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In an effort to reduce expenses, a law firm plans to lay off

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In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post Updated on: 07 Nov 2013, 20:15
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In an effort to reduce expenses, a law firm plans to lay off 40% of its attorneys and hire paralegal contractors as needed to replace them. In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.


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Originally posted by avohden on 04 Nov 2013, 10:36.
Last edited by avohden on 07 Nov 2013, 20:15, edited 2 times in total.
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 04 Nov 2013, 11:28
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Objective: reduce expenses,
Fact: lay off 40% of its attorneys and hire paralegal contractors as needed to replace them.
Fact: In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.
Wrong. A only affect the firm's REVENUE, not expense. Hence, A is wrong.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.
Wrong. Out of scope. Nothing about attorneys' performance.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.
Wrong. TEMPTING but wrong. Does NOT affect objective - reduce expenses - directly. For example, if paralegals can do most of function but charge higher rates --> The objective fails.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.
Correct. D confirms that the plan will reduce expenses. Hence, D is correct.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.
Wrong. E does not compare the cost of hiring paralegal with that of hiring full-time attorney. E does not help anything and is wrong.

Further explanation for E.
Even when we know the demand will decrease, we still do not have enough information to conclude that the lay-off would be beneficial. Why? Because we don't know the saving from laying off 40% attorney is LARGER / SMALLER than the income loss from lower demand.

Let see an example:
Before: Demand = 100 cases, the number of attorney = 20 ==> 5 cases per attorney.
After: Demand = 90 cases (fewer than 100), the number of attorney = 12 (lay off 40% x 20 = 8 attorney) ==> 7.5 cases/attorney
Clearly, the firm HAS TO hire more paralegals ==> The costs of hiring paralegals occur ==> The firm CAN'T achieve its goal if the rate/hour of paralegal is greater than that of full time attorney.


Hope it helps.
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 05 Nov 2013, 03:53
pqhai wrote:
E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.
Wrong. E does not compare the cost of hiring paralegal with that of hiring full-time attorney. E does not help anything and is wrong.


If demand for legal services remain consistently lower for the next few years, then laying off full-time attorneys would be beneficial. Because during this period the firm don't have to pay to full-time attorneys and when this low-demand period passes by, the firm can again hire paralegal contractors to fulfill the demand. And in this way the firm may be able to achieve a reduction in expense.

Whats wrong in my understanding? :roll:
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 05 Nov 2013, 11:18
TirthankarP wrote:
pqhai wrote:
E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.
Wrong. E does not compare the cost of hiring paralegal with that of hiring full-time attorney. E does not help anything and is wrong.


If demand for legal services remain consistently lower for the next few years, then laying off full-time attorneys would be beneficial. Because during this period the firm don't have to pay to full-time attorneys and when this low-demand period passes by, the firm can again hire paralegal contractors to fulfill the demand. And in this way the firm may be able to achieve a reduction in expense.

Whats wrong in my understanding? :roll:


Hello TirthankarP

Great question. I'm glad to help. :)

Option E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.

Even when we know the demand will decrease, we still do not have enough information to conclude that the lay-off would be beneficial. Why? Because we don't know the saving from laying off 40% attorney is LARGER / SMALLER than the income loss from lower demand.

Let see an example:
Before: Demand = 100 cases, the number of attorney = 20 ==> 5 cases per attorney.
After: Demand = 90 cases (fewer than 100), the number of attorney = 12 (lay off 40% x 20 = 8 attorney) ==> 7.5 cases/attorney

Clearly, the firm HAS TO hire more paralegals ==> The costs of hiring paralegals occur ==> The firm CAN'T achieve its goal if the rate/hour of paralegal is greater than that of full time attorney.

Hope it's clear.

Pqhai.
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 09 Nov 2013, 11:32
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Official Explanation

Answer D
- In this “strengthen the plan” question, the most important thing is to note the objective, which is “to reduce expenses”. Because of that specific goal, items that might increase revenues or profitability and therefore seem “good for the firm” do not actually achieve the objective.

