It is a common belief that lawyers are in a secure profession, because they can profit from bad times as well as good. When times are good, lawyers profit from lucrative deals and investments. When times are bad, lawyers profit from litigation and bankruptcy.
The results of a recent Altman Weil survey of 218 major US law firms paint a different picture. While average US law firm profitability in 2009 remained stable during the recession, 66.7% reduced support staff, 43.3% cut paralegal staff, 43.5% reduced the number of associates (young lawyers as employees), and more than 25% de-equitized (removed from profit-sharing) one or more partners and further cuts were planned for 2010. There is now a large pool of unemployed lawyers and other legal professionals in the US.
Perhaps this is not so surprising in retrospect. However, the same survey also found that the major US law firms do not intend to return to the status quo prior to the financial crisis. Rather than simply rehire staff as regular employees as they have done in the past, 52% responded that they intend to make the hiring of lawyers on a temporary basis a permanent part of their staffing strategy. This is up from 39% hiring of temporary lawyers the previous year. A recent article by Klinghoffer and Richter in The Legal Intelligencer 1 observes that this approach appears to be a long term trend.
The emergence of skilled project-based legal professionals: Fad or trend?
In the US, lawyers hired on a planned temporary basis are called “contract-based attorneys”, “project-based attorneys”, “temporary attorneys” or simply “contract attorneys”. The main difference between those lawyers and lawyers working for law firms and corporate legal departments is that when the project is done, the relationship is over.
Until recently, project-based attorneys were hired to cheaply carry out menial tasks requiring some degree of legal judgment. A prime example is staffing initial relevancy and attorney-client privilege review of the massive amount of documentation generated by discovery requests during US litigation.
Now that there is a vast pool of unemployed highly skilled lawyers available, US law firms have also been hiring project-based attorneys for substantive work. Klinghoffer and Richter confirm that this is in fact happening. This raises the question whether this new trend will remain solely a US phenomenon that will disappear when business picks up again.
In this author’s view, the answer is “no” for one simple reason — advancements in information technology, project management software, extranets, and web-based tools are lowering barriers to assigning work on a project basis to a level approaching that of calling upon full-time internal staff. Externally hosted secure electronic workspaces are already available at moderate cost that enable access to, and accountability for, project documentation, communications and work-in-progress without the issues associated with granting access to a corporate or law firm network or intranet. These advances are putting in-house corporate counsel and law firms in an unprecedented position to hire skilled talent from around the world to cost-effectively address client requirements in a highly targeted manner.
When one has successfully worked with freelancers internationally via the Internet as this author has, obtaining skilled services as a commodity on the Internet does not seem like such a foreign concept. The author has found that the quality, timeliness and usability of each freelancer’s work product generally exceeded expectations for a fraction of the cost from a traditional source. The key learning this author has gained from half a dozen such projects is that one should (a) use a service that provides access to a substantial pool of vetted qualified candidates, (b) describe the project and selection criteria in a clear and thoughtful manner, and (c) interact with the most promising candidates during the selection process (learn how they work through their questions and comments), so that you find someone who is a good fit.
Engaging a project-based legal professional may be a viable way to address a capacity bottleneck. Here’s an example of an in-house corporate chief patent counsel situation in a mid-sized company.
Due to an increase in reporting and management responsibilities, in-house chief patent counsel has not had time to meet with employees on a regular basis to harvest inventions, leading to a decline of invention reporting and filing of patent applications. While the company’s outside counsel would have been willing to offer this service, it is not experienced in ferreting out inventions. Paying outside counsel for learning by doing would have been risky and potentially cost-prohibitive.
In-house counsel hires a former in-house counsel with extensive experience harvesting inventions and drafting patent applications as project-based counsel with the help of an agency. The company begins to reestablish its exclusivity via patent protection based on the harvested inventions while in-house patent counsel continues to concentrate on providing strategic advice to company management.
Project-based counsel can also be used to address a temporary need requiring special knowledge or skills. An example is when an investor needs to make an independent assessment of the value of an acquisition target. Here’s an example.
An investment group is interested in investing in a promising European start-up company. The law firm advising the investment group would like to conduct the due diligence on behalf of the investment group, but does not have a patent attorney with expertise in the start-up company’s technology to conduct the technology protection and freedom-to-operate due diligence. The law firm is initially faced with an dissatisfying choice between (a) trying to teach outside patent counsel how to conduct patent due diligence on the fly and (b) asking one of their competitors to team up with them.
Through an agency, they are able to hire an independent multilingual project-based patent attorney with substantial IP due diligence experience and appropriate technical background at a daily rate well below the corresponding hourly rate charged by local counsel.
Another way that project-based counsel can be invaluable is to kick-start a project of strategic value to a company. Here’s an example involving protection of proprietary know-how.
A company conducts an internal audit to determine whether there are any weaknesses that should be addressed prior to launching a campaign intended to attract companies and investment groups for a buy out proposition. The auditors report that they are not able to verify any systematic approach toward protecting the confidentiality of unpatented proprietary know-how which the company claims is the basis for its dominant position in the market. They also found that there is apparently no system in place to prevent illegitimate use of know-how belonging to its competitors.
They recommend that the company take measures to identify the know-how in its possession, determine its source, and implement specific measures to protect its own know-how and segregate that know-how from know-how covered by third party nondisclosure agreements. The auditors and the company’s legal counsel conclude that they do not have the required combination of technical and legal expertise to carry out this recommendation in a timely and cost-effective manner.
A project-based IP legal professional with the appropriate technical and legal background, obtained via an agency, conducts the know-how audit on-site and submits a complete report, including some suggestions on how to ensure compliance based on industry best practices.
Agencies that have developed a pool of legal professionals available for project-based work include Inside Edge Legal (an affiliate of Major, Lindsey & Africa), JuriStaff, GenCounsel, Adecco, CPA Global, Firm Advice, Legal Placements, Kelly Law, Lumen Legal, Pat Taylor, Project Counsel and IP Hire.
The European Intellectual Property Employment Agency IPHire has pursued a rather unique strategy in that it is focused on providing project-based legal professionals specifically in the intellectual property field. The project-based legal professionals are not only attorneys-at-law, but also patent attorneys, which in Europe are usually not in the same category as attorneys-at-law, and paralegals trained in IP work. As far as this author can determine, IP Hire’s approach is unique among such agencies. Global job postings for project-attorneys indicate that there is a significant demand for project-based IP attorneys.
Since IP work can generally be parceled out as discrete projects and IP rights will continue to be important for extracting value from investments in innovation, it seems likely that the demand will continue.
While it is too soon to say how quickly the use of skilled project-based legal professionals will grow, this development is clearly more than a fad. Technology and placement agencies are making it easier than ever to use project-based legal professionals to address the challenge of meeting the ever-changing need for legal services around the world. Don’t get left behind.
Robert (Bob) Lelkes © 2011
 See also, Susskind, “The End of Lawyers? Rethinking the Nature of Legal Services” (Oxford University Press, 2009)