In this episode, Lisa Solomon explains what freelance lawyering is, how to work with a freelance lawyer, and where to find one. She also points out that because you can bill a freelance lawyer’s time at more than you pay, a freelance lawyer can generate a profit for your firm. Sam and Aaron lead off with a discussion of the ethics of this practice.

Lisa Solomon

lisasolomonheadshot115

Lisa Solomon is the founder of Now Counsel Network of experienced freelance lawyers. She is also a freelance lawyer with over 20 years of experience.

You can follow Lisa on Twitter and LinkedIn.

Thanks to Ruby Receptionists and Xero for sponsoring this episode!

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Transcript

Female: Welcome to the Lawyerist podcast with Sam Glover and Aaron Street. Each week, Lawyerist brings you advice and interviews to help you build a more successful law practice in today’s challenging and constantly changing legal market. And now, here are Sam and Aaron.

Sam Glover: Hi, I’m Sam Glover.

Aaron Street: And I’m Aaron Street and this is Episode 97 of the Lawyerist podcast, part of the Legal Talk Network. Today we’re taking with Lisa Solomon about how you can work with freelance lawyers in your practice.

Sam Glover: Today’s podcast is sponsored by Ruby Receptionists and its smart, charming receptionists who are perfect for small firms. Visit callruby.com/lawyerist to get a risk-free trial with Ruby.

Aaron Street: Today’s podcast is also sponsored by Xero, beautiful, legal accounting simplified. Find out more at xero.com. That’s X-E-R-O dot com.

Sam Glover: Aaron, coming up in my interview with Lisa Solomon, somewhere in the middle we’re talking about the value proposition of freelance lawyers. She makes a case that hiring a freelance lawyer can actually be a profit center for small firms because you can up-charge that freelance lawyer’s hourly rate. If I’m paying the freelancer a hundred bucks an hour, I can turn around and bill the client $150 an hour for that work. This is totally ethical, but something about it just rubs me the wrong way. Lisa and I don’t get too deep into it, so I thought maybe we could start out by taking that apart and trying to figure out if that should feel icky or not.

Aaron Street: I agree that the instinct of buying something and then making a profit from your clients can feel a little icky in the same way that in the days of early copy machines when you had to pay 10 or 20 cents per copy, felt really weird and gross and inappropriate even though, of course, it was allowed. I agree.

At the same time, if you have an associate at your firm and you bill them out at $150, you don’t pay them $150 for every hour they bill because your growing the firm for the purpose of making a profit and you have to cover your overhead and the act of managing them and all of those things.

Sam Glover: On the flip side, if I hire an accountant to prepare paperwork, that is similar in character to the kind of paperwork I might hire a freelancer to prepare, I can’t up-charge the accountant. I have to simply send the bill through as an expense to the client.

Aaron Street: And the distinction is lawyers.

Sam Glover: The distinction is the law degree, yes, or being employed by the firm. The same applies if it’s a paralegal or a legal secretary, I think. I don’t know. It feels weird to me that all I’m doing is marking up the bill and passing it through when they’re working somewhere else or they’re completely outside of my firm; it’s a contract with another company. They’re delivering me an invoice. Something about it feels strange. I agree you can totally do it and it doesn’t feel weird at all if it’s somebody who sits in your office and you call an associate as opposed to a freelancer. Lisa points out that you don’t have to disclose what you’re paying the freelancer to your client.

Aaron Street: In the same way that you don’t tell them what your associates make as their salary.

Sam Glover: Absolutely. Obviously not. I don’t know. I guess I just want to throw that out there and talk about it. I don’t have a grand sweeping conclusion, but I think Lisa’s right. You can actually make a profit off of freelancers, which isn’t a bad idea if you can’t make a better profit yourself, I guess.

Aaron Street: Although to the extent that it’s a good idea, then you extrapolate that out to the extreme and you just have a fully outsourced law firm where you don’t do any legal work and you just make a ton of profit on people who aren’t even employees or associates of your firm being on-call to do all of the work of your firm. That would be absurd.

Sam Glover: Probably. At some point, it’s probably not going to stay profitable to do it that way. Maybe somebody can work it, but it doesn’t seem like a good way to run a firm to me.

Aaron Street: I guess I have no major problem with occasionally or even regularly but in small amounts using freelance lawyers as a way to get more done or do things that you don’t have the skills to do or the time to do or as a new business model instead of having associates all the time. I get that. The fact that you are most certainly not up-charging freelancers in your clients’ best interest feels a little weird to me.

Sam Glover: It does to me too, but I can’t quite move my finger on it and maybe that’s the best we can do. I wanted to try to talk about it a little bit more because I moved past that pretty quickly with Lisa.

Aaron Street: All that said about whether you should up-charge or not and how Aaron feels about it, the freelance lawyer movement, if you want to call it a movement, this new business model, is really cool innovation in the practice and one that I think provides lots of opportunities for solo and small firms to do more than they would otherwise be able to do, and I think that’s great.

Sam Glover: It is. It’s a really a cool way that experienced lawyers can continue practicing on their own terms. It’s a great way for lawyers who are really busy to get some extra work, hopefully from experienced lawyers. I think hearing from Lisa, you’ll have a better picture of what it means, both what freelance lawyers are, how to work with them, and all that kind of stuff. Here’s my conversation with Lisa.

