Hiring freeze! These two words are dreaded by the entire in-house legal community, including, of course, anyone looking for work. Notably, I hear the most vocal hiring freeze frustrations from general counsels who are short-staffed and stressed out. Many worry that reduced capacity and budget constraints lead to unfinished work, sloppy compliance and, ultimately, their companies’ exposure to liability. One inside counsel told me recently, “I just hope I’m not committing malpractice.”
Economic disruption leads to more legal work, not less, for even the healthiest of companies. Challenges faced by any of your customers, suppliers, distributors or other business partners tend to result in contract breaches. And companies undergoing any kind of reorganization or consolidation must deal with a myriad of legal issues, such as labor law compliance and customer complaints.
I know I’m preaching to the choir here, but a very logical argument can be made for increasing attorney headcount as demand for the services of your department goes up. With a little help from online resources or a consultant, you can make this case in spreadsheet terms for CFO consumption, demonstrating the economic benefits of bringing more work in-house. I do understand, however, that your CEO may simply be closed to any kind of headcount expansion discussion. It’s just not politically possible. In fact, many companies have open attorney positions that are frozen or in danger of elimination altogether.
Leaders with overworked and understaffed legal departments crave options. Well, you can proactively end run hiring freezes. I’ve scattered a few ideas on creative staffing into previous columns, but let me lay them all out here for consideration. If I’m missing an effective strategy for hiring freeze conditions, please e-mail your ideas and I’ll make sure they find their way here next month.
Here are six strategies for doing more with more, along with a pro/con observation on each:
1. Secondments: Many large, name brand law firms are struggling to keep some of their best and most experienced associates busy. Strike a win-win agreement with a law firm to take a senior associate on loan for six months or a year. The attorney stays on the firm’s payroll, and you negotiate a deeply discounted fixed rate for the ongoing work. Even if the law firm breaks even on the deal, it’s beneficial to the firm in a number of ways. The firm retains a valued attorney, the associate learns client service lessons, and the firm achieves an enhanced partnering relationship with your company.
Pro: You get a talented, experienced attorney, increasing the amount of legal work you can handle inside. Con: A secondment, even on a break-even basis for the law firm, will still be expensive relative to other staffing options.
2. Part-time hire: You may be able to win approval for an exception to adding headcount if the addition is part time, presumably including a reduced benefits package. Since this won’t fly within a strict hiring freeze, it’s probably the least likely option of these six. Nonetheless, it’s an option worth exploring, and since you are not asking for the full-time exception to the hiring freeze, the political risk in asking should be minimal.
Pro: You get to add talent, and perhaps in time the role can be expanded. Con: If you give the part-time hire what amounts to essentially a full-time job, you will wind up unsatisfied with the attorney’s performance.
3. The 1099: You may know an excellent attorney, perhaps even a colleague at one point, to whom you have said, “I wish I could hire you.” Well, agree on an hourly rate, give the guy or gal a visitor’s pass and e-mail access, and you are off and running. Using independent contractor status to end run a hiring freeze is a classic strategy that works.
Pro: Increase inside capacity, and get quality work from someone you know. Con: If this attorney works in your department for any length of time, you will be vulnerable to the IRS 20-part test for true independent contractor status.
4. Contract attorneys: In the recession during the early 1990s, staffing firms emerged to provide experienced attorneys for in-house projects or as off-payroll staff. The service took hold, but as the economy improved these firms focused on higher volume document review assignments, usually employing junior attorneys at low pay. New firms, carefully avoiding words like “contract” and “temporary” in their marketing materials, are revisiting the potential of offering well-pedigreed attorneys as flexible off-payroll assets for legal departments.
Pro: As with the 1099 option above, this is great way to add resources during a hiring freeze and save money as opposed to using outside counsel for similar work. Con: Unlike engaging a former colleague as an independent contractor, you won’t have prior experience with the attorney.
5. Paralegals: Hospital administrators often say it’s harder to find good nurses than doctors. Similarly, truly terrific paralegals are in short supply, but they offer tremendous value. By supporting your current attorneys and taking some non-lawyer work off their plates, hiring a good paralegal can boost the efficiency and capacity of your entire department.
Pro: You may be able to look like a budget hero by withdrawing your request to fill an open attorney position and creating a lower-priced paralegal position as an alternative. Con: It may be harder to get your open attorney position back when the hiring freeze eventually lifts.
6. Legal Process Outsourcing (LPO): This has become a fancy term for off-shoring legal work, primarily to India (see “The Offshore Option“). It’s a tangential way to end run a hiring freeze. To the extent you are willing to send routine matters to an LPO provider, you are freeing up existing staff to work on higher-value tasks.
Pro: Of my six strategies for doing more with more, LPO usually wins on cost when compared to any other option. Con: The LPO work needs to be reviewed, which partly defeats the purpose of using an LPO provider to free up staff. That’s why LPO use is more commonly considered as a substitute for certain outside counsel work, as opposed to a substitute for ongoing in-house work.