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A recent opinion by a D.C. court committee on the licensing of contract attorneys has thrown lawyers, law firms, and legal placement agencies for a loop. According to the June 17 opinion from the D.C. Court of Appeals Committee on Unauthorized Practice of Law, contract lawyers doing business in the District must have a D.C. Bar law license. The opinion came as a surprise to many in D.C.’s legal community who have long held the view that they can employ contract attorneys as long as they are licensed by another state. “It’s going to have a huge impact,” says Julia Sweeney, executive director of Special Counsel, a legal placement firm. “Everybody’s talking about it.” Anywhere from several hundred to a couple of thousand lawyers work on a temporary basis at many of D.C.’s largest law offices. Yet fewer than 30 percent of them hold D.C. law licenses, according to six officials at placement agencies. Agencies, law firms, and contract attorneys all say they are trying to figure out how the rules will impact their businesses. And a few firms have already made it clear that they will accept only attorneys licensed with the D.C. Bar. Some legal recruiters worry that an increase in demand for D.C.-licensed attorneys could lead to a shortage in eligible lawyers, or could push up the billing rates for temporary attorneys, which currently run between $48 and $55 an hour. It could also force some contract attorneys who are not licensed in the District off of their current projects. The decision is also likely to take a financial toll on the contract attorneys, many of whom will have to fork over as much as $650 in fees to get a D.C. license, either through a waiver or by taking the exam. That may be a boon for at least one group in town � the D.C. Bar, which is poised to rake in hundreds of new members required to pay $173 each in annual dues. Members of the court committee that issued the opinion say their purpose was to clear up what appeared to be widespread misunderstanding of the licensing requirements for contract attorneys. “We’re not out to punish people or make their lives difficult,” says Frank Eisenhart, a co-author of the opinion and a partner at Dechert. “We are out to get compliance with the rule.” THE HIDDEN FORCE Contract attorneys are the hidden force behind many of the largest business transactions and litigation in the city. They are often recent law school graduates or people in between jobs. Some have turned contract work into a full-time job, opting for a flexible work schedule � and, at some agencies, benefits packages � over the long-term grind of a permanent position. Most are paid between $25 and $35 an hour, although law firms often bill out the contract lawyers at more than double that. In recent years, more and more major law firms have turned to contract attorneys to cut costs and handle short-term projects such as time-consuming document reviews for mergers, antitrust matters, or corporate investigations. Crowell & Moring recently set up a separate office in the District with more than 400 temporary lawyers to review SBC Communications Inc.’s documents for its proposed merger with AT&T Corp. O’Melveny & Myers has been housing scores of attorneys to pick through Verizon Communications Inc.’s documents for its planned acquisition of MCI Inc. Crowell and O’Melveny declined comment. At the heart of the court committee’s opinion is whether that sort of contract work is considered the practice of law. The committee concluded that if these attorneys are being billed to clients as lawyers, they should be required to be members of the bar. While the committee’s opinion does not hold the same weight as a court decision, the committee is the guiding authority in the District for how bar rules should be interpreted and enforced. In particular, committee members say, it’s important for all attorneys who practice in the District to be licensed here so that their actions can be governed � and potentially disciplined � by the D.C. Bar. The opinion makes clear that placement agencies, lawyers, and law firms could be forced by the court to stop using non-D.C.-licensed attorneys or face fines. And clients could also seek reimbursement for legal fees that were paid to an attorney who was not licensed in the District. DON’T PANIC Anthony Epstein, chair of the court committee and a partner at Steptoe & Johnson, says he doesn’t expect any firm or agency to face disciplinary action immediately. Still, he says, “we would certainly expect them to do everything they possibly can to bring themselves into compliance as quickly as they reasonably can.” But several contract attorneys say they are being unfairly targeted: If they will now be forced to take and pass the D.C. Bar exam, why shouldn’t lawyers who are employed by the federal government and working in the District be held to the same standard? Currently, federal government lawyers do not need a D.C. law license to practice in the capital; they only have to hold a valid law license from one of the 50 states or other U.S. territory. “The fact is that most other states don’t have these kinds of requirements, which tells me this is just a smoke screen for trying to generate more revenue,” says a contract attorney working with a major D.C. law firm, who requested anonymity because he fears he would lose his job. A D.C. Bar spokeswoman says the bar had no involvement in the committee’s decision. Many law firms were reluctant to discuss the opinion, and several declined to say whether they were currently using contract lawyers. Attorneys at Howrey are still analyzing the opinion, says a Howrey spokeswoman, but because most of the firm’s document review is done in Virginia, it may be exempt. George Jones, head of the professional responsibility committee at Sidley Austin Brown & Wood, says the firm was evaluating whether any of its contract lawyers were working without a D.C. license. Steptoe & Johnson, Covington & Burling, King & Spalding, and Jones Day all say they already require their contract lawyers to hold D.C. licenses. Legal placement firms were more forthcoming than law firms contacted for this article. While most agencies said they hadn’t encountered similar rules in other jurisdictions, they said they were encouraging lawyers without a D.C. license to sign up for the bar. Getting applications in quickly may allow some contract lawyers unlicensed in D.C. to continue working because the rules allow attorneys to work for a year while their paperwork is processed. Some legal placement firms said they were looking at ways to help cushion the financial burden for their contract attorneys. Christopher Jensen, head of the D.C. office of legal recruitment firm Hudson, says his firm will put at least $100 toward the bar application fee for its attorneys. FEW OPTIONS But the placement companies were unsure how the decision might impact their businesses, saying they are in limbo until law firms decide how to comply. One option would be for law firms to reclassify non-D.C.-licensed attorneys as paralegals for billing purposes. But because paralegals are usually billed out at lower rates than lawyers � as much as $15 an hour less than an attorney � either the law firms, the agencies, or the lawyers would have to bear the cost of the lower rates. Firms could also push non-D.C.-licensed attorneys off their projects. Robert Joseph, executive director of Law Resources Inc., says he’s afraid that such a decision could lead to hiring problems in the short term. “If [law firms] do insist on people who are only admitted in D.C., there is going to be a huge shortage if the demand is high,” Joseph says. None of the agencies interviewed could cite specific clients who had banned non-D.C.-licensed attorneys or lowered billing rates for them. But some firms are already taking action. A law firm client of Staffwise Legal Inc. had a five-attorney project that was scheduled to begin on June 27. But last week the agency got a call from the firm asking it to replace two of the contract attorneys because they weren’t licensed with the D.C. Bar, says Gayle Grabow, a recruitment specialist there. Grabow would not name the law firm. Law Resources is facing a similar request. According to an e-mail solicitation for a project beginning July 5 at Arnold & Porter, Law Resources is placing only attorneys who are “barred or pending bar admission in D.C.” Joseph declines comment on the e-mail, which was obtained by Legal Times. But an industry shake-up could be good news for contract attorneys who already have D.C. Bar licenses. “I’m paying my dues every year,” says Rani Dennis, a contract attorney who declined to say where she was working because she had signed a confidentiality waiver. “It’s only fair. They’re getting just as much benefit from this market as I am.” Emma Schwartz can be contacted at [email protected].

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