Lisa Solomon: This is Lisa Solomon. I’m the Founder and CEO of Now Counsel Network. We help solos and small law firms slay the professional staffing dragon. We do that by matching them with vetted experienced freelance lawyers for temporary and project-based engagements.

Sam Glover: Lisa, thank you for being on our show. Before you started Now Counsel Network, you were a freelance lawyer, right?

Lisa Solomon: Yes, I worked exclusively as a freelance lawyer for 20 years.

Sam Glover: Maybe the first thing we should talk about is what that means. I’ve heard the term contract attorney and I think it’s sort of the same thing. I did some contract work early in my practice. Tell me what a freelance lawyer is. How do you describe it to people when they’re wondering, and what does it all look like?

Lisa Solomon: That’s a great questions, Sam. There are a few different terms that are in use around the country that fall under the umbrella of what you could consider flexible legal staffing. You have freelance lawyer, contract lawyer, and per diem. Contract lawyer and freelance lawyer are sometimes used interchangeably although in some parts of the country, particularly on the coasts in the big cities, contract lawyer has taken on the connotation of a relatively lower skilled attorney doing primarily document review in a basement somewhere.

People who do what I did for 20 years and what the members of Now Counsel Network do, started calling themselves freelance lawyers. That connotes a lawyer who is an independent business person, a solo lawyer who’s an independent business person who works on, again, a temporary or project basis, doing generally more substantive work and that’s generally for solos and small law firms. We just started using the term to make that distinction.

The third term that I mentioned is per diem. Again, sometimes per diem, contract lawyer, freelance lawyer, they may be used interchangeably, but generally, in my experience, per diems are generally court coverage attorneys, people that you can contact to make an appearance, perhaps do a deposition. They’re not necessarily going to be doing a lot of writing on a case. They may not have an ongoing relationship.

Sam Glover: For people who don’t know, in some jurisdictions, appearance lawyers are a thing. In California, you’re licensed all over the state, so you may have cases up and down the coast. I suppose you don’t want to have to drive for two hours to get to court so you just hire somebody to show up for you and go through the motions. I assume you show up if it’s a summary judgement motion or something, but not if that. Whereas, in my state, Minnesota, it’s not so much of a thing. In some states, people may not really be familiar with that idea.

Lisa Solomon: In some jurisdictions, in particular, there’s just so much inefficiency in the court system, frankly. Frankly, I understand in some jurisdictions like California, a lot of appearances are telephonic which can actually make things easier, make it easier for a lawyer to actually, him or herself, participate in more appearances.

For example, here in New York where I am, there really aren’t telephonic appearances. There’s a lot of times when you just have to go and get an adjournment or wait around for two or three hours before your case is called to do a very short argument. Even if you don’t have a statewide case load, you might have appearances in different courtrooms, too many appearances in different courtrooms in the same building. You can’t be in more than one place at once.

Sam Glover: What kinds of work does? We’ve talked about appearances which overlaps but isn’t quite what we’re talking about with freelancing. What kind of work do freelancers do? I think you did mostly appeals and motion practice and writing on those, right?

Lisa Solomon: Yeah. Freelance lawyers generally do concentrate fairly heavily on the written work, anything that can be done on paper. This is not to say that freelance lawyers can’t make appearances. They frequently do, but they’re generally not going to be the ones you call for the first time at 6:00 at night the night before an appearance or to handle just your routine every day appearance.

For example, a freelance lawyer who drafted an appeal, who wrote a brief, might do an oral argument. That’s an appearance, that’s a court appearance, but it’s connected with a larger project. Freelance lawyers, you can do basically any kind of work that an associate in your office could do.

Sam Glover: You said paper earlier, but obviously we’re not necessarily talking about that. Freelancers can be remote as well as local.

Lisa Solomon: Yeah, sorry. I’m using paper figuratively. In fact, in my experience, the majority of freelance lawyers work remotely. If you don’t mind, I’ll go into this in a little bit more detail because it does go back to the question of what kind of work can a freelance lawyer do.

A freelance lawyer generally does not have to be admitted in your jurisdiction if they’re doing written work, work that you’re going to review and is going to have your name on it when it goes out. They don’t have to be admitted in your jurisdiction. That’s for the same reason that you can have a paralegal draft something for you or you can hire a law clerk. It’s because the defining characteristic of a freelance lawyer is that the hiring lawyer retains the obligation to supervise the work.

Supervision itself, that doesn’t mean micromanaging. I’d like to talk about that a little later. We can talk about what that means under the ethics rules, but just to know the reason I bring it up now, it’s just to point out that the freelance lawyer need not be admitted in your jurisdiction, and in fact, over my career, I’ve worked with lawyers all over the country.

There are a few occasions when the freelance lawyer does have to be admitted in your jurisdiction. Those are what you would expect; when the freelance lawyer is doing something in person. If the freelance lawyer is going to court or if the freelance lawyer is handling a deposition, then they need to be admitted. It’s very frequent that they’re not admitted in your jurisdiction.

Sam Glover: We’re basically talking about outsourcing maybe. I’m going to use that word even if it’s not exactly appropriate. I can send out a contract. I’ve got my notes and I want to call up a freelance lawyer or send him an email and say, “Here’s the gist of the agreement. Draw me up a contract,” or I send over the court file and my notes and my interviews with my clients and I say, “Respond to the motion for summary judgement,” or “Draft me a complaint.” Is that how it works? What does the workflow look like? How would I give work to a freelance lawyer?

