The Current Legal Marketplace
It is no secret that practicing law in the 1990’s has become more challenging than perhaps any other time period. The competitive business climate of Corporate America forced service providers, including law firms, to provide more for less. This economic pressure has caused many law firms to downsize, limit growth, and/or stretch out partnership tracks for many associates. Adding tension to this environment is the growing population of practicing lawyers. Recently, several articles in the Pittsburgh Business Times have observed similar difficulties exist in the Pittsburgh legal marketplace . This article, however, will not focus on the problems illuminated in the other articles, but will suggest an opportunity for law firms to acquire a competitive advantage in the current market place.
Contract Attorneys as Part of the Solution
A partial solution to the competitive demands on Pennsylvania law firms suggested in Pennsylvania Law 1994: the State of the Profession, is that “law firms will need to innovate in order to compete and survive, let alone succeed, in this new environment. The first “Innovative Solution” suggested by this analysis is to use outsourcing to reduce costs. The article states:
Costs will need to be controlled as never before. Staffing ratios must be revisited, benefits packages streamlined, part-time and temporary employment and “outsourcing” explored, with the concomitant reductions in space requirements and, therefore, occupancy costs, through heralded “virtual corporation.”
In fact, one might argue that the solution of “contract attorneys” is no longer an innovation; it is commonplace in most large metropolitan centers across the country with some of the largest law firms and Fortune 500 companies using contract attorneys. Currently there are established contract attorney services in Boston, New York, Philadelphia/Wilmington, Baltimore, Hartford, Northern New Jersey, Washington D.C., Chicago, Milwaukee, New Orleans, Houston, Dallas, San Francisco, and Los Angeles. Pittsburgh now through Legal Network Ltd joins the growing list of metropolitan areas in offering such a solution.
The Benefits of Contract Attorneys
The following is a list of documented benefits realized by organizations which utilize contract attorneys:
Enhances Profitability: The economic benefits of using contract attorneys are easily observable. The costs of contract attorneys, including service fees, is often less expensive than hiring a full-time attorney. They do not carry overhead costs such as taxes, benefits and staff support. In addition, the cost of paying attorneys for nonchargeable hours does not exist because contract attorneys are matched directly with work needs. Furthermore, unlike some associates who respond to competing demands in a law firm, contract attorneys can stay focused on completing assigned projects. Then when the work is completed, the attorney leaves with no hard feelings. The result is that law firms become more profitable and often improve client service by passing on the savings.
Quick Response: With the use of contract attorneys, it is unnecessary to turn down projects when current staffing is insufficient to handle a sudden increase in work. Contract attorney agencies can quickly identify skilled and experienced attorneys to meet staffing needs.
Fill Gaps: The staffing difficulties most firms experience when faced with a maternity leave or illness can be easily solved with contract attorneys.
Leverage Core Competencies of Partners: Attorneys who are experts in their fields sometimes struggle with how to market the their expertise, yet still get the work done. Contract attorneys free up partners’ time to review work-in-progress and concentrate on attracting additional projects. Many times a significant portion of a legal project can be delegated to a contract attorney while the partner performs the more technical aspects of the project.
Professional Concerns of Using Contract Attorneys
Quality: Similar to the national trend, the Pittsburgh legal marketplace has experienced the impact of downsizing and the desire for more free time for all attorneys. As a result, a high number of experienced and specialized attorneys seek temporary assignments as a full-time career. In fact, Pittsburgh has the second highest percentage of attorneys to the general population next to Washington D.C. In many cases these attorneys are specialized sole practitioners or members of small firms who look to contract assignments to fill out their schedules. Finally, the feedback from clients in other cities where contract attorneys have been rigorously tested is very positive.
Conflicts of Interest, Confidentiality of Information and Disclosure to the Client: Importantly, these concerns in the context of temporary attorneys have been addressed by the American Bar Association in Formal Opinion 88-356, Temporary Lawyers. The opinion observes that the use of temporary attorneys is growing and provides guidance on these issues. The opinion notes that:
The use of a lawyer placement agency to obtain temporary lawyer services where the agency’s fee is a proportion of the lawyer’s compensation does not violate the Model Rules or predecessor Model Code as long as the professional independence of the lawyer is maintained without interference by the agency, the total fee paid by each client to the law firm is reasonable, and the arrangement otherwise is in accord with the guidelines in this opinion.
Why Use an Outside Organization to Identify Contract Attorneys?
With the marketplace indicating that contract attorneys play an important strategic role for law firms to increase profitability, the final issue is how to locate contract attorneys. The possibilities are for the law firm to seek contract attorneys on their own or use an organization specialized in the area. The latter method provides several advantages. First, continuous recruitment efforts and computerized database In addition, there are tax reasons for using an agency. The employment status of contract attorneys , has been analyzed by many in the private sector who have concluded that the manner in which law is performed makes it appropriate to categorize contract attorneys as independent contractors. These arguments are enhanced when a law firm uses an agency to find contract attorneys as opposed to ad hoc individual hiring because the agencys allow outside agencies to quickly find experienced and skilled attorneys from a larger candidate pool. Furthermore, agencies pre-screen and categorize applicants based on their skill level. This essentially eliminates the concern that a contract attorney will mold his/her background to a law firm’s advertised position. Agencies have also been successful when there is an immediate demand to locate several attorneys for sudden large projects. Something many law firms would likely be unable to accomplish. In a nutshell, the agency in most cases, will find the more qualified attorney in less time.
In addition, there are tax reasons for using an agency. The employment status of contract attorneys , has been analyzed by many in the private sector who have concluded that the manner in which law is performed makes it appropriate to categorize contract attorneys as independent contractors. These arguments are enhanced when a law firm uses an agency to find contract attorneys as opposed to ad hoc individual hiring because the agency’sattorneys are clearly making themselves available to work for the general public.
Conclusion Contract attorneys and the agencies which supply them are a fast growing tool utilized profitably by many law firms. The trends which have driven the emergence of this field are projected to be long term factors in the legal marketplace in Pittsburgh. Therefore, law firms should expect their use to proliferate. Consequently, the law firm which learns to use contract lawyers most effectively, will clearly have a cost advantage over those which do not.