The Rule of Thirds: Why Your Time Is Worth More Than You Think

What is the Rule of Thirds?

The Rule of Thirds is a practice management framework that describes how a law firm allocates the revenue generated by a fee-earner. In its simplest form, it works like this:

• One-third of the charge-out rate goes to the fee-earner as salary and employment costs (including employer's National Insurance and pension contributions)
• One-third goes to the firm's overheads — rent, professional indemnity insurance, support staff, technology, marketing, and administration
• One-third goes to the firm as profit, distributed to the equity partners

This framework has been validated by multiple Law Society financial benchmarking surveys and is widely used in legal practice management. It is not a precise formula — the actual split varies by firm size, practice area, and location — but it provides a reliable approximation that holds across a wide range of firms.

Why This Matters for Unqualified Legal Professionals

When an unqualified legal professional — a paralegal, a McKenzie Friend, or an experienced informal helper — sets their rate, the instinctive comparison is with a solicitor's salary. If a solicitor earns £45,000 per year, the reasoning goes, then someone with similar experience but without the qualification should charge less.

This comparison is misleading because it ignores the structure of the law firm. The solicitor's £45,000 salary is the one-third that reaches them after the firm has extracted its costs and profit. The client is paying three times that amount — approximately £135,000 per year equivalent, or roughly £65–£70/hour — for the solicitor's time.

When you work directly with a client, you are not a law firm. You do not have a law firm's overheads. You do not have equity partners extracting a profit margin. The appropriate comparison is not with the solicitor's salary — it is with the solicitor's charge-out rate, adjusted for the genuine cost savings of direct engagement.

The Direct Engagement Adjustment

A fair direct-engagement rate for an experienced unqualified legal professional should reflect:

• The value of the work — what would a law firm charge for the same task?
• The overhead saving — the client is not paying for a law firm's rent, insurance, and support staff
• The profit saving — the client is not paying a profit margin to equity partners
• The qualification discount — the client is accepting some additional risk by not instructing a regulated professional

In practice, this means a fair direct-engagement rate is typically 50–70% of the equivalent law firm charge-out rate. For a Grade D paralegal in London (guideline rate £138/hour), the fair direct-engagement rate is approximately £70–£95/hour. For a national rate (guideline £126/hour), the fair direct rate is approximately £60–£85/hour.

A Worked Example

Consider a paralegal with 10 years of family law experience, working in the Midlands on a complex financial remedy case.

This rate represents a genuine saving for the client (who would pay £126+ through a firm) while fairly compensating the paralegal for their skill and experience.

Using the Calculator

Our UK Legal Professional Rate Calculator applies this methodology automatically, taking into account your practice area, experience level, location, and preferred overhead adjustment percentage. The result is a personalised rate with a full breakdown of the reasoning — designed to be shared with the client as a transparent, defensible proposal.