Lisa Solomon: You can put it into whatever workflow you have. The first step, of course, is finding a freelance lawyer. From what you said, it sounds like you already have a relationship established with a-

Sam Glover: Let’s assume we’ve already got one.

Lisa Solomon: Freelancer, like other kinds of freelancers, you need to contact them and find out if they’re available. If they are available for the project, the type of project and within the deadline that you need, then it’s however you set up your workflow. Freelance lawyers are generally very flexible. We’re not here to wrestle hiring firms into our systems. Hiring firms generally have their own systems.

Sam, I know that you’re very tech savvy. You would probably use some kind of file sharing to share the particular case file or the particular portion of the case file like Box or some other file sharing method. Other lawyers might use email. They may feel more comfortable using email. Similarly, some people like to do things by phone.

Sam Glover: Do you get boxes shipped to you once in a while?

Lisa Solomon: You know what? It used to be more frequent. Now it’s basically never.

Sam Glover: I have gotten boxes of documents shipped to me to help out on doing some appellate consulting. Eventually I twisted their arm into scanning it instead. I assume that over time, whether it’s because you work with people or just because times are changing, that goes off.

Lisa Solomon: Definitely times are changing. Frankly, I used to print out, even when I got files, say, by email, I used to print out a lot of stuff. Now I have got three monitors. I hardly ever use my printer.

Sam Glover: Give me an example. Let’s say I just don’t have time. I need some help drafting a response to a motion for summary judgement. One of the things that makes me wonder about this is lots of the lawyers I know don’t seem to realize that they don’t have time to draft the motion for summary judgement until three days before it’s due. I assume that’s not the best time to contact a freelancer.

Lisa Solomon: You would be correct on that, just as if you were working with an associate in your office, although with an associate you probably would have better workflows. Yes, it’s best the further ahead you can plan the better. You may have more difficulty finding a freelance lawyer if you don’t have a relationship already established with one or you may contact your freelance lawyer that you work with frequently and they may not be available if the deadline’s too short.

That is the downside of freelancing and working with a freelance lawyer is the freelance lawyer is a freelancer, doesn’t have to take every project. The flip side is that if you can plan ahead, or on occasion, a freelance lawyer can do a rush job or a job on short notice certainly. The benefit is that it’s a freelancer. You don’t have to pay the freelancer when they’re not working.

Sam Glover: We’re going to take two minutes to hear from our sponsors. When we come back, I want to talk about cost and I want to talk about challenges and I want to talk about where to find freelancers and build a relationship so that you’ve got people to call.

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Aaron Street: Billable hours are the life blood of a successful law practice. Problem is, you still have to bill those hours. Even if your law firm has an accountant, tracking hours, clients, rates, preparing invoices, and collecting on those invoices is time you never get paid for. Writing notes to yourself in court or on the road is inefficient and error-prone.

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Sam Glover: We’re back. Lisa, I’m curious about cost. I’m sure it varies. I’m sure it’s all over the place, actually. How much would someone expect to pay for freelance work, and make your pitch for why it’s more cost effective to hire a freelancer?

Lisa Solomon: The first thing that I want to say is when you’re working with a freelancer, I suggest working with experienced freelancers, with experienced freelance lawyers. Just as with everything else, you get what you pay for. Someone with less experience is going to be generally less expensive. It probably will require more oversight, a greater degree of oversight and supervision from you.

I find that solos and small firms, when they are outsourcing work, when they’re working with freelance lawyers, they want to get back a very high quality of work. While there certainly is an obligation to spend an appropriate amount of time reviewing and, if necessary, revising the work, you don’t want to be putting in as much time as the freelance lawyer has. You get what you pay for.

What that means is generally you’re going to be wanting to look for someone with a certain amount of experience, say, maybe at least five years. Now Counsel Network will require at least seven years, for example, because you are busy. That’s the reason. You’re too busy often to do it yourself. There’s other reasons to use freelance lawyers as well. Maybe you don’t like drafting briefs. That’s a valid reason as well. You’re busy. If you want to have a junior person that’s more, to me, a service to the profession. It depends on what your goals are and how much guidance you want to give the freelance lawyer.

Sam Glover: Are we paying a freelance lawyer a normal attorney’s hourly rate or what can we expect?

Lisa Solomon: A good question. Good question. You’re generally going to pay a freelance lawyer say between 100 and $200 an hour. That depends on the number of years of experience, practice area, area of the country. Basically, the idea is that you will be able to make a fairly significant profit on the work that the freelance lawyer is doing for you.

Let’s say that you’re working on a matter that you’re billing hourly. You will pay the freelance lawyer perhaps, and this is just a general rule of thumb perhaps, half of what you’re billing them out at. Remember, you’re not paying their health insurance, benefits. What you pay them, that’s it. You’re not even paying their half of the Social Security taxes.

Sam Glover: Hold on a second. It’s not intuitive to me that I could bill out a freelancer higher than their hourly rate. Why isn’t it like hiring a courier or a private investigator, where I don’t get to bill them back out at an hourly rate, I get to charge the invoice through to the client? Shouldn’t I just be charging the invoice through to the client?

