Law Firm Growth During an Uncertain Legal Climate, Part Ii: How to Ethically Use Freelance Lawyers & Referral Fees

• Publication year: 2020
• Author: By Laurie Rowen and Erin Giglia

Law Firm Growth During an Uncertain Legal Climate, Part II: How to Ethically Use Freelance Lawyers & Referral Fees

By Laurie Rowen and Erin Giglia

Erin Giglia and Laurie Rowen are the co-owners/founders of Montage Legal Group, LLC, a freelance attorney company comprised of former prestigious law firm freelance lawyers who work on a project basis for law firms that need help with overflow and specialty areas of law.

Prior to founding Montage, Erin and Laurie both practiced litigation at Snell & Wilmer LLP in Orange County, California. Laurie and Erin have been featured in Forbes.com, the ABA Journal, and The Atlantic, and have received numerous honors in connection with their work with Montage. To contact Laurie and Erin with questions on freelance attorney ethics, please email info@montagelegal.com.

Once a solo practitioner or small firm has crossed into "too busy," law firms have several options that can offer immediate relief. In this article we will discuss hiring contract/freelance attorneys periodically, on an hourly or flat fee basis, as well as opportunities to refer matters to lawyers outside the firm, possibly in exchange for a referral fee in place of hiring a traditional associate attorney.

I. FREELANCE ATTORNEY RELATIONSHIPS

Firms often rely on freelance lawyers, also known as temporary or contract lawyers, to assist with legal projects during periods of increased work such as trial preparation, to add specific expertise, to creatively lower fees to firm clients, or to cover for vacation and maternity leave. While many ethical rules apply to the law firm/freelance lawyer relationship, the most commonly misunderstood rules involve (1) Aiding and Abetting the Unauthorized Practice of Law; (2) Fees to Client/Upcharging; and (3) the Duty to Disclose.

A. AIDING AND ABETTING THE UNAUTHORIZED PRACTICE OF LAW

No person may practice law unless the person is an active member of the State Bar of California.¹ Rule of Professional Conduct 5.5 states, "A lawyer admitted to practice law in California shall not knowingly assist a person in the unauthorized practice of law in that jurisdiction."²

While the California State Bar Act does not define the "practice of law," courts have discussed its meaning, which is not as stringent a requirement as it initially appears. "The primary inquiry is whether the unlicensed lawyer engaged in sufficient activities in the state or created a continuing relationship with the California client that included legal duties and obligations." California ethical rules permit law firms to contract with out-of-state attorneys to handle many legal projects including drafting legal pleadings, research and writing, as long as the law firm remains ultimately responsible for the final work product.³

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Winterrowd v. American General Annuity Ins., 556 F.3d 815 (9th Cir. 2009) is instructive on this issue. In Winterrowd, a lawyer barred in Oregon but not in California assisted a California lawyer litigating a case before the United States District Court for the Central District of California. The Oregon attorney did not "appear" before the court, did not sign any pleadings, and had little contact with opposing counsel or clients, and the California attorney supervised the Oregon attorney. The court held that there was no ethical violation under these circumstances.⁴

Simply engaging an out-of-state contract lawyer to ghost-write generally does not violate ethical rules, so long as an attorney licensed by the state retains full control over the representation and exercises independent judgment in reviewing the non-licensed attorney's work.

B. UPCHARING/FEES CHARGED TO CLIENT

When a law firm uses a freelance attorney for a legal project, the firm can elect to bill the client in several...