In the current economic climate, many businesses seek law firms offering reduced rates or alternative fee structures to lower their legal bills. But lawyers are overwhelmed because their pool of associates is smaller due to layoffs and hiring freezes. Rather than hiring additional associates, firms increasingly rely on temporary "freelance" or "contract" attorneys to meet their clients’ needs.

A freelance attorney is a solo practitioner who provides temporary legal services to law firms, rather than representing clients directly. The temporary attorney provides a final written product, which the firm then reviews, revises or approves, and signs. Freelance attorneys provide services to law firms independently, or through companies that handle administrative issues. Firms rely on freelance attorneys to assist during busy periods like trial preparation, to add specific expertise and to lower fees to firm clients. Freelance lawyers are essentially contract lawyers but the term "freelance lawyer" is increasingly used to describe experienced lawyers who handle substantive projects rather than appearances or document review.

Temporary attorneys can be an attractive model, but must consider the ethical rules. How are conflicts of interest managed? Can a firm add a surcharge to the temporary attorney’s rate? Must a firm disclose the relationship to its clients?

In California, the Code of Professional Conduct does not include rules that specifically address temporary attorneys, so the same rules that apply to lawyers who directly represent clients also apply to freelance lawyers and the law firms that use their services. The California Rules of Professional Responsibility govern, with support from state ethics opinions and the ABA Model Rules of Professional Conduct.

Part one of this article discusses conflicts of interest, aiding and abetting the unauthorized practice of law, and the duty of competence.

Conflicts of Interest

How should a law firm best manage conflicts of interest when outsourcing legal work to a freelance attorney?

For many firms, the most concerning part of hiring a temporary attorney is the potential for conflicts of interest. While law firms and temporary attorneys are required to manage conflicts appropriately, conflicts of interest rules should not be a significant hurdle to getting outside help.

California Rule of Professional Conduct 3-310 governs attorney conflicts, and prohibits an attorney from accepting or continuing to represent a client if there is a conflict or potential conflict affecting the member’s representation. If a freelance attorney works for a firm, that firm’s client is the temporary attorney’s client for conflicts purposes. Because temporary attorneys often work for different firms simultaneously, it is crucial that both the temporary attorney and the firm routinely monitor conflicts. Freelance attorneys are required to maintain accurate records of their actual conflicts so they can properly clear conflicts for every matter. State Bar of California Standing Committee on Professional Responsibility and Conduct, Formal Opinion 1992-126 states:

"To 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. The firm engaging a contract attorney has the most direct obligation to maintain an accurate record of the contract attorney’s work for each of its clients and to monitor for conflicts on a routine basis."

COPRAC Opinion 1992-126 indicates that there is potential for a conflict if the attorney had a "substantial relationship" and obtained "confidential" information during the course of his representation of that client.

While temporary attorneys do not typically obtain confidential client information to amount to a "substantial relationship," all attorneys must avoid engagements adverse to a current or former client’s interests, especially if a prior relationship presumes knowledge of that client’s confidential information. A better rule is simply for freelance contract attorneys to maintain accurate records of matters and clients, and to avoid working on any other matter adverse to current and former clients.

Imputed disqualification provisions can be especially confusing when dealing with contract attorneys. The key question is whether the law firm’s conflicts are imputed to the temporary attorney, and vice versa. The answer generally depends on the closeness of the relationship, and under ABA Formal Opinion No. 88-356, whether the temporary attorney is "deemed associated" with the firm such that knowledge of and access to the firm’s clients’ confidential information is presumed. If the attorney is "deemed associated" with the firm, then the firm’s conflicts are imputed to the temporary attorney and vice versa, but not if the relationship is more distant and the temporary attorney does not have access to confidential client information.

Relationships between temporary attorneys and firms vary widely, from a short discrete project to relationships that involve follow-up work. The temporary attorney’s knowledge and access to the firm’s clients’ information will also vary widely — in the case of a discrete project, the temporary attorney may only have information regarding a general question with no knowledge of or access to the clients’ information. But if the relationship involves multiple projects or includes follow-up work, the temporary freelance attorney may have access to the firm’s document database and client files. Conflicts of interest rules for temporary attorneys therefore depend on the closeness of the relationship between the temporary attorney and the firm, and the temporary attorney’s access to the firm clients’ confidential information. Under ABA Formal Opinion No. 88-356, "If the contract attorney works only on a single matter for the firm and has no access to information concerning other clients, then the contract attorney would not be deemed associated for imputed disqualification purposes."

Firms and temporary attorneys should also take every precaution to limit the temporary attorney’s access to confidential client information. Firms should avoid granting passwords to document management systems or general access to client files to temporary attorneys unless absolutely necessary. COPRAC Opinion No. 1992-126 suggests, "To minimize the chance of the contract attorney unnecessarily learning confidential information, the firm must make a concerted effort to screen the contract attorney from confidential information that is unnecessary to the attorney’s assignment at the firm. The firm should limit the contract attorney’s access to office files unrelated to the assignment and the contract attorney should not attend meetings at which unrelated cases are discussed."