Lisa Solomon: Absolutely not. You can make a profit. All of the ethics opinions from around the country, except for Texas is a little weird, but every other ethics opinion that’s dealt with this, the ABA and every other ethics opinion says you can absolutely make a profit on work performed by a freelance lawyer. You just need to show the work in the portion of the bill where you’re billing for fees. You might put some work in on the case. In that section for fees as opposed to billing, if you bill as a disbursement, then you can’t mark it up unless there’s a previous agreement that you’re going to mark it up by a certain amount or percentage.

If you bill a freelance lawyer’s work as a fee, which it is, it’s a professional fee, it just happens to be done by someone who works for you as an independent contract as opposed to as an employee, you absolutely can make a profit.

Furthermore, while the client needs to agree to the amount that you’re billing them, just like they have to agree to your billing rate, you don’t have to reveal the amount of what your profit is, just like you don’t have to reveal I pay my associate $90,000 a year, an hourly that comes out to blah, blah, blah.

Sam Glover: This is a bit of a [tandem 00:23:43], but I want to pursue it a little bit further. Can I do the same thing for an accountant?

Lisa Solomon: For an accountant? I would say probably not because an accountant is going to be an expert in the case, for example, a forensic accountant. Again, that’s not my area of expertise. My area of expertise is dealing with freelance lawyers. For example, with a paralegal, you’re making profit on work done by a paralegal, right?

Sam Glover: Yeah, I suppose so.

Lisa Solomon: These are within the core functions, within the core services that a law firm is providing.

Sam Glover: Something feels weird about that to me, but it sounds like it’s been vetted. What’s weird about Texas?

Lisa Solomon: Texas just has a weird thing about inside the firm and outside the firm. There are freelance lawyers who live and practice in Texas. We have a few in Now Counsel Network, for example, that have been able to structure their relationships with hiring firms so that it passes ethical muster in Texas.

Sam Glover: If you’re going to do it in Texas, take a look at the ethics opinions out there and make sure you follow them, is what we can say?

Lisa Solomon: Yeah, it’s Opinion 577 in Texas. Certainly anybody who wants to contact me, I can send a link, but it’s out there. I don’t want to focus too much on Texas because we’ve got 49 states versus just Texas.

Sam Glover: We’ve got plenty of Texas listeners though, so I want to make sure we point them in the right place since it’s the only one that’s a little bit weird.

Lisa Solomon: Fair enough.

Sam Glover: What would you say is the biggest challenge to working with a freelance lawyer for the hiring lawyer?

Lisa Solomon: I would say sometimes solos and small firm lawyers, but particularly solos who are used to doing everything themselves, just aren’t really experienced with delegating work. They don’t know what the best practices are to delegate. For example, you want to share all relevant information, all relevant documents at the beginning of the engagement. It prevents delays. You want to give as clear instructions as possible. Be open to feedback from the freelance lawyer.

Often the freelance lawyer, especially if you’re working with an experienced freelance lawyer, someone who’s experienced can take a look at cases and say, “This issue that we didn’t discuss, but this issue frequently comes up in the kinds of case that I’m working on. I think there’s some facts in this case that would make this a good argument for us. Can you tell me if there are these other facts?” I would say be open to going back and forth, a little bit of back and forth on helping to mold the issues.

Certainly a freelance lawyer shouldn’t go off on a big tangent without getting your approval. That would be outside the scope of the project. A good freelance lawyer is really partnering with you, not as your business partner, but really on the same level and really digging in and can really help you in that way.

Sam Glover: One of the challenges I feel like I’ve found from learning to manage, from being managed, is often that lawyers just want to hand something off. “Here, do this,” without making clear what their expectations are. They just throw it at you. Maybe they mention a couple cases that they remember that may or may not be relevant and probably aren’t. It seems to me that clear setting or aligning expectations is probably the hardest piece or one of the harder pieces, especially for solo lawyers but also small firm lawyers that just aren’t used to delegating all the time.

Lisa Solomon: Exactly. Definitely at the beginning, for example, let’s say that I’m hired to write an opposition to a summary judgement motion. My first question would be, what arguments do you want to make? If the hiring lawyer says, “I don’t know, come up with something,” that rarely happens because the hiring lawyer is already so familiar with the case. You see what I’m saying?

For example, another situation where there’s a motion to dismiss, they might say, “You know what? Here’s the ones I’ve identified, but let me know if you come up with anything else,” again, another benefit of working with an experienced freelance lawyer.

If it’s a large project, and if it’s a freelance lawyer that you haven’t worked with before or that you’re just starting to work with, certainly ask the freelance lawyer to check in every so often. If it’s a large project, every ten hours or every week or, say, after finishing research on the first legal issue, just to touch base and check in. That will prevent surprises at the end.

Believe me, good freelance lawyers are responsible business people, but once in a while you hear, “I gave this to the freelance lawyer and I didn’t get it back in time. That’s going to happen as often as a lawyer does that to a client, which is not very often.

Sam Glover: Hopefully.

Lisa Solomon: Hopefully. I can certainly understand, especially when you’re working with someone remotely, you want to have a little bit of extra insurance, as it were, at the beginning of a relationship. Once you have established a relationship, once you’ve established trust, mutual trust, then you can ease off on some of that.