Accordingly, choices like A, B, and C are incorrect – while they all provide good value for the firm, none of them assist in directly reducing costs. Choice D is correct in that it removes a slight flaw in the plan – the plan doesn’t explicitly state that the contracted paralegals will actually be cheaper than the full-time attorneys. D removes a potential weakness, and is therefore correct.
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 15 Apr 2014, 21:17
avohden wrote:
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In an effort to reduce expenses, a law firm plans to lay off 40% of its attorneys and hire paralegal contractors as needed to replace them. In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.


oe to follow

D looks like more of a assumption than a strenghtener.
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 16 Apr 2014, 04:42
abid1986 wrote:
avohden wrote:
New project from GMAT Club! Click here

In an effort to reduce expenses, a law firm plans to lay off 40% of its attorneys and hire paralegal contractors as needed to replace them. In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.


oe to follow

D looks like more of a assumption than a strenghtener.



NOTE - all assumptions are also included in strengthners......
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 02 Mar 2015, 06:57
It is D as our conclusion is that we can save money. As C mentions saving money, C is right
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In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 01 Nov 2015, 00:21
avohden wrote:
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In an effort to reduce expenses, a law firm plans to lay off 40% of its attorneys and hire paralegal contractors as needed to replace them. In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.


oe to follow


I have a problem with option D. It has a major flaw. Even if the cost of hiring paralegals for a given amount of work exceeds the cost of full time attorneys the plan might still work because of the cost of paying full time attorneys during slow periods i.e. with less or no work (when you don't have to pay contractors). Uneven demand can actually save money through contractors. That's how the entire damn outsourcing industry works and while this is outside knowledge, it's quite easy to see that without even this knowledge it can be figured out from the question - especially with the phrase "for a given amount of work". C in that case becomes a compelling answer, the plan won't work if you can't hire contractors to do the same stuff that full time attorneys do. It's like hiring janitors to replace attorneys because they are cheaper for a given amount of work.
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New post 11 Apr 2016, 02:33
rajarshee wrote:
avohden wrote:
New project from GMAT Club! Click here

In an effort to reduce expenses, a law firm plans to lay off 40% of its attorneys and hire paralegal contractors as needed to replace them. In this way, the firm believes, it can avoid paying attorneys during slower periods and simply ramp up with contractors when the workload requires it.

Which of the following, if true, would most increase the plan’s likelihood of achieving its objective?

A. None of the firm’s existing clients would leave the firm to work with a laid-off attorney.

B. Most of the attorneys to be laid off are among the lowest-performing attorneys on the firm’s roster.

C. Paralegals can perform most of the functions of the attorneys that will be laid off.

D. For any given amount of legal work, the cost of paralegal contractors does not exceed that of full-time attorneys.

E. The firm’s outlook for the next few years suggests that demand for legal services will remain consistently lower than it has for the previous five years.


oe to follow


I have a problem with option D. It has a major flaw. Even if the cost of hiring paralegals for a given amount of work exceeds the cost of full time attorneys the plan might still work because of the cost of paying full time attorneys during slow periods i.e. with less or no work (when you don't have to pay contractors). Uneven demand can actually save money through contractors. That's how the entire damn outsourcing industry works and while this is outside knowledge, it's quite easy to see that without even this knowledge it can be figured out from the question - especially with the phrase "for a given amount of work". C in that case becomes a compelling answer, the plan won't work if you can't hire contractors to do the same stuff that full time attorneys do. It's like hiring janitors to replace attorneys because they are cheaper for a given amount of work.



during slow economy :
regular attorney : NO work but money is given
Contract : No work, No Money

when work is there
Regular attorney pay > Contract pay

Adding both
========================
regular attorney
Money during no work + Regular pay when work is there >> just contract pay which is less than regular attorney

Note: The most import to note in the option D is "For any given amount of legal work"

=========================

Saved money!!!
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Re: In an effort to reduce expenses, a law firm plans to lay off  [#permalink]

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New post 23 Feb 2018, 11:42
I am wondering whether new projects are still being made. This is a good question with a common pattern. Test takers can choose D as the answer without looking at other option choices.
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Re: In an effort to reduce expenses, a law firm plans to lay off   [#permalink] 10 Sep 2019, 23:59
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