Contract attorneys perform work for a law firm pursuant to a contract. These legal professionals aren’t employees of the firm, but rather are either “on call” to assist when needed or are full-time employees who aren’t associates and not on the firm’s partnership track. Contract attorneys can be leveraged to help a law firm be more cost-effective and efficient.
Research shows that over 56% of law firms use contract attorneys as a flexible resource to meet business demands.
Here are some of the reasons why law firms take advantage of this dynamic workforce. You can use this logic to convince your firm management that contract attorneys would be a significant benefit to your organization.
The Real Numbers Behind Hiring a Full-Time Employee
According to an article in CNNMoney, although it depends on the type of benefits provided and taxes, a salaried employee can cost the firm 18% to 26% more than that individual's base salary. These additional costs are frequently given as the rationale by businesses for not hiring more workers. That overhead can include Social Security taxes, Medicare taxes, state unemployment insurance, health care benefits, 401(k), and other employer-funded perks like a company car, cellphone, or health club membership.
Further, there is the hidden overhead of doing business, such as the cost of additional equipment, office supplies, and work space.
In contrast, a contract attorney may cost between $50–120/hour. When you calculate the cost comparison with a $70,000/year associate to complete a memorandum that will take 10 hours, a contract attorney at $75/hour would charge $750. But an associate with a $70,000 salary taking the same amount of time to complete the task would cost at least 25-30% more.
Contract Attorneys Can Save the Firm Money
As discussed above, using contract attorneys is often a more efficient choice than making a permanent hire because there is less overhead. This also gives senior management more time for rainmaking.
Contract Attorneys Can Make a Profit
While the American Bar Association Model Rules of Professional Conduct Rule 1.5 states that a law firm’s fees must be reasonable, it doesn’t preclude a firm from charging a premium on a contract attorney’s rates, provided those charges are reasonable. The Rule lists several factors that can be used to determine whether a fee is reasonable. Some these factors are:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the task properly;
(2) the fee customarily charged locally for similar legal services;
(3) the amount of time involved, and the results obtained; and
(4) the time limitations imposed by the client or by the circumstances.
In addition to the other factors listed in the Rule, a law firm can charge for the time spent contacting the contract attorney and explaining the project. The firm can increase its profitability by charging the appropriate hourly fee of an attorney with commensurate experience.
Contract Attorneys Specialize in Research and Writing
Speaking of experience, a contract attorney typically will have several years in practice focused primarily or exclusively on legal research and writing. The contract attorney will excel with legal research tools such as Westlaw, Lexis, and Pacer, along with other investigative services for public records and business filings. A contract attorney will stay abreast of the latest technology and features in legal research and will be aware of new case decisions and legislation that may impact your practice. He or she also will know where to find obscure resources and do so quickly.
Many of the senior attorneys in a firm either don’t like performing legal research or think they aren’t proficient at it. Younger associates may not have the requisite knowledge and backgrounds to be competent and may actually waste more time than is needed… and billing unnecessary hours to a project. This may raise the eyebrows of clients and encourage more rigorous scrutiny of their monthly invoices from the firm.
Instead of inviting this type of client auditing, law firms are wise to hire a specialist with a practice limited to these specific tasks.
Law firms—including your competition—are leveraging contract attorneys to ease the workload and to enjoy greater profitability while at the same time cutting costs.
For clients who need a reliable source of experienced contract legal professionals, LexInsight removes inefficiencies from an outdated brick and mortar staffing model to match law firms with contractors in minutes. Unlike working with staffing agencies that can take weeks to find the right contractor, with LexInsight contractors pass through conflict checks instantly and can even bill and get paid for their time through our secure platform. Ready to hire your first contract attorney and expand your firm? Start browsing attorney profiles by setting up your account now.