Certainly also, always at the end, leave yourself a little time to review and make any revisions. A good freelance lawyer who’s worked with you a few times, should really be able to get into your head, especially if you’ve given them feedback as to, for example, your writing style, et cetera. A good freelance lawyer who you’ve worked with a few times should be able to give you something that’s almost signature ready.

In fact, I’ve had cases, projects myself where there have been zero or very few minor changes, but that doesn’t mean that hasn’t been reviewed. You have to give yourself enough time to do the same review that you would do with an associate or something else on an important project.

Sam Glover: Lawyers who are the kinds of lawyers who are running around putting out fires and not figuring out until three days before the hearing that they’re going to need help, probably don’t make great clients for a freelance lawyer or don’t make great hires of freelance lawyers.

Lisa Solomon: Again, if you put that in another context of a litigant who gets served with a complaint and doesn’t call a lawyer until three days before the answer’s due, also may be not necessarily the best client to have.

Sam Glover: Totally.

Lisa Solomon: You take that into account. It happens in every industry. Sometimes it’s possible, “I’d love to help you with this. Can you see if you can get an enlargement, an adjournment?” It is what it is. Freelance lawyer can decide what to do when they’re presented with it.

Sam Glover: Step one is obviously hiring a freelance lawyer. I imagine some people may know someone who is suitable. For example, I hated drafting complaints more than anything in the world, but I needed to draft a bunch of them. One of my law school classmates happened to be in between jobs and also really smart, capable, experienced litigating. I said, “Can I pay you to draft complaints for me?” I would just shoot the file over her to do it. That worked really well because I already knew her ahead of time. I was confident that she could just do this and that her work quality would probably be higher than mine anyway. If I don’t know that person, how do I find someone?

Lisa Solomon: Obviously, if someone you know is generally going to be a good choice if you know the quality of their work, although doing business with friends, you certainly have to make that calculation. You can ask your colleagues for referrals. It’s just like you would hire anybody else, like someone to manage your IT. Ask for referrals, who’s good, the same way you would find any other independent contractor whose services that you want to use.

Obviously knowing someone personally or knowing someone who knows them, getting a referral, then you can go a little bit further afield, say, in your local bar association or just out on the web. Being a professional freelance lawyer, a freelance lawyer as a career choice is becoming more popular. You can just search the web for, say, legal brief writing help, some general terms.

There are individual freelance lawyers out there and there are also … it’s becoming more popular to have what Now Counsel Network is, which is networks of freelance lawyers, which can be very helpful as well. Networks generally, they come into play. They vet the lawyers to a certain extent. Now, various networks work differently as far as the type, the type and the-

Sam Glover: Why don’t you tell us about Now Counsel Network a little bit. I’m looking at the website. It looks like there’s maybe a couple dozen lawyers in it. I know that this is pretty new as well. How do you go about vetting? How do you get people into the network and how does it help people find a freelancer?

Lisa Solomon: We have a fairly strict process for vetting our freelance attorneys. All of our freelance attorneys have to have at least seven years’ of experience in practice and/or as a legal research and writing instructor at a law school. That’s the bare minimum just to get through the door.

Then we check bar admissions and disciplinary history. Of course, you have to have a clean disciplinary history. We review writing samples. That’s something that as far as I know it’s fairly unique because we want to have a very high quality product. We want our freelance lawyers to be providing very high quality work. We do review a writing sample. We speak with three references. That’s the procedure process of getting admitted as a Now Counsel Network freelance attorney.

Sam Glover: There are others out there. I know Custom Counsel is now attached to CuroLegal. We’ve had Nicole Bradick on who that was her company. There’s Hire an Esquire. I did some Googling and spotted a couple others that you said were out there competing like Overflow Legal Network and Montage. I suppose with those, you just have to do what you can to vet someone and then give it a try and see if you work together well. You might not have the perfect experience the first time because maybe you just don’t work well together, I assume.

Lisa Solomon: Remember, it’s a business relationship but it’s also a personal relationship. Work styles and personalities also have to mesh, no different than an employee, although an employee you’re stuck with for more time. Certainly, you want someone who’s going to both measure up to your standards and hopefully exceed them.

Sam Glover: You’ve mentioned partnership a couple times. I think that’s probably a better mindset for going out and finding someone is, I want to partner somebody without any of the baggage of actually forming a partnership. That seems actually like a pretty good attitude because it is, it’s a respected colleague that you’re going to collaborate with, not a young recent graduate who you’re hoping is just going to be able to spit some decent work back at you.

Lisa Solomon: Exactly. It’s an intellectual … not a business partnership. We have to be very careful using our terms of [ARC 00:37:20], but certainly an intellectual partnership.

Sam Glover: Very cool. Lisa, thanks so much for being with us today and talking about freelance lawyering. It’s been helpful for me and I’m sure it’s helpful for our listeners. I really appreciate it.

Lisa Solomon: Sam, thanks for having me.

Aaron Street: Make sure to catch next week’s episode of the Lawyerist podcast. If you’d like more information about today’s show, please visit lawyerist.com/podcast or Legal Talk Network.com. You can subscribe via iTunes or anywhere podcasts are found. Both Lawyerist and the Legal Talk Network can be found on Twitter, Facebook and LinkedIn. You can download the free app from Legal Talk Network in Google Play or iTunes.

Sam Glover: The views expressed by the participants of this program are their own and do not represent the views of, nor are they endorsed by Legal Talk Network. Nothing said during this podcast is legal advice.

