Temp Lawyers Offering a Permanent Solution
The office is the newest for the temporary legal staffing operation of Kelly Services and joins a growing number of similar turnkey offices popping up around the country dedicated to short-term contract legal work. Kelly now has two contract legal service offices in New York City.
Special Counsel, the legal staffing arm of MPS Group Inc., also has two offices in New York, each capable of housing 100 attorneys on temporary assignments. Hudson Legal, a division of Hudson Highland Group, offers turnkey legal staffing options in eight of the 12 cities it serves in the United States.
Staffing companies say the demand for turnkey operations reflects the increasing burden put on corporate legal offices by the dramatic rise in the number and type of documents and electronic records that must be reviewed in civil lawsuits today. Faced with the need to screen thousands—sometimes millions—of documents and electronic files in a short period, corporate attorneys have turned increasingly to staffing companies for help, seeking not just short-term lawyers but someplace to house them as well.
"There is a shift in the legal marketplace from just providing talent to providing staffing and space," says Marc Zamsky, executive vice president of Hudson Legal. "A company might say, ‘Not only do we need 15 or 20 contractors for the next thee months, we need space to house them, we need the computers and technology.’ Our clients, whether they are corporations or law firms, are relying on us more and more for turnkey solutions."
The increased spending on legal-staffing contracts has begun to draw human resources departments and purchasing agents into the process. In some cases, corporations are striking longer-term contracts with staffing firms that establish set prices for contract legal services on an as-needed basis.
Staffing companies offer a way to trim costs for corporations with rising legal bills. Outsourcing basic litigation tasks like categorizing documents and data and checking for specific content in e-mails or other communications can cut millions off legal expenses.
Christopher Gallagher, regional vice president of Ajilon Legal, a division of international staffing company Adecco, says corporations with large legal bills defending complicated lawsuits can save $5 million to $10 million per year by using contract attorneys.
The math is fairly straightforward. The billing rate for an associate at a large law firm runs about $275 to $300 per hour. Contract agencies pay their lawyers $35 to $50 an hour, plus time-and-a-half for overtime. Although most contract lawyers working for agencies put in 50 to 60 hours per week, their average hourly pay would still tend to be in the $40 to $60 per hour range. Contract agencies can thus charge three times what they pay their contract lawyers to cover overhead and profit and still save corporations a bundle in legal expenses.
"It is relatively low pay compared to what a lawyer [in a large firm] would make," says Julian S. Brown, president of development for Compliance Inc. of Arlington, Virginia, which is part of international staffing company Vedior. "But if they are working most weeks of the year, they will make decent money."
The cost-saving potential of contract legal service has made a strong impression on corporations, which typically hire outside law firms to handle complex lawsuits. Corporate legal departments, pressed to control spending, have begun farming out tasks to lawyers at staffing agencies or asking their outside counsels to use the agencies for routine work. Ajilon’s Gallagher says some corporations have established strict guidelines requiring the use of temporary contract lawyers for routine tasks.
"In the past, it was a good ol’ boys club," Gallagher says. "The outside counsel would just send bills to the corporation. Now corporations would rather use contract services to control costs."
Gallagher relates one case in which a Fortune 100 corporation established a rule for its outside legal counsels that document review jobs requiring more than three attorneys and four days had to be done with contract lawyers. The rules also set the rates that would be allowed for those outside legal services.
Despite the lower level of pay and emphasis on saving money, legal staffing agencies have managed to find plenty of lawyers willing to take the jobs. Some of those lawyers are just starting their careers and are in need of work. Others are recently retired and are looking for supplemental income. Still others are in transition: between jobs, moving to a new city along with a transferred spouse, or making a lifestyle change.
All that career movement provides a steady flow of staffing candidates. In the San Francisco Bay area, where Robert Half runs three legal staffing offices, the operation interviews more than 100 candidates each week. Hudson has about 1,800 contract lawyers working under its supervision each day.
Charles Volkert, executive director of Robert Half Legal, says the types of law firms that are outsourcing work to agencies have changed. "It is no longer just the top 50 law firms using us. We are working with midsize and small law firms."
The rise in corporate caseloads and the explosion in the number and types of documents that are now under review in those cases are driving the legal staffing business. Corporations are turning increasingly to outside law firms to help handle those cases, and those outside law firms are, in turn, outsourcing some of the work to staffing agencies.
In a survey of law firms published in June by Robert Half, 45 percent of corporate legal departments say they had increased their use of outside counsel during the past year. Of the type of work being sent to outside counsel, 66 percent cited litigation. Compliance and regulatory matters ranked second at 16 percent.
The increasing demand for contract lawyers has provided a boost to the contingent staffing industry. In a report earlier this year, Staffing Industry Analysts, a California-based staffing industry research and consulting company, says temporary legal staffing is the fastest-growing segment of the contingent workforce in the U.S., increasing at an annual rate of 16.1 percent from 1997 to 2005. Two-thirds of the work done by staffing agency attorneys is in litigation or other work, while one-third involves merger and acquisition activity, according to the Staffing Industry Analysts report.
Growth in the legal staffing business has spurred expansion by most of the major staffing agencies and spawned a host of smaller, independent contract legal staffing firms, particularly in large metro areas. Despite the competition, staffing agencies have been reporting solid growth in their legal services businesses. Ajilon’s Gallagher says his company’s revenue grew more than 30 percent last year.
The type of litigation being outsourced to staffing agencies stems from an explosion in the types and amount of corporate records subject to discovery in civil lawsuits. Computers create immense storehouses of potential evidence in the form of e-mails, memos and other electronic files.
Lawyers can use the rules of evidence to force corporations to sift through their vast files for certain documents or communications. And it’s not just the finished documents that are subject to discovery, but also the various early drafts and edited versions that might exist in computer files.
That has led to a new line of computer software called electronic discovery, or e-discovery, which can help compile and sift through corporate records. But lawyers still need to review documents for relevance and status to determine which ones will be used as evidence.
The review process is a time-consuming and repetitive task, usually with a short deadline that requires a team of lawyers. All of which makes it ideal for outsourcing to staffing companies that can supply lawyers on short notice for periods of a few weeks to several months.
"When you get a request to review 2 million e-mails, that is a daunting task," Volkert says. "That is one of the key components driving the business."