Jill Rorem, Esq., is senior manager, legal staffing at Blackman Kallick (www.blackmanstaffing.com). Jill oversees the successful recruitment of attorneys, paralegals and contract legal professionals. Jill (and the Blackman team) staffs document reviews using qualified contract attorneys and thus, works with attorneys-in-transition daily. You can follow her at twitter.com/roremlegalstaff.
Contract attorney rates are a hot topic in the document review industry. New agencies continue to pop up and everyone is trying to offer the lowest rate possible to get a foot in someone’s door. This has significantly lowered the hourly rate paid to the contractors. Conversely, so many attorneys in transition sustain themselves as contractors and are struggling to keep their heads above water as hourly rates decline. It is disheartening that most agencies have maintained 80-100% margins and only the contract attorneys feel the pain from the downturn in rates. (Please see my August 23rd post, “Irate about contract attorney rates: A rant” for the low down). Of recent late, it was standard to pay contract attorneys $35/hr and most projects paid time-and-a-half for hours after 40. Now, they are lucky to earn $30/hr (we even hear of rates as low as $20/hr) and a higher rate for overtime is rare.
While cheaper billing rates appeal to clients, buyers (aka, “those who hire attorneys in transition”) should beware – you may get what you pay for! Rock bottom bill rates inevitably lead to very low hourly rates for the contractors, which could result in considerable snags during your document review. Consider the following consequences:
- A low pay rate can mean that you are hiring an agency’s least experienced contractors or the “last resort” candidates who will agree to work at a lower hourly rate.
- A low pay rate can lead to turnover on the project if something more lucrative comes up (and when pay rates are low, there is something more lucrative).
- Contractors are less loyal to agencies that underpay them and may be less productive in their work. The last thing you want on a document review project are apathetic and resentful attorneys who have once been paid higher rates to do the same work, especially when these are the people who could identify the “smoking gun.”
- Your law firm or organization could be poorly represented as a “cheap” firm in the contractor community and beyond.
So, how do you avoid such consequences? First, ask the agency what their pay rate will be to the contractors for the hourly rate they quote you. If they are not willing to discuss this information with you, it’s a sure sign that the agency margin is too high and there is probably room for negotiation. (TIP: knowing the bill rate and the pay rate is also the best way to assess competing bids for the document review. It’s all about mark-up in this industry and if an agency is taking an 80 percent mark-up, you are NOT getting a deal). Second, find out what the agency does to retain contractors in such circumstances that do call for a low pay rate. Do they offer bonuses? Serve lunch? Do they have a reputation for treating their contractors with respect and kindness? It matters (please see my September 1st post “Contractors speak up!”). If you are ultimately concerned about the bottom line bear in mind that clean up at the end of an unsuccessful project is much more expensive than a few extra dollars an hour on the front end.