Aiding and Abetting in the Unlawful Practice of Law

Does the use of freelance attorneys who are not members of the State Bar of California violate ethical rules prohibiting aiding and abetting in the unlawful practice of law?

"No person shall practice law in California unless the person is an active member of the State Bar." Cal. Bus. Prof. Code §6125. Under California Rule of Professional Responsibility 1-120, no member may "assist in, solicit, or induce any violation" of the rules of professional conduct or the State Bar. California Rule of Professional Conduct 1-300(A) states, "A member shall not aid any person or entity in the unauthorized practice of law." These rules apply when a California law firm contracts with attorneys not admitted in California or uses a Legal Process Outsourcing, or LPO, company that employs off-shore individuals or out-of-state attorneys. See Birbower, Montalbano, Condon & Frank v. Superior Court, 17 Cal.4th 119 (1998).

While the State Bar Act does not define the practice of law, courts have discussed its meaning. In Birbower, the court held, "The primary inquiry is whether the unlicensed lawyer engaged in sufficient activities in the state or created a continuing relationship with the California client that included legal duties and obligations."

Law firms are permitted to contract for certain legal services by nonadmitted attorneys, as long as the law firm remains ultimately responsible for the final work product. If the temporary attorney makes an appearance, then that attorney must be admitted in California. In most situations, however, the temporary attorney performs tasks that do not require a license, as long as a California attorney retains full control over the client representation and exercises independent judgment. Law firms must consider the duty of competence, but simply engaging temporary attorney services from a non-California attorney does not amount to aiding and abetting in the unlawful practice of law. San Diego County Bar Association Ethics Opinion 2007-1 (SDCBA Opinion 2007-1) ("The attorney does not aid in the unauthorized practice of law where he retains supervisory control over and responsibility for those tasks constituting the practice of law.")

Duty of Competence

Does a law firm violate ethical rules if it uses an inexperienced contract attorney?

Section 6067 of the California Business & Professions Code recites the attorney’s oath "to faithfully discharge the duties of an attorney at law to the best of his knowledge and ability." California Rule of Professional Conduct 3-110 requires that an attorney perform legal services "competently," defined as "diligently to apply the learning and skill necessary to perform the member’s duties arising from employment or representation." Rule 3-110 discussion further states, "The duties set forth in rule 3-110 include the duty to supervise the work of subordinate attorneys and non-attorney employees or agents."

The temporary attorney relationship typically involves a supervising attorney who is responsible for the temporary attorney’s work. The supervising lawyer assigns the task, and is ultimately responsible for its content. Attorneys may also seek assistance from outside attorneys if they are unfamiliar with a particular area of law. This is permissible under Rule of Professional Conduct 3-110(C), which states, "If a member does not have sufficient learning and skill when the legal service is undertaken, the member may nonetheless perform such services competently by 1) associating with or, where appropriate, professionally consulting another lawyer reasonably believed to be competent, or 2) by acquiring sufficient learning and skill before performance is required." To satisfy the duty of competence, the attorney must determine whether the "outsourced" work has been done competently. The attorney therefore must know enough about the subject to competently judge the work. The attorney may not solely rely on a temporary attorney to discharge the duty of competence. SDCBA Opinion 2007-1.

The ABA has commented on the importance of using only skilled contract attorneys in Formal Ethics Opinion 08-451 (August 2008) — "There is nothing unethical about lawyer outsourcing legal … services, provided the outsourcing lawyer renders legal services to the client with the ‘legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation,’ as required by Model Rule 1.1."

ABA Model Rule 1.1 Comment 1 further states: "In determining whether a lawyer employs the requisite knowledge and skill in a particular matter, relevant factors include the relative complexity and specialized nature of the matter, the lawyer’s general experience, the lawyer’s training and experience in the field in question, the preparation and study the lawyer is able to give the matter and whether it is feasible to refer the matter to, or associate or consult with, a lawyer of established competence in the field in question."

Best practices dictate hiring skilled contract attorneys with the experience necessary to competently perform the quality of legal work clients deserve, and to exercise competent, independent judgment over the temporary attorney’s work product.

Part two of this article will discuss ethical considerations regarding the duty to disclose the contract attorney relationship to a client, allowable fees, the duty to maintain client confidences, fee-splitting and malpractice insurance.

Erin Giglia and Laurie Rowen are the owners and founders of Montage Legal Group, a freelance attorney network based in Orange County. They can be reached through the company’s website, www.montagelegal.com, and by email: info@montagelegal.com.

In Practice articles inform readers on developments in substantive law, practice issues or law firm management. Contact Vitaly Gashpar with submissions or questions at vgashpar@alm.com.