  • I want to thank Lawyerist and Legal Talk Network for the opportunity to help educate the legal community about working with freelance lawyers.

    I’m commenting to address the concern that Sam and Aaron expressed about making a profit on work performed by a freelance lawyer. In particular, Aaron’s comment that “you are most certainly not up-charging freelancers in your clients’ best interest” just doesn’t square with the fact that a law firm is a business. As Aaron himself also pointed out, “if you have an associate at your firm and you bill them out at $150, you don’t pay them $150 for every hour they bill because your[‘re] growing the firm for the purpose of making a profit and you have to cover your overhead and the act of managing them and all of those things.”

    Indeed, the foundational ethics opinion about freelance lawyering, ABA Formal Op. 08-451 (entitled “Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services”), explicitly compares freelance lawyers to associates:

    …the fees charged by the outsourcing lawyer must be reasonable and otherwise comply with the requirements of Rule 1.5. In Formal Opinion No. 00-420, we concluded that a law firm that engaged a contract lawyer could add a surcharge to the cost paid by the billing lawyer provided the total charge represented a reasonable fee for the services provided to the client. This is not substantively different from the manner in which a conventional firm bills for the services of its lawyers. The firm pays a lawyer a salary, provides him with employment benefits, incurs office space and other overhead costs to support him, and also earns a profit from his services; the client generally is not informed of the details of the financial relationship between the law firm and the lawyer. Likewise, the lawyer is not obligated to inform the client how much the firm is paying a contract lawyer; the restraint is the overarching requirement that the fee charged for the services not be unreasonable.

    Furthermore, Op. 08-451 observes that working with freelance lawyers can, in some circumstances, actually reduce costs to the client:

    [o]utsourcing affords lawyers the ability to reduce their costs and often the costs to the client to the extent that the individuals or entities providing the outsourced services can do so at lower rates than the lawyer’s own staff. In addition, the availability of lawyers and nonlawyers to perform discrete tasks may, in some circumstances, allow for the provision of labor-intensive legal services by lawyers who do not otherwise maintain the needed human resources on an ongoing basis.

    In other words,? the ability to staff up a matter with freelance lawyers on an as-needed basis helps solos and small firms? compete with larger firms. Four years later, the ABA Ethics 20/20 Commission’s report reiterated these points in its report concerning outsourcing to the House of Delegates:

    ?Lawyers have found that the same technology-driven efficiencies that have led to an increase in outsourcing throughout the global economy are also making outsourcing an appealing option within the legal profession for certain work. In particular, lawyers have found that, if they exercise proper care in the selection of a provider, work can be completed with greater speed and lower costs without sacrificing quality. These efficiencies offer opportunities for solo practitioners and small and medium-sized U.S. law firms, allowing them to better compete for large matters without fear that they will lack adequate resources to perform the legal work involved. Also, by reducing the cost of legal services, outsourcing can improve access to justice by making legal services more affordable.

    ….The Commission’s research indicates that lawyers still tend to outsource legal and law-related work domestically more often than they outsource work internationally. In fact, information reviewed by the Commission indicates that, more recently, the outsourcing industry is responding to client demand for greater availability of on-shore operations.

    My complete analysis of Op. 08-451 is at http://nowcounselnetwork.com/aba-formal-op-08-451-good-news-for-us-based-independent-contract-lawyers/. Other posts that address rates charged for work performed by contract or freelance lawyers are:

    http://nowcounselnetwork.com/citigroup-judge-pay-contract-lawyers-what-theyre-worth/

    http://nowcounselnetwork.com/aba-adopts-model-rules-comments-concerning-outsourcing/

    • You are focused on the rules of ethics. Aaron and I both concede that upcharging is ethical under the rules. But just because something is ethical under the rules, that doesn’t mean it is okay. The rules provide a baseline, not an ideal. Besides, let’s say a client thinks something is wrong. Do you think they will be mollified if you quote the rules of ethics at them? I seriously doubt it.

      • What make you think a client would think something is wrong? Regardless of whether an associate or a freelance lawyer is performing the work: (1) Op. 08-457 points out that the ethical responsibility of an outsourcing lawyer to make reasonable efforts to ensure that the contract lawyer conforms to the Rules of Professional Conduct is no different from the responsibility of a lawyer supervising the work of another attorney who is employed by the supervising lawyer’s firm; and (2) the hiring attorney is obligated to charge a reasonable fee for the work.

        Furthermore, in one of the posts linked to in my previous comment (http://nowcounselnetwork.com/citigroup-judge-pay-contract-lawyers-what-theyre-worth/), the court in In re Citigroup Inc. Securities Litigation quoted with approval In re AOL Time Warner Shareholder Derivative Litig., No. 02 Civ. 6302 (CM), 2010 WL 363113, at *22 (S.D.N.Y. Feb. 1, 2010) (Special Master’s R&R, adopted as Court’s opinion, id. at *1), in which that court explained: “‘The Court should no more attempt to determine a correct spread between the contract attorney’s cost and his or her hourly rate than it should pass judgment on the differential between a regular associate’s hourly rate and his or her salary.’” (Opinion, p.37).

