Limit the risks when working with contract attorneys

The challenges in recruiting and retaining attorneys in recent years have been well-documented. Even if good candidates are available, hiring a new full-time attorney requires significant training and can be a substantial investment at a time of increasing economic uncertainty. For that reason, the best solution for short-term staffing needs may be a contract attorney.

Contract attorneys can be a crucial resource to ensure all necessary work is completed in connection with complex litigation or large transactions. But hiring contract attorneys has its own unique considerations and risks. Below are tips to keep in mind when using contract attorneys.

Supervisory Responsibilities

As is obvious from their name, contract attorneys typically perform work for a law firm or attorney pursuant to a contract. That contract defines the relationship, typically reflecting that the engagement is limited in nature. Law firms may wish to include terms to clarify that the contract attorney is not a full-time professional with the firm.

Unless a client contracts directly with a contract attorney, typically the law firm will undertake the attorney-client relationship, through which the law firm owes direct duties to the client. These duties may include responsibilities and obligations relating to the conduct of the contract attorney.

For example, an attorney generally owes a duty to clients to act competently when providing legal services. Under Rule 5.1(b) of the California Rules of Professional Conduct, attorneys "having direct supervisory authority over another lawyer, whether or not a member or employee of the same law firm, shall make reasonable efforts to ensure that the other lawyer complies with [the Rules of Professional Conduct] and the State Bar Act." Thus, the duty to supervise can arguably extend to contract attorneys, particularly given that the rule applies even where the attorney is not a member or employee of the same law firm.

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 may not serve as a complete defense to any future claim for malpractice. Thus, having protocols for the supervision of contract attorneys can help ensure that the client continues to receive the same quality services provided by any other attorney at the firm.

One place to start is with the contract or other documentation specifying exactly what the contract attorney has been hired to do, instructions 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.

Conflict Issues

When a contract attorney is hired as an employee who works exclusively for a single law firm, the conflict issues are generally less complicated. Subject to an analysis of the specific circumstances of the case, generally the rules applicable to the contract attorney, such as the imputation of conflicts, may 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 or simply to work on a single project or case. Some firms address this issue by establishing 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 can agree that the contract attorney will do work only for the one law firm for a period of time. Not surprisingly, contract attorneys may expect some commitment from the law firm, whether in the form of compensation or a workload commitment.

It can sometimes be 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, the California bar provided some insight in Formal Opinion 1992-126: "[t]o 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 Other Potential Obligations

Several high-profile cases have addressed whether law firms owe "employment" obligations to contract attorneys, including whether firms are obligated to provide contract attorneys with benefits in the same manner as employees. Thus, 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.

Avoid Uncertainty

The goal when hiring a contract attorney is to clearly define as many aspects of the relationship as possible. Ambiguity regarding the nature of the relationship, the scope of the contract attorney's work, and/or the applicable ethical or legal rules all can lead to risk. Without an agreement or handbook detailing the firm's expectations and the contract attorney's instructions, the benefits of a contract attorney can be severely diminished.