Avoid Risks When Dealing with Contract Lawyers

Even if contract lawyers are a huge value for law firms if used properly, there are some risks that law firms may not always consider.

Many of them use contract lawyers, either to give a helping hand with work overload on a daily basis or assisting with large document reviews for one single matter. These firms may also use contract lawyers to help meet short-term staffing needs with none of the investments that are crucial in the growth of a new full-time lawyer. Contract attorneys may be a great resource for law firms when used correctly, but associated risks may appear, risks which law firms may not always consider. Let’s look at some tips that will help law firms use contract lawyers effectively and risk-free.

A Mission to Supervise

Their name clearly shows that contract attorneys will typically work for a law firm or a lawyer pursuant to a contract. Firms will often use a contract that separates a contract lawyer from other attorneys in the firm, also by clarifying the fact that a contract attorney is not an associate, not on the company’s track for partnership and not a full-time expert in the firm.

If a client does not contract directly with a contract attorney, in many cases the firm undertakes the attorney-client relationship, through which the firm owes direct duties to a client. Duties include responsibilities and obligations relating to the contract attorney’s conduct.

Let’s say an attorney owes a duty to clients to act professionally when he is providing legal services. According to Rule 5.1(b) in the ABA Model Rules of Professional Conduct, an attorney “having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.” Some have interpreted that this duty to supervise extends over contract lawyers being supervised by a full-time member of the firm.

In some circumstances, the contract lawyer will be directly liable to a client because of their own negligence or mistake. Nonetheless, for the firm, the fact that they relied on a contract attorney will often not be of use as a defense to claims for malpractice. As such, even if supervising contract attorneys is not necessary according to the rules of professional conduct, many firms choose to take action to monitor and supervise contract lawyers to ensure the quality of services given to their clients.

Firms will sometimes consider protocols for supervising contract lawyers, starting with the contract or/and other documents defining precisely what the contract attorney is hired to do, the protocols for performing their work, but also confirmation that the attorney will act according to the law firm’s procedures and practices, supplementary to all professional and ethical rules.

Apart from the terms of a contract, law firms have the possibility to address the practical aspects of the contract lawyer’s work, including how their work will be reviewed to guarantee that it meets the appropriate standards. Law firms that simply pass along the work of contract attorneys without doing nothing more may be assuming risks that are unnecessary.

Conflict

If a contract lawyer becomes an employee of a single firm, the issues regarding conflict are less complicated. The applicable rules for contract attorneys, such as the imputation of conflicts, will generally apply as they do to any other lawyer in the firm.

Nevertheless, the problem of conflict becomes complicated when a contract attorney is hired as an independent contractor or only to work on a single case or project. Some firms solve this issue by implementing “exclusive” independent contractor relationships with contract lawyers so that the analysis of the conflict involves only one set of clients. This arrangement means that the firm and the contract attorney agree on the fact that they will only work for them and no other law firms. Contract lawyers may expect commitment from the firm, in the form of compensation or workload commitments.

It becomes more complicated for firms if they prefer to employ contract attorneys on a purely “as-needed” or nonexclusive basis. Understanding the conflict issues that can appear in these situations, the California bar provided insight in the Formal Opinion 1992-126: [t]o facilitate identification of conflicts, the contract attorney should maintain a personal record of clients and firms for whom he/she has worked, in addition to a general description of the work performed for the clients.” Thus, the law firm may want to ask the contract attorney if they maintain such a list in order to assist in evaluating conflicts.

Depending on the circumstances, however, a contract attorney’s conflicts are not to be imputed to the firm where their work is minimal and limited only to a single matter or client. There are other factors that may limit the possibility of conflicts being imputed, including whether the contract lawyer is separated physically in the firm’s office from other client documents or whether their access to databases or electronic files has been restricted to those matters on which they are working.

Other Obligations May Apply

Several recent high-profile cases addressed the issue of whether law firms have an obligation of “employment” toward contract attorneys, including whether they must provide them the same benefits as their employees. A number of cases have also addressed whether firms must pay overtime to contract attorneys under specific circumstances. A larger number of cases have focused on whether contract attorneys are hired to provide professional legal services, which could make them exempt from overtime laws.

In addition to federal and state regulations regarding compensation, law firms may consider how other laws and rules could apply to a contract attorney. Dependent on the way firms choose to structure their relationships with contract attorneys, different requirements may appear as compared to other lawyers working at the firm.

Limiting Uncertainty

Most firms that hire contract attorneys take measures to address the nature of their relationship with the contract attorneys (e.g. independent contractor or employee), as well as the scope of the contract attorney’s work and the applicable professional, ethical and legal rules.

Failing to arrive to a clear agreement on key issues can lead to other problems later on and may potentially undermine the great benefits of using contract attorneys in the first place.