Traditionally, an attorney holding a job with a large law firm was considered to be much more secure than a freelance or contract attorney. After all, law firms pay well, provide benefits, and offer opportunities for advancement to partnership. In the current economic crisis, however, large law firms have succumbed to intense pressure to cut costs and legal fees. Laying off attorneys and staff has proved to be an effective cost-cutting measure. This article discusses how the downsizing of law firms may provide additional opportunities for contract lawyers.
Impact of Economy
The American Bar Association tells of more attorney layoffs in each ABA Journal Report. In the latest report, six large law firms laid off about 300 attorneys and 400 staff. Many layoffs have preceded this latest wave, and more are sure to come. In some cases, even partners have been let go. Moreover, some firms have frozen or reduced the compensation of associate attorneys or postponed their start dates.
Most of the cut-backs are based on the need to reduce costs and to reduce the number of attorneys who are in areas less in demand. For example, Goodwin Procter LLP is a large law firm with offices in Boston (main office), California, Washington, D.C., and New York. Goodwin Procter’s layoffs of 38 associates and 36 staff were primarily in Boston and New York, and among the firm’s business law practice. Cut-backs are also made in response to increased pressure from clients, especially large corporations, to reduce legal fees.
Outsourcing Legal Work
In many cases, the work that the associates were doing can be outsourced to off-site contract attorneys without reducing the quality of services to clients. A contract attorney costs less than an associate-employee because the firm does not have to provide office space, insurance coverage, and retirement benefits.
Reservations formerly held by attorneys regarding the outsourcing of legal work have been alleviated in part by Formal Opinion 08-451of the Standing Committee on Ethics and Professional Responsibility of the American Bar Association, which stated that outsourcing legal work, if done within certain guidelines, does not violate the rules of professional responsibility. The key condition is that the outsourcing lawyer must remain responsible for meeting the standards for rendering competent legal services and keeping the client’s information confidential. An outsourcing lawyer is allowed to charge a reasonable fee above the cost of the service, depending on the extent of overhead or supervision that was required. A few states have also addressed the conditions under which outsourcing legal work is permissible.
Law firms first used outsourcing for word processing, payroll, storage, and other administrative functions. The first use of contract attorneys for legal work was in the context of document review for discovery requests. In some cases, contract attorneys work on site under varying conditions. Some attorneys go through outsourcing firms to have documents reviewed in India or other offshore locations. Outsourcing legal work now extends beyond the document review function to such areas as legal research, preparation of routine contracts, and patent work.
Becoming a Contract Attorney
The attorneys who were laid off may also benefit from outsourcing by becoming contract attorneys themselves. Because most of the layoffs are based on factors other than the attorneys’ performance, a laid off attorney may be able to do contract work for his or her former law firm. It is relatively easy to market your services by word of mouth or on the internet.
The stigma associated with working as a contract attorney is not nearly as pervasive as it used to be. Attorneys formerly feared that working as a contract attorney might be viewed so negatively that they could not get a good position in the future. While some prejudice lingers, contract attorneys in general are not necessarily viewed as inferior attorneys who cannot find a job elsewhere.
No attorney should want to benefit at the expense of another attorney. It appears, however, that the cut-backs at law firm personnel created by the recession may provide increased opportunities for contract attorneys. In light of ABA Formal Opinion 08-451, law firms can be assured that outsourcing legal work does not violate any of the rules of professional responsibility, particularly when the work is given to U.S. lawyers. Contract attorneys should be prepared, however, for more competition from laid-off attorneys who may be seeking to work independently.
Martha Nell, “Bloody Thursday: 6 Major Law Firms Ax Attorneys,” ABA Journal (Feb. 12, 2009)
“January’s Carnage: 1,487 Law Lawoffs,” ABA Journal Law News Now (Jan. 29,2009)
Mrposse, “Contract attorneys and the changing legal landscape,” The Posse List (Feb. 13, 2009)
Formal Opinion 08-451: Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services, Standing Committee on Ethics and Professional Responsibility, American Bar Association (Aug. 5, 2008)