The sheer number of lawyers in Allegheny County could be a problem for new attorneys seeking work, but may also be a blessing for area businesses.
There are more lawyers per capita here than in any other area of the nation except Washington D.C. (Business Times, May 26). Because of this oversupply, there are many lawyers who are out of work, or who will work inexpensively.
New companies are forming as a result, offering alternatives to high-priced law firms that charge an hourly rate- alternatives such as flat fee or contingency arrangements and temporary services.
Legal Network Ltd., a North Hills based company, keeps a registry of about 750 lawyers and paralegals who work on a contract basis only- at much cheaper rates than lawyers at the bigger firms.
Many of these lawyers either can’t find work or are looking for full-time positions. They’re used as temporary workers, performing many “back office” functions, such as document review. These are tasks that require a lawyer, but not necessarily an expensive one.
For example, a senior attorney at one of the large firms could cost $200 an hour; Legal Network will provide a lawyer with the same experience for $77 an hour.
“This is tactical use of contract attorneys,” said Bradley Franc, a lawyer and co- owner of Legal Network.
Just because these lawyers are part time doesn’t mean their skills are lacking, Mr. Franc said. About one third of Legal Network’s lawyers are offered full time jobs by the law firms for which they do temp work. About 15 percent of them made law review in school, a prestigious position on a legal journal reserved for the best students. About a quarter of the lawyers are right out of law school and couldn’t find full- time positions, Mr. Franc said. They work at Legal Network to gain experience.
The bottom line, from the client’s perspective, is saving money, especially when a company needs an army of lawyers working on a case or deal.
Mr. Franc cited the example of a company that required a long term discovery. The business racked up 3,443 hours of billable time. By using contract lawyers at a rate of $32 an hour, instead of law firm lawyers at a rate of $150 an hour, the company was able to save over $400,000 in one year, said Mr. Franc.
David Charnock, the business manager for Rothman Gordon Foreman & Groudine, a Downtown law firm, said his firm uses Legal Network when there is an immediate need for one or two experienced attorneys, but not a need for full time staff.
“We can get specific people with a specific need, ” Mr. Charnock said. “When you look at the hourly rate they are charging, it isn’t at all that exorbitant.”
Although the lower rates are nice, there are some lawyers who will work on a contingency fee basis, which means they don’t charge a fee unless they win the case. Such arrangements are more rare among business oriented law firms than they are among personal injury firms.
Downtown firm Silkov and Love works on a contingency basis, a risky proposition for a firm of only five lawyers. “We take on a clients case as an investment,” said partner Jay Silverblatt. “But we won’t take a case that is a loser.”
Mr. Silverblatt, who has been trying corporate cases on a contingency basis for 17 years, said his firm’s success with the billing strategy has been high; the cases he picks seldom lose. But he said most companies don’t bite on that pitch, he said, because the corporate mentality is to use a big firm and pay on an hourly basis.
“I always scratch my head and wonder why,” Mr. Silverblatt said. Of course, alternative billing practices aren’t solely the domain of small and non traditional law operations.
For instance, the Pittsburgh office of LeBoeuf, Lamb, Green & McRae, a New York City based law firm, handles all of Alcoa’s litigation on a flat fee basis. Alcoa pays a fixed retainer (regardless of outcomes), and LeBeouf, Lamb handles all the company’s litigation. While not the norm these days, flat fees and contingencies are neither particularly new or surprising. They date back to the beginnings of American legal practice/
However, Pre-Paid Legal Services, an Oklahoma-based company, is trying something more radical in it’s approach to billing. The company, which recently opened an office in Monroeville, is taking a page from the health care book in its approach to billing small companies.
Call it managed law. For companies with 20 or fewer employees and gross profits of less that $2 million annually, Pre-Paid can eliminate many nickel and dime legal expenses with a premium-like fee.
For $69 a month, Pre-Paid will author 10 collection letters monthly, review three contracts of up to 15 pages each monthly, and provide 60 hours of trial defense services yearly, among other services.
To Allan Feitl, owner of Oakworks Furniture in Ross Park Mall, using Pre-Paid meant he could drop his lawyer.
“I was apprehensive at first,” he said. “But what we are basically getting is a lot more use of an attorney for a much lower price.”