Monday, December 6, 2010

Ten Benefits of Freelance Attorneys

We all know that the down economy has affected the legal practice – layoffs, hiring freezes, and the like are widespread.  Clients are more cost conscious than ever, and are increasingly looking to alternatives in legal services where possible.  But legal work doesn’t stop.  Clients still need and deserve excellent service.  Regardless of how thin you’re trying to stretch yourself in your legal practice, no client should ever feel it. 

Even in a booming economy, outsourcing to freelance attorneys can add value to your practice.  Solo attorneys, small firm practitioners, large firms, and their clients all benefit when adding skilled and experienced freelance attorneys to any legal practice.  Solo practitioners and small firm attorneys can gain peace of mind, and even some free time, with the extra help a freelance attorney can provide, without the risks involved in hiring a full-time associate.  Large firms, most of which have scaled back significantly, also benefit from outsourcing legal work to temporary attorneys.
Are you a solo practitioner ready for some extra help? Are you an overworked associate ready to run for the hills? Are you a member of a small firm interested in expanding your practice areas, or are looking for a solution to peaks in work?  Are you interested in strategies that can improve your practice and even help your law firm to grow and thrive?  There are many benefits to using freelance attorneys, ten of which are set forth below.
1.     Save Your Firm Money
Freelance attorneys cost a law firm and its clients less than traditional associates.  It is as simple as that.  Because freelance attorneys charge substantially less per hour, you can lower your legal fees by 25-50% and pass the savings on to your client.  The even better news is that there are freelance attorneys available to handle your firm’s projects who have better credentials and are more qualified than you can afford to hire full time.  Freelance attorneys can increase the quality of the legal services your firm provides while saving you and your clients money.  It can be a win/win situation.
2.     Increase Your Profit in A Down Economy

One of the most important benefits of using a freelance attorney is that since freelance attorneys cost less per hour than a traditional associate, you can receive a margin on their services and still save your client money.  According to ABA Formal Opinion 00-420, attorneys are permitted to add a reasonable surcharge when billing clients for the use of freelance lawyers.

Pay your freelance attorney for the time they bill, charge your client a percentage above that, and keep the profit without overhead.  In other words, freelance attorneys generate pure profit for a law firm.  

3.     Save Your Client Money

It's no surprise that clients want to spend as little money as possible on legal services, no matter the economic conditions.  The bottom line is – freelance attorneys are much less expensive than traditional law firm rates, sometimes by as much as 75%. Firms can slash the rates they charge to their clients, keeping their clients happy, and gaining new ones.  The trick is to find a freelance attorney who is experienced and qualified, and who has the big firm experience every client wants.  Cost savings should never translate into low quality or a decrease in service.  Quite the opposite results when you use the right freelance attorney who can devote the time and attention to your important clients that they deserve. 
4.     Add Skills To Your Firm

In the past, “contract attorneys” frequently were lawyers who could not get jobs or clients.  These contract attorneys primarily were given projects like document review, and firms would never consider allowing these attorneys to perform complex or substantive tasks.  Their work was thought to be substandard. 

There has been a recent change in attitude about “contract attorneys,” now generally called “freelance attorneys.”  (See our previous blog entry – Contract Attorney v. Freelance Attorney – for more information.)  For a number of reasons, including layoffs and an increasing desire for work-life balance, freelance attorneys today have excellent credentials.  Attorneys with excellent credentials from top law schools, who have extensive experience from working at the biggest law firms in the nation, have made the decision to become freelance attorneys.   Using a freelance attorney today means adding experience and skill to a firm’s practice, and any stigma previously associated with outsourcing has disappeared.

Not only can freelance attorneys add skill to your current practice, but they can provide assistance in areas where you firm lacks experience. 
Perhaps you specialize in negotiation or have excellent trial skills, but quickly lose patience with the drudgery involved with discovery practice.  Maybe you have a case presenting an unfamiliar area of law, like bankruptcy or probate litigation.  Or you are a transactional attorney with an opportunity to handle some litigation cases, but lack experience in litigation practice.  Whatever the case may be, outsourcing to an experienced freelance attorney will give your firm access to that attorney’s skills and experience.  More experience and skills lead to more value to your client, who will be happy with your service.
5.     Lower Your Hiring Risk

We are all familiar with the ebb and flow of a typical legal practice.   Sometimes you and your associates are so busy that everyone is working crazy hours and you’re still not sure how everything will get done.  But you hesitate to hire an associate because of the times when work or collections are slow.  Maybe you have enough work to hire for a few weeks or months, but not full-time.  Hiring a full-time associate, with the costs, benefits, and training involved, may not be the right decision for your firm.  Freelance attorneys are not looking for vacation pay, insurance, profit-sharing, or other benefits, and actually gave those things up when choosing an alternative career path.  An experienced freelance attorney can assist you and your firm during periods of increased work for as long as you need her.

6.     Increase Efficiency

By utilizing freelance attorneys for legal projects, you can focus your time on the things that directly increase your bottom line, like case strategy and major substantive issues.  An experienced freelance attorney can also increase your efficiency by bringing her own exceptional organizational skills and experience to your practice.  You can spend more time generating revenue and growing your practice, and the legal work can be delegated to a competent but much less expensive lawyer.  
7.     Grow Your Business

Marketing and business development is crucial to any law firm, small or large.  In order to grow or even sustain your practice, you should be spending approximately 25% of your time marketing and developing business.  Be honest with yourself, is this really happening?  Delegating legal work to an experienced freelance attorney can free time for you to develop business.  Freelance attorneys can also assist in your marketing efforts by ghostwriting presentations or whitepapers.