        • Dan Woodall

          I’m a partner in a 14 lawyer firm and although I’ve not yet outsourced work or hired a “contract” or “freelance” attorney, in my opinion paying a contract attorney less than you bill that contract attorney out to a client is no different than paying an associate less per hour than you charge a client for each hour of that associate’s time. If law firm’s did not earn some amount of profit off of our associates’ (and partners for that matter) time, then we’d all eventually go out of business or at least stop practicing law because we wouldn’t be making any money.

          Whether the lawyer who actually does the work is an independent contractor or an employee has absolutely no bearing on the quality of the work, and I am still responsible to my client for the quality of the work, the overall strategy, communicating with the client, communicating with opposing counsel, communicating to the court and the overall representation and provision of legal services to the client.

          Consider this scenario…..let’s say I have a client who agrees to pay $350 per hour for a Senior Associate’s time (defining a Senior Associate as a lawyer with 7 years or more legal experience). A Motion for Summary Judgment is needed for this particular client’s case and I could assign the summary judgment to a Senior Associate who isn’t that great at drafting summary judgments, or I could assign the summary judgment to a contract lawyer with 15 years of experience and who writes GREAT summary judgments. If you were the client would you rather I assign your motion for summary judgment to the Senior Associate who is probably going to take longer and produce an inferior summary judgment? Or would you prefer I hire the contract attorney who is going to draft a better summary judgment in less time? Also let’s assume when you break it down the actual amount of money the Senior Associate is being paid by the firm for one hour of billable time equals $150 per hour. The result is our law firm is technically billing out this Senior Associate time to the client at a rate of $200 per hour MORE than what the Senior Associate is being paid for each hour she bills this client. This is exactly how every law firm that charges by the hour makes a profit. How is that different than paying a contract attorney $150 per hour and billing that contract attorney out at $350 per hour, which is what the client agreed to? And in our example, the client is getting a better deal by using the contract attorney. How is that a bad deal for the client? Remember market forces somewhat dictate how much a firm can charge. What if in our example, the client interviewed several law firms and chose our law firm because it was the most economical? Under these assumptions, the client is getting a smoking deal that he/she could not find elsewhere in the legal market.

          EVERY law firm attempts to make a profit off of each time keeper utilized to deliver legal services to a client. Doesn’t matter if it’s a paralegal, associate or partner.

          It seems like the ultimate question being asked by Sam Glover is whether morally or ethically attorneys should be able to make a profit off of the delivery of legal services to their clients. To which I’d respond hell yeah. I don’t work 12 hour days to break even. The days of the noble profession are long gone. That being said, I still take great satisfaction in providing my clients excellent legal work at rates that are very competitive in my marketplace.

      • Eric Cooperstein

        I generally agree with Lisa’s analysis. The presumption in up-charging for a freelancer is that the hiring attorney is providing supervision and guidance for the freelancer. The work product of the freelancer is not expected to be the final product. If it was, like the work of an expert lawyer or an accountant, it should not be up-charged because the hiring lawyer did not provide any value-added.

        Also, readers / listeners should know that the payment to the freelancer should not be contingent on the client’s payment of the bill. If it is, then in many (most?) jurisdictions that will be viewed as fee-sharing with a lawyer in a different firm and there may be provisions of Rule 1.5(e) with which the lawyer must comply, including disclosure to the client of all of the fee arrangements, including how much the freelancer is getting paid. Most lawyers will want to pay the freelancer regardless of whether the client pays (and most savvy freelancers will want the same arrangement).

        • So if supervision and guidance justify upcharging, the client should not see any time billed separately for supervision or guidance, right?

          • Eric Cooperstein

            Not necessarily. As the ABA opinion sets forth, it’s just like having an associate. The lawyer pays the the junior lawyer a certain rate and bills the client a market rate.

            Would you have a problem with it if the lawyer charged the client a flat fee and then farmed out the work to a freelancer so that the lawyer could earn more on the case?

            • I don’t know if I have a problem with it. I’m just uncomfortable with the idea of upcharging just because you can, not because you’ve actually added any real value.

              • myshingle

                I think that the value added depends upon the circumstances. When I outsource matters in my practice area, which is highly specialized, I would typically rely on two attorneys who were 8-10 years senior to me. Generally, I’d pay them approximately fifty to sixty percent of my billing rate and would bill them out at my rate or slightly less. In that situation, clients receive the benefit of my colleague’s expertise that would have cost them more had they retained them directly. And reliance on contract lawyers instead of hiring an experienced energy lawyer (which in the DC area would be a minimum of low six-figures), I can keep my rates competitive which also benefits clients. My clients know that I run a lean operation and they are appreciative that they can retain my services for the cost of hiring a biglaw 3rd year.

                I suppose that it’s logical to ask whether I could accomplish the same goals without a markup. However, if I were to do that, the project just becomes a pass through at which point, I might as well refer the case out. To be honest, if referral fees were allowed without so many restrictions in my field, and were considered more of an accepted practice, I might do that. In that situation, however, the other firm gets the windfall because I’ve done the marketing – which can be pricey in my industry given the cost of conferences and CLEs and the complexity of the subject matter which doesn’t lend itself to 20 second blog posts.

  • Greg McLawsen

    @samglover:disqus – Realize that your view (up-charging is ethical but “not okay”) effectively means that law firm’s can’t use contract attorneys. As @LisaSolomonEsq:disqus rightly points out, firms are businesses. If we can’t make a profit doing work for our clients, game over. And if it’s “not okay” to make a profit off contractors that means firms really can’t staff cases with them. Maybe it would make good business since in the “oh crap the brief is due” situation. But generally firms simply couldn’t use contractors.

