities, allowing your firm to focus on legal work instead of HR administration. PEOs use economies of scale to perform HR tasks more efficiently. By leveraging their experience and infrastructure, they can often provide superior benefits at lower costs compared to an in-house HR department.1
Compliance Experts Reduce Risks
When you have locations in multiple states, payroll taxes, workers’ compensation, ACA regulations, and other compliance issues become extremely complex. Failing to address every minute detail can result in massive fines or lawsuits. But compliance is a PEO’s specialty — their multi-state knowledge is invaluable. They ensure you meet all requirements, so you avoid penalties, audits, and legal exposure.2
Fortune 500-Level Benefits
Providing competitive benefits is vital for attracting top legal talent. But smaller companies often lack the bargaining power to negotiate great rates on health insurance, 401k, dental plans, etc. However, PEOs pool thousands of employees across clients to qualify for big-business discounts.3 This means they can offer Fortune 500-caliber benefit packages at small-business prices. Access to better benefits improves recruitment and retention.
Relief from HR Burdens
HR issues like payroll, compliance, and benefits administration can become burdensome — you’d rather focus on law more than labor law. A PEO lifts these burdens from your shoulders. Their experts handle HR tasks smoothly and efficiently while you devote your time to core legal work.4 Your HR team is freed up to focus on more strategic initiatives as well.
Shared Liability Lowers Costs
Here’s an incredible advantage PEOs offer: they become a co-employer and assume much of the risk related to human resources management. PEOs handle employee lawsuits, discrimination claims, wrongful termination suits, etc., which leads to lower liability insurance costs for your firm.5 With less exposure, your premiums shrink.
Experts in HR Best Practices
Do you want to implement human resources best practices but lack the expertise? PEOs employ specialists who know how to optimize HR to improve workplace culture, talent development, diversity and inclusion, compliance, safety, and more.6 They bring state-of-the-art HR strategies to your organization. This elevates your operational excellence without having to hire more in-house personnel.
Let the PEO Handle Payroll
Payroll may seem straightforward, but managing it across state lines can turn into a compliance nightmare. Pay rates, taxes, deductions, and other factors vary significantly between states. Missing a regulation could result in fines from the IRS or labor agencies.7 But when you use a PEO, their experts handle the complexities of multi-state payroll perfectly. You avoid expensive mistakes.
Assigning Responsibilities Improves Focus
PEOs allow you to assign tasks according to each of your team’s strengths. Your attorneys practice law. The PEO handles specific HR duties. This division of labor allows each group to maximize their expertise for the benefit of the firm.8
Peace of Mind and Operational Efficiency
In the end, the greatest benefit a PEO provides is freedom. Their comprehensive services offer peace of mind, allowing you to focus entirely on practicing law and growing your multi-state presence. You gain operational efficiency as they lift the burdens of HR administration.9 Your lawyers do what they do best, supported by PEO experts who become strategic partners in your firm’s success.
For additional considerations, read our post on mitigating co-employment risk.
References:
- Mathis, R., Jackson, J. (2011). Human Resource Management: Essential Perspectives. Cengage Learning.
- Lal, N. (2017). Managing Compliance and Legal Risks in Outsourcing Transactions. The Journal of Legal Studies Education, 35(1), 69-95.
- Collings, D.G., Wood, G.T., & Szamosi, L.T. (2021). Human resource management: A critical approach. In Human Resource Management (pp. 1-23). Routledge.
- He, H., Zhu, W., & Zheng, X. (2014). Procedural justice and employee engagement: Roles of organizational identification and moral identity centrality. Journal of business ethics, 122(4), 681-695.
- Burton, V.L. (2018). Business Law: Text and Cases. Cengage Learning.
- Noe, R.A., Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
- Lipman, F.D. (2013). Payroll Taxes. The Tax Lawyer, 67, 301-312.
- Klaas, B.S., McClendon, J., & Gainey, T.W. (2001). Outsourcing HR: The Impact of Organizational Characteristics. Human Resource Management, 40(2), 125-138.
- Lal, N. (2017). Managing Compliance and Legal Risks in Outsourcing Transactions. The Journal of Legal Studies Education, 35(1), 69-95.
