Tuesday, July 14, 2015

On Containing Contractor Conflicts & Other Risks

Two good updates from the Daily Report on the topic of contractor lawyer risk management. First:
  • "For law firms that hire a contract attorney as an employee who works exclusively for the firm and its clients, conflict issues are relatively straightforward. The imputation rules apply equally to all attorneys in the law firm. The issue is more complicated for contract attorneys hired as independent contractors. One way to address this issue is to establish an ‘exclusive’ independent contractor relationship with a contract attorney so that the conflict analysis only involves one set of clients."
  • "Under this arrangement, the law firm and the contract attorney agree that the contract attorney will do work only for the one law firm. Not surprisingly, contract attorneys may expect some commitment from the law firm, whether in the form of compensation or a workload commitment. It is more complicated for firms that prefer to use contract attorneys on a purely ‘as needed’ or nonexclusive basis."
  • "To ensure that a contract attorney's conflicts are not imputed to the firm, it is important that the firm take steps to delineate the contract attorney's limited role. This typically means physical separation, such as working away from the office space or within a segregated area at the firm's office. Any access to firm databases or records should be limited to the specific project within the project attorney's assignment."
  • "Per D.C. Bar Ethics Opinion 352, if a contract attorney ‘is located in a firm's office space, works simultaneously on multiple projects for the firm, is listed on the firm's website or other directories, and has access to the firm's email systems and electronic documents,’ the attorney would likely be so associated with the firm that the attorney's conflicts are the firm's conflicts."
  • "Make no mistake: there is nothing inherently wrong, unethical or unprofessional about using contract attorneys. But the risks involved are unique and merit a different kind of attention. Here are more suggestions for addressing them."
  • Insurance Coverage: "For these reasons, it is especially important to precisely define the nature of the relationship between the law firm and the contract attorney, and confirm during the application process that the legal malpractice insurer will provide coverage should a claim arise."
  • 'Independent' Contractors: "Typically, negligence committed by contract attorneys in the furtherance of their employment is likely attributable to the law firm. Even in an "independent contractor" scenario, there is a risk of a claim for negligent supervision or hiring of an independent contractor. As a result, it is critical that attorneys from the hiring firm supervise and train contract attorneys."
  • Documentation: "One thing is certain if a legal malpractice claim arises out of work performed by a contract attorney: everyone will focus on the nature of the relationship between the contract attorney and the law firm. In the absence of documentation, such determination will be left to the general recollections of the parties involved, as well as what reasonable third parties might have believed. This creates risk."

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