8.     Effectively Manage Legal Projects

Attorneys are a necessary evil to many companies that want to focus on the core of their business and grow their profits.  No one wants to pay high legal fees.  Many small companies do not have legal departments or a general counsel because their legal needs are few enough to send them all to outside law firms.  In times of increased cost consciousness, companies are turning to alternative solutions to meet their legal needs. 

Freelance attorneys with big firm transactional and litigation experience can offer companies more value for their dollar.  Freelance attorneys are significantly less expensive than law firms, sometimes by 50% or more.  Freelance attorneys can act as temporary in-house counsel as needs arise, and can handle many tasks such as contract drafting, revising, review and negotiation, regulatory issues, and due diligence. 

What do you do if you’re a small company and you receive a summons and complaint?  You might just call your regular law firm for help.  But what if it’s a unique issue, or what if you want to save your company some money?  Freelance attorneys can help steer companies that are unfamiliar with the litigation process when a company is served with a complaint.  Freelance attorneys can assist a small company prepare a request for proposals, interview law firms, retain the right firm for you, and can even assist in managing the litigation (ultimately resulting in cost savings).  If your company is unfamiliar with the litigation process, it’s easy to get overwhelmed.  A freelance attorney acting as temporary in-house counsel can help to ease the process.

9.     Maternity Leave Does Not Spell Disaster

Your associate is going out on maternity leave, and you need to figure out how to manage her caseload in her absence without sacrificing client service.  You’re busy, your associates are busy, and it might not be practical to distribute her work.  Rather than dumping more work on your busy associates, consider using an experienced freelance attorney for 8 to 16 weeks or longer, depending on the situation.  The contract attorney will ensure that your cases receive the attention they need, and that your clients receive the outstanding service they deserve.  

10.  Avoid Associate Burnout

Associate turnover is a concern to any firm because of the high training costs involved.  But many firms have no idea how to better retain the associates they have.  Most firms cannot afford to pay more than the high salaries they are already paying.  Most also do not realize that money is not the problem.  Many partners are surprised to hear that young Gen X and Gen Y attorneys are not interested in working 60-80 hour weeks, no matter how much you pay us.  We all want a life, and are willing to sacrifice money to have one. 

Here is another secret for you – we’ve talked to your associates, and many of them want an express ticket out of there.  Its not that they don’t like you, its just that they want less work and less stress.  Many of them are looking around for other options right now.  Wouldn’t you rather keep your associates happy and avoid losing them to another opportunity?  What if keeping your associates happy actually leads to increased profits to your firm?

Rather than incurring all of the (impractical or impossible) costs involved with hiring another associate to ease the burden, consider bringing in an experienced freelance attorney who needs very little training or oversight to keep your associates happy.  As an added bonus, allow your associates to be involved with the oversight process to help them gain leadership and training experience. 

There are many excellent reasons to consider adding freelance attorneys to your team.  A word of caution – not all freelance attorneys are created equal.  Maximize the benefits to your firm by using only the best freelance attorneys.  There is potential for violating certain ethical rules by using substandard contract attorneys.  The old adage still applies – you really do get what you pay for!

Thursday, December 2, 2010

Survey Confirms Major Law Firms are Increasing Their Use of Contract Lawyers

The American Lawyer reports in its article out yesterday, Law Firm Leaders Survey 2010 - The New Normal, that “the changes implemented during the recession--smaller associate classes, postponed start dates for new hires, reductions in the equity pool, and scaled-back profit expectations--are here to stay, at least for a while.” This includes more partner layoffs, and the increased use of contract attorneys.

They base this prediction on their 2010 Survey of Leaders of Am Law 200 firms. Among many cost-saving measures that firms implemented in 2010, the survey found that the use of contract lawyers increased.

A little more than half of our respondents (55 percent) said that their firm had used contract lawyers, up from 44 percent a year ago.
The ABA article on this same topic, BigLaw Partner Cuts Aren't Over by Debra Cassens Weiss, also stated that “many firms are apparently making up for reduced associate numbers by shifting work to temporary lawyers.”

The survey also found the following:

• 87 percent of respondents said that 2011's incoming class will be the same size or smaller than their (usually already reduced) 2010 class.

• 60 percent of respondents said that the downturn has produced a fundamental shift in the legal marketplace.

• 70 percent of respondents said that they plan to ask partners to leave in 2011, and 31 percent said that their firm plans to deequitize partners.

• 46 percent of respondents said they deferred first-year starting dates in 2010, but only 17 percent said they anticipate doing so in 2011.

• 91 percent of respondents said that their firm used a flat fee for entire matters in 2010, compared to 82 percent in 2009, and nearly 93 percent said that their firm used a flat fee for some or all stages of matters last year, up from 78 percent.

• 47 percent of respondents said that clients have refused to pay for work done by first- or second-year associates—a development that is part of clients' strategy to shift economic risk back to law firms.

• 85 percent of respondents said that more clients are requesting discounts.

• 41 percent of respondents said that they expect their 2011 profits per partner to rise by 5 percent or less—lower than the 8 percent and 9 percent increases common during the boom but better than 2009's flat result.

While things still look a little dismal in 2011,  there is still hope.  "About seventy percent of respondents said that they were somewhat optimistic about 2011, and 10 percent said that they were very optimistic.” And for attorneys choosing to leave their firms to do contract/freelance legal work, given the results of this survey, things are looking very optimistic for 2011!