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Law Firms' Use of Temporary Attorneys Becomes Permanent

Though temporary attorneys may represent an imperfect solution for law firms dealing with the peaks and valleys inherent to litigation practice, they're fast becoming a permanent fixture for many law firms. This cover story, Temporary Solution from American Lawyer (Sept. 1) highlights the benefits and drawbacks of employing temporary attorneys, from the perspective of the employer law firm and the temps themselves.

According to the article, most firms don't want to speak publicly about hiring temp attorneys. Only 42 of the 200 largest law firms responded (most on conditions of anonymity) to a survey on use of temp workers. Of the respondents, 57 percent reported using temp attorneys, up 13 percent since 2003. The article summarizes the appeal of contract attorneys with average credentials, even at a time when law firms vie to attract the so-called "best and the brightest" with stratospheric salaries:

In an age when law firms spend huge amounts of money on marketing efforts to build their brands, they also increasingly rely on off-label, generic lawyers, most of whose resumes would never get a second glance for an associate-track job. Law firms do it because they have to: Clients are pressing counsel to trim costs, and labor-intensive document reviews are a natural target. Firms, for their part, increasingly find they can't handle the work alone anyway-even if they wanted to-as each new class action or securities fraud investigation brings on a landslide of electronic documents. As a bonus, firms can bill out at higher attorney rates the kind of work that a decade ago might have been assigned to paralegals.

And how much money do the firms make?  As the article describes:

It varies. The American Bar Association's committee on ethics and professional responsibility concluded in a formal 2000 opinion that firms could bill out temporary attorneys at triple the rate they pay the agency. In our survey, though, only a handful of firms using temps reported triple-billing; a third reported a 0-25 percent markup over the rate the firm pays its agencies, and another third reported a 26-100 percent markup.

Still, the dollars can add up. At an average markup of 100 percent, 100 temporary lawyers hired for four months (the average length of time for an antitrust regulatory review) could generate roughly a $5 million profit for the firm. "Any law firm that doesn't make money off of document review is making a mistake," says Phillips Geraghty, a cofounder and managing director of New York-based legal staffing agency De Novo Legal, LLC.

So if temps are earning firms profits, what are the drawbacks? According to the articles, some firms are wary about being perceived as "running a sweat shop," and othersworry about confidentiality and quality of work.

As for the contract attorneys, is temp work exploitation -- or a more lucrative option than they'd otherwise find at non-Biglaw jobs? Pay for temps ranges frm $21 to $35 an hour, but the agencies that provide the temps are paid double that (around $60 an hour) by the law firms. Still, even at $30 an hour, a four-month contract, with 10- to 12-hour days and overtime, can yield as much as $50,000 for the temp, provided that the contract actually lasts that long. 

At the same time, temp work is often a dead end. Says one D.C. temp quoted in the piece:

We are told not to put 'contract attorney' on our resumes, otherwise you are looked down on," said one D.C.-area temp who has been looking for a full-time job for years. And most firms don't permit temps to make calls, surf the Web, or e-mail on the job, an obstacle to finding permanent employment.

(For more on a temp's perspective on law firm use of contract lawyers, see this commentary by Temporary Attorney and this by DC Contract Attorney).
 
Some firms are now creating hybrid positions, like staff attorneys or litigation analysts. These positions are staffed by JDs, and they're permanent jobs, albeit lower paying (around $75,000 per year) than associate positions. Firms like Skadden Arps, which employs 108 staff attorneys (most of whom work out of satellite space) explained that they have more quality control over staff attorneys than temps, who come and go.

What's your view of the rise of the temp attorney? Does use of temp attorneys let associates focus on more substantive matters so that firms can make better use of their $145,000 investment? Does the pay received by temp attorneys and the subsequent mark-ups by the employment agency and then the law firm exploit temps -- or is their overall compensation sufficiently generous to ensure that they're not taken advantage of? Finally, is the temp industry here to stay -- or will we see more firms going either the Skadden route and hiring staff attorneys? Or will they go the route that corporations like DuPont are now pursuing, offshoring document review to countries like India or the Phillipines?

Posted by Carolyn Elefant on September 11, 2006 at 05:13 PM | Permalink | Comments (6)

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