The Decision to Hire Contract Attorneys
Should Never Be Just About the Money
is, contract attorneys are often temporary and/or part-time and some
firms hire quite a few. Do these part-timers have their own clients, to
include other firms that they work for under contract? Is there frequent
turnover of contract attorneys at the firm? In short, contract attorneys
represent an unknown risk to a malpractice insurance carrier.
By Mark Bassingthwaighte
Firms hire contract attorneys for a variety of reasons, not the least of
which is an attempt to control expenses. While reducing expenses is
a good thing, the financial savings shouldn’t be the only issue in play
as unintended consequences could follow if no thought is ever given
to a few other concerns. The issues that come to mind most readily
for me are conflicts of interest, accountability for work product,
disclosure, and insurance coverage were an allegation of negligence
ever to arise.
Addressing these issues is problematic, however, because the term
“contract attorney” means different things to different people. IRS
definitions and regulations aside, contract attorneys can run the
gamut from full-time “employees” who are held out as members or
associates of a firm to temporary part-time attorneys who never step
foot within the walls of the firm. For the purposes of this article, I
am going to focus on contract attorneys who will never be held out
publicly as being associated with the firm at which they are working.
Let’s look at the insurance coverage concern first. Don’t assume
coverage for contract attorneys under your existing policy is a given.
While some insurance companies make no distinction between
“contract attorneys” and “employed” attorneys, others do. This means
some insurance carriers will automatically add contract attorneys to
your policy, once notice has been given and the appropriate amount
of premium paid, and others will not. Why won’t they? One reason
If your insurance carrier will not extend coverage under your existing
policy, the contract attorney may need to purchase his or her own
coverage if they feel coverage is necessary. I would suggest coverage
should be mandatory if the contract attorney will be doing things
like appearing in court or taking depositions. It may not be necessary
if there will never be any client contact and the hiring firm will be
reviewing and accepting accountability for the contract attorney’s
entire work product. Regardless, always confer with your insurance
carrier when thinking about hiring a contract attorney (or attorneys) so
the situation can be fully understood, documented, and appropriately
underwritten by the carrier if they are willing.
The decision as to whether to use contract attorneys is not something
that should lie exclusively with the firm. Clients may or may not
be comfortable with contract attorneys and thus clients should be
included in the decision-making process. Certainly, our ethical rules
require disclosure; but ethical rules aside, whose matter is it? It’s the
clients. I would argue clients fundamentally deserve to know who will
be working on their matters due to confidentiality, competency, and
financial concerns at a minimum. Explain to your clients why the use
of contract attorneys is necessary. Let them know who they are and
what skill set they bring to the table. Then detail what the savings will
be and share the steps that will be taken to ensure confidences will
be maintained. In the end, it’s all about respecting the attorney/client
relationship.
The accountability piece is an interesting issue. Under agency
principles, the firm is going to be liable for what the contract attorneys
do within the scope of their employment. Sometimes firms will try
to do an end run around this concern and treat the contract attorneys
as independent contractors. This may be partially effective if the
contract attorneys are fully independent (think in accordance with the
IRS definition) and the client has not only been made aware of the
situation but consented to it in writing. I say partially effective because
there will always be the possibility of a negligent hire claim should
any of the independent contract attorneys commit malpractice. Given
ALPS Risk Manager Mark Bassingthwaighte, Esq., has conducted more than 1,000 law firm risk management
assessment visits, presented numerous continuing legal education seminars throughout the United States, and
written extensively on risk management and technology. Check out Mark’s recent seminars to assist you with
your solo practice by visiting our on-demand CLE library at alps.inreachce.com. Mark can be contacted at
[email protected].
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THE GAVEL