By Isabelle Smith and Erin Giglia
Due to the rising expense of E-Discovery, as well as the pressure put on by clients to keep costs down, law firms have turned to contract attorneys to conduct document review in large, document-intensive litigation. In the course of a single document request, attorneys may have to review hundreds of thousands of documents for relevance and privilege. Many clients simply refuse to pay law firm associate rates to conduct such a review. To minimize costs to their clients, law firms often hire contract attorneys, who typically charge significantly lower hourly rates than law firms charge for associate time.
There are risks associated with outsourcing what may seem like a mundane task to contract attorneys, who may not be as experienced or supervised as closely as associates. Any attorney who has been involved in a privilege review understands the stakes — a client’s confidential, proprietary documents, as well as documents subject to the attorney-client privilege. It is imperative that privileged documents remain so due to the danger that waiver in one case can lead to indefinite waiver. J-M Manufacturing alleges exactly that in a lawsuit filed against McDermott, Will & Emery.
According to a well-publicized lawsuit J-M filed June 2 in a state court in Los Angeles, McDermott improperly produced privileged and other documents — all because it did not thoroughly supervise and review the work of the contract attorneys who conducted the privilege review. The Wall Street Journal reports that the lawsuit alleges that McDermott’s outside contract attorneys “negligently performed their duties” while screening documents. The newspaper states the suit, “is seen in the industry as an important case concerning the quality of work performed by a growing cadre of temp lawyers who are paid as little as $25 to $30 an hour to review documents.”
This case is currently active, so the facts have not played out. But the lawsuit itself provides take-away lessons. First, it is crucial to properly direct and supervise lower level attorneys, contract or otherwise. Supervision will vary depending on the task and the attorneys involved. Several legal ethics opinions have articulated that the hiring attorney is ultimately responsible for, and adopts the contract attorney’s work product as their own. See COPRAC Formal Opinion 1992-126.
Second, firms need to be aware of their contract attorneys’ backgrounds, experience, education, and training, and must meet it’s ethical duty to perform all legal services competently. See California Rule of Professional Conduct 3-110 (A), which states, ” A member shall not intentionally, recklessly, or repeatedly fail to perform legal services with competence.” Rule 3-110 (B) defines “competence” as the “diligence, learning and skill, and mental, emotional, and physical ability reasonably necessary for the performance of such service.” See also, ABA Model Rule 1.1, which states, “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation; and COPRAC Formal Opinion 1992-126. The ABA has commented on the importance of using only skilled contract attorneys in Formal Ethics Opinion 08-451, “There is nothing unethical about outsourcing legal…services, provided the outsourcing lawyer renders legal services to the client with the ‘legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation,’ as required by Model Rule 1.1.”
While law firms and clients may be tempted by inexpensive hourly rates, the adage – “Buyer Beware” certainly applies. So where does that leave clients and law firms who simply cannot afford the costs of associate time, but are concerned about using inexperienced, cheap contract attorneys? The risk associated with hiring contract attorneys can be greatly diminished by hiring experienced freelance attorneys who have the background and skill set to perform the tasks, but whose rates are well under that of law firm associates. Experienced freelance attorneys may be more expensive than contract/temp attorneys, but are a worthwhile investment to assist law firms with large-scale legal work.
It would be a mistake for law firms and clients to close the door on outsourcing legal work. The lesson learned at this early stage of the McDermott lawsuit is to hire experienced freelance attorneys, and as always, to properly direct and supervise attorneys.
Isabelle Smith, the first former partner to join Montage Legal Group, obtained her law degree from University of California, Hastings in 1998 and served as the Executive Editor of the Hastings Law Journal. She was a partner in the Global Litigation Group of Howrey, specializing in complex business litigation, with a particular focus on professional liability disputes and securities matters. Isabelle has represented and counseled law firms in legal malpractice disputes, and Fortune 500 companies and start-ups in securities class actions, derivative suits, corporate governance, antitrust, merger and acquisition disputes, unfair business practices, and trade secrets. In 2006 and 2007, Isabelle was named a Southern California Super Lawyer Rising Star by Law & Politics Magazine. She was also named Pro Bono Partner of the Year by Howrey, LLP’s Irvine office.