    Incidentally, the idea that the “rules” don’t also encompass aspiration norms of our profession is simply incorrect. Of course the rules provide justiciable standards for the discipline process. But they are also an articulation of the norms to which we should aspire above the baseline required to avoid discipline. See e.g., ABA Model Rules, Scope [14] “…The Rules are thus partly obligatory and disciplinary and partly constitutive and descriptive in that they define a lawyer’s professional role…”). It is completely appropriate – as Lisa has done – to frame debates about aspirational ethics in terms of the rules.

    • Part of what’s been frustrating about this conversation here and on Twitter is that I don’t have a “view.” I’m trying to have a discussion about a billing practice that makes me uncomfortable, and I can’t put my finger on why it does. Yet you’ve accused me of being anti-innovation and of arguing like a particular deplorable politician. It’s not anti-innovation to discuss the ethics of upcharging. In fact innovation requires us to have a lively discussion about innovative ideas, including ethics. Yes, let’s not shoot down ideas before they are fully formed. But upcharging is not a half-formed idea; it is a common practice among freelance (and other) lawyers. It is definitely fair game for discussion.

      That said, it’s not persuasive to me that the viability of any particular business hinges on upcharging. If it’s unethical, then you shouldn’t build a business on it until you change the rules. If it’s unfair, then you should come up with a different business model. I’m not yet sure if I think upcharging is unethical or unfair. I recognize it is similar to paying an associate one hourly rate or salary and billing the client another rate. But I also think it’s not exactly the same, and I’m trying to figure out whether the distinctions are material.

      While we’re on the subject, I’m not persuaded by the argument that a certain practice is permitted by the ethics rules. (I concede that upcharging for freelancers is ethical under the rules.) The ethics rules lay out the bare minimum expected of a lawyer, not best practices for a lawyer who wants to be at the top of the profession, provide the best client service, or be on the leading edge of innovation. We should aspire to do better than the bare minimum. The rules don’t prohibit sleeping with your clients, but that’s generally regarded as a bad idea (representing your spouse or significant other) or at least icky (jumping into bed with a client), and carries the potential for some ugly consequences that could include unethical conduct. The rules don’t require you to always have a written retainer agreement, but I think clients should expect one. The rules don’t require you to check for conflicts, but you really ought to. And so on.

      In short, it’s perfectly possible for something to be permitted under the rules but still unfair or unwise.

      For what it’s worth, I think Dan Woodall has given the most coherent argument in favor of upcharging that I’ve read so far, and I find it fairly persuasive. (Although I don’t agree that “the ultimate question [I am asking] is whether morally or ethically attorneys should be able to make a profit off of the delivery of legal services to their clients.” Of course they can.)

      • Greg McLawsen

        You have an interesting idea of how discourse works. I don’t agree that there’s anything wrong with calling out half-baked criticisms. If there’s a valid objection to Lisa’s carefully articulated view, that objection should be carefully articulated. Gut feeling isn’t good enough.

        You keep voicing a vague objection to Lisa, then backing off and saying “but that isn’t my view.” For example saying:

        “The more I think about this, the more I think even an hourly assoc. is distinguishable and upcharging is problematic.”

        • If all you are doing is copying a time entry from one bill to another, how have you added any value to justify charging the client more than what you paid? Am I just missing some value? You haven’t told me what it is, yet. You just keep saying it’s okay under the rules, but that doesn’t mean it’s fair.

          I think the kind of upcharging Lisa proposes is different from an associate because an associate doesn’t bill you for that line item. They track their time so that you can bill it to the client, not so that the associate can bill you. I don’t think it comes into play at all for flat fees, because you aren’t upcharging the freelancer’s bill. You’re just absorbing various costs, one of which is the cost of a freelancer. Then you quote a flat fee for the full package. I think what Lisa proposes is similar to paying an accountant to audit a deal. You don’t get to upcharge the accountant’s line items, do you? How is upcharging for a freelancer different?

          • Greg McLawsen

            Flat fees don’t do anything except provide a different package for services.

            If I offer X service for a flat fee, I’ve calculated (or guessed at) my costs to deliver that service. If it’s contractors doing some/all of the work, I think about what they’ll charge me for the work, then add some margin… because that’s how service businesses work.

            Regardless of whether the client pays a flat fee or hourly fee there’s a mark-up to the contractor’s work. It’s just more transparent for hourly work. (And in either event disclosed to the client in the legal services agreement).

            We don’t find this arrangement unfair in other industries. In construction, a general contractor’s whole job is to delegate parts of a project to subs, and profit on the markup. The General is an expert on selecting the right people for the job and managing him. That’s a great value, as anyone who has managed subs will know.

            If @myshingle:disqus is managing a complex piece of litigation, and brings in an expert “sub” to do some of the drafting, that’s a similar deal. Carolyn is qualified to find the best person for the job and supervise the work – probably better than almost anyone in the country but certainly better than the client.

            As with the reasoning underling “value billing” and flat fees, the focus here should be on the value delivered to the client. If client would pay $1,000 to a traditional firm for a piece of work, and I can do the same for $1,000 or less, it’s fine if I capture values from efficiency… and from delegating work to super-competent contractors.