Ethics Series Part 4: To Bill or Not to Bill: 3 Ways Law Firms Can Manage Costs of Hiring a Freelance Attorney

Law firms have several options for managing freelance attorney costs. First, the law firm may simply absorb the cost of the freelance attorney, perhaps in a contingency fee arrangement. Second, the law firm may treat the costs as a direct expense to the client where no markup is taken. Or third, recognizing the additional costs associated with hiring and managing the freelance attorney, the law firm may apply a surcharge to the freelance attorney’s fees and bill the client appropriately.

Each of these three fee arrangements satisfies the requirements of the Minnesota Rules of Professional Conduct (“MRPC”). Most importantly, MRPC Rule 1.5(a) requires attorney fees to be reasonable given the circumstances of the attorney-client relationship. Further, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility indicated in Ethics Opinion No. 08-451 that adding a surcharge for a contract attorney’s work is permitted as long as the fee charged is reasonable for the services rendered. The ABA Committee reasoned that such a profit is reasonable provided the hiring attorney supervises, directs, and reviews the freelance attorney’s work. In addition, just as law firms do not disclose how much they pay associates who work on a client’s legal matters, they are not required to disclose how much they pay a freelance lawyer.

In essence, the key ethical obligation to billing clients for freelance attorney work product is reasonableness, which is demonstrated through the proper supervision of the freelance attorney and applying a reasonable surcharge for the law firm’s oversight. Hiring freelance attorneys is a convenient and practical way to solve temporary project staffing problems. Plus, if managed correctly, it is also a way to increase a firm’s revenue stream.

Effective February 3, 2014, Susan has moved her law practice to the Environmental Law Group and is no longer working as a freelance attorney. You can reach her at swiens@envirolawgroup.com. MFAN Bio | Email | LinkedIn | MFAN Posts

• Related Posts
• Bookmark
• Tags

No Responsesto “Ethics Series Part 4: To Bill or Not to Bill: 3 Ways Law Firms Can Manage Costs of Hiring a Freelance Attorney”