Denton partners Randy Evans and Shari Klevens (Handout)
As a result of the changing market for legal services, law firms are not always looking for the same type of candidate when hiring new attorneys as in the past. Because demand from clients can be uneven, particularly for litigation matters, some firms may be reluctant to commit to full-time attorneys in fear that the work won’t be there permanently to justify the cost. For that reason, law firms are turning more and more to contract attorneys, who can help alleviate the workload during busy times without the same long-term commitment.
While contract attorneys can be a great resource for law firms when used properly, there are also associated risks that law firms may not always consider. Below are some tips to help law firms use contract attorneys effectively and avoid the pitfalls.
The Duty to Supervise
As is obvious from their name, contract attorneys typically perform work for a law firm or attorney pursuant to a contract. Often, the contract will distinguish the contract attorney from other attorneys at the firm, including by clarifying that the contract attorney is not an associate and is not on the firm’s partnership track.
Unless a client contracts directly with a contract attorney, the law firm will typically undertake the attorney-client relationship, through which the law firm owes direct duties to the client. These duties may include certain responsibilities and obligations relating to the conduct of the contract attorney.
For example, pursuant to Rule 3-110 of the California Rules of Professional Conduct, an attorney owes a duty to clients to act competently when providing legal services. The discussion to that rules specifically provides that the duty of competence includes “the duty to supervise the work of subordinate attorney and non-attorney employees or agents.” The California State Bar has specified in formal bar opinions that the duty to supervise extends to contract attorneys. See, e.g., California State Bar Formal Opn. No. 2004-165.
In some situations, a contract attorney may be directly liable to the client due to her or his own negligence or error. However, for the law firm, the fact that the firm used and relied on a contract attorney will typically not serve as a complete defense to any future claim for malpractice.
Accordingly, law firms may want to consider protocols for the supervision of contract attorneys. One place to start is with the contract or other documentation specifying exactly what the contract attorney has been hired to do, the protocols for performing that work, and confirmation that the contract attorney will abide by the law firm’s practices and procedures, in addition to all ethical and professional rules.
Beyond the terms of the contract, law firms can also address the practical aspects of the work to be performed by the contract attorney, including how the contract attorney’s work will be reviewed to ensure that it meets the appropriate standards. Law firms simply passing along the work of contract attorneys without doing more may be assuming unnecessary risk.
When a contract attorney is hired as an employee that works exclusively for a single law firm, the conflict issues are generally less complex. The rules applicable to the contract attorney, such as the imputation of conflicts, will typically apply as they do to any other attorney at the law firm.
However, the issue of conflicts becomes more difficult when the contract attorney is hired as an independent contractor. One way to address this issue is to establish an “exclusive” independent contractor relationship with a contract attorney so that the conflict analysis only involves one set of clients.
Under this arrangement, the law firm and the contract attorney agree that the contract attorney will do work only for the one law firm. Not surprisingly, contract attorneys may expect some commitment from the law firm, whether in the form of compensation or a workload commitment.
It is more complicated for firms that prefer to use contract attorneys on a purely “as needed” or nonexclusive basis. Recognizing the conflict issues that can arise in this context, Formal Opinion 1992-126 states that “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.” Thus, the firm may want to inquire as to whether the contract attorney maintains such a list to assist in evaluating conflicts.
However, depending on the circumstances, it is possible that the contract attorney’s conflicts will not be imputed to the law firm where the contract attorney’s work is relatively minimal and is limited only to a single matter or client. Other factors that may limit the possibility that conflicts will be imputed include whether the contract attorney is physically separated in the law firm’s office space from other client files and whether the contract attorney’s access to electronic files or databases is limited to only those matters on which the contract attorney is working.
Consider Whether Other Obligations Apply
A number of recent high-profile cases have addressed the obligations law firms owe to contract attorneys, including whether firms are obligated to provide contract attorneys with benefits in the same manner as employees. Most notably, there have been a number of cases addressing whether law firms are required to pay overtime to contract attorneys under certain circumstances.
In addition to state and federal laws relating to compensation, law firms can consider how other rules, regulations, and laws may apply to contract attorneys. Depending on how law firms choose to structure the relationship with the contract attorney, there may be different requirements as compared to other attorneys at the firm.
Most firms hiring a contract attorney will take steps to clearly address the nature of the relationship with the contract attorney (e.g., employee or independent contractor), the scope of the contract attorney’s work, and the applicable ethical, legal, and professional rules.
The failure to come to a clear agreement on the key issues can lead to problems later and can potentially undermine the benefits of using contract attorneys.