Lately, I have been seeing a number of legal employers seeking contract attorneys. Contract attorneys typically work for a firm on a temporary basis, usually when it experiences overflow that is not expected to be permanent.
Back when I graduated law school, contract attorneys were associated with document review work. Doc review typically involves two types of work. The first is translating documents written in a foreign language. The second and more common type involves inspecting every document to see if it is relevant to discovery requests.
I have never done doc review work. But from what I have heard from blogs and anonymous forums is that it is a dead-end job at best and soul sucking, depression-inducing misery at worst. While some firms treat their staff well, others resemble a white-collar version of the horrendous working conditions featured in Upton Sinclair’s The Jungle. I’ve read about people working in makeshift offices that used to be broom closets. Or lawyers having to sign out of the office to use bathrooms that are cleaned only twice per week.
Nowadays, more firms are willing to provide substantive legal work to contract attorneys. While many small firms are experiencing an uptick in business, they are still reluctant to hire full-time associates. The reasons are numerous and complex. Maybe small firm owners are extremely cheap and don’t want to pay benefits and employment taxes on top of a salary. Maybe they don’t want to deal with state labor laws. Or they don’t want to give anyone an expectation of perpetual employment.
The problem is that many job seekers are not fond of contract work (partially because of the doc review horror stories) and take them only as a last resort. While this sounds like the epitome of entitlement, there are plausible downsides to taking on contract work. First, they lose a lot. From their perspective, there is no job security, no benefits, no unemployment benefits after termination, and they may have to forgo more secure work. Second, contract attorneys tend to feel like third-class citizens at a firm, even if they are treated the same as the full-time attorneys. They have good reason to think this way because they are usually not listed on the firm’s website. Finally, they are worried that employers and recruiters might view contract work on a résumé with suspicion. People with numerous contract jobs might be viewed erroneously as unstable job hoppers. Or they may wonder, “If this person was so good, why wasn’t she hired full time?”
Under the right conditions, contract work is beneficial to everyone and in my opinion has been given a bad rep.
For job seekers, contract work can be the starting point for gaining experience and getting to know a firm. Existing solo practitioners can use contract work to supplement their income and expand their skill set. Also, there is more flexibility. Contract attorneys are generally allowed to work for other firms and do not have billable hour requirements.
While contract attorneys generally do not get benefits, they usually (but not always) get paid as independent contractors. This means no taxes are deducted from their payments and they get more generous tax write-offs compared to employees. However, they must pay self-employment tax in addition to income tax on their net profit and must pay them on a quarterly basis.
With better tax benefits and greater flexibility, contract attorneys have the potential to earn more than full-time associates if they work for multiple firms and properly negotiate pay.
For employers, hiring contract attorneys as independent contractors can be cheaper than hiring a full-time associate. But I highly recommend consulting an employment or a tax lawyer to see if the job duties might make their hires look like employees. Even a suspected independent contractor/employee misclassification can subject you to an employment tax audit with the potential for back taxes, penalties, and interest.
Finally, I want to say something about how employers and recruiters should view contract work on a résumé. Some view them negatively because of their personal experiences and biases. To these people, I challenge them to educate themselves. Yes, there are people who take contract work because they have no other options. But at least these people are trying to survive and better themselves. They probably have work experience that is comparable to associates. Also, many good candidates have preferred contract work because of the tax benefits and flexibility mentioned above. As I have mentioned numerous times on this column, if you are going to hire someone and pay them a substantial amount of money, it would be wise to spend some more time looking at their work history as opposed to their title.
Contract work can be beneficial to employers and employees who are seeking an alternative to traditional employment arrangements. Maybe if everyone looked at contract work differently, this can be a significant step in fixing the extremely dysfunctional legal employment system.