FAQs for Contract Lawyering

For attorneys who are between jobs or contemplating alternatives to a full-time position, working on a contract basis may be a good short or long-term option.

WORKING AS AN INDEPENDENT CONTRACT ATTORNEY

For attorneys who are between jobs or contemplating alternatives to holding a full-time position, whether because of lay-offs, desire for better work-life balance, an impending career change, hiatus from working for family or personal reasons et cetera, working on a temporary or contract basis may be a good short or long-term option.   Perceptions by some that contract legal work mainly consists of lawyers doing document review on a temporary basis aren’t accurate.  Within the legal world there are many highly complex projects that are being handled by lawyers working under contract as a matter of choice. 

There are essentially two approaches to doing contract legal work:  locating work on your own or working through a firm or staffing agency. The following FAQs are primarily focused on the former scenario and there are or will be separate FAQs on working through staffing agencies posted on the Career Services site.  Contact Alumni Career Services for more information.

There are many advantages to taking in work on your own:

Pick your projects (assuming you have enough work or financial reserves)

Great way to break into a new practice area or field

Flexible hours, work from home

Potentially more lucrative than working through a firm or agency – you get all of the revenue you bring in (less self-employment taxes, remember, which you have to reserve for on your own)

All of these positive features are contingent on having a steady supply of work, which highlights the potential downside of being a contract lawyer:

No job security or paid vacation or sick leave

No healthcare benefits (you may be able to get these through COBRA

May have to take on unexciting projects

Don’t have the resources of a law office, for example: meeting spaces, admin help, supplies, research databases, etc.

 

<!How do I get started in finding contract work?

Start close to home, i.e., see if you there are opportunities to work on a contract basis with your previous employer or clients since they know you and your work and vice versa (See the FAQ below.)  After that tap your network of business and personal acquaintances.  Being listed on referral services may steer some work your way, and The Recorder or Daily Journal and other legal papers often include (usually at the back) want ads for contract work.  Job boards for FTE positions ofen include positions which are part-time or temporary, and some times companies or firms which have posted an employee position are open to having the work done on a contract basis.  You may have to work through an agency until you have enough work on your own to be independent – see the FAQs on Working with a Staffing Agency which include a list of agencies.

Is Is it improper, or just unwise, to ask for contract work from clients of the firm?

You may want to be careful that you are not burning bridges with your previous employer, for example if you are in effect underbidding them and want to go back to work at the firm some day or have a stream of referrals from them.  Often however this arrangement can work well for all parties: the client gets to continue working with an attorney they are comfortable with, at a better rate, the firm maintains good relations with a former employee who may be a source of business for them in the future, and helps out a client, and you get a client of your own without needing to compete or do heavy marketing. An assumption for all of this is that you are actually capable of servicing the client effectively – if you have been working on complex litigation or multi-million dollar transactional deals it may not be realistic for clients to use you without the resources of a firm behind you.

<!Do you need malpractice insurance to do contract work?

Malpractice insurance for lawyers is not legally required in California (it is required in some states however and effective January 2010 California attorneys are required to disclose in their engagement letters whether they maintain malpractice insurance). If you are working on a referral from a firm or working for an agency, that firm or agency may include you on their own malpractice policy. If you are going solo, getting malpractice insurance is a judgment call based on your assets and the type of work you are doing.  By way of reference, approximately 40% o f CA lawyers work without malpractice insurance.  Malpractice insurance has gotten more affordable and reportedly policies may be obtained for as little as $3,000 – $4,000 per year.

Is it necessary or advisable to set up a business entity to do contract legal work?

There are two drivers for being more formal: protecting yourself against liability and marketing yourself. Forming a professional corporation or LLC may give you some insulation against liability but malpractice insurance may have more practical value.  If you want to look like a real firm features which may help you look more professional are having a business address, a business office as opposed a home office (you can even rent office space by the hour in some places), and a website. More infrastructure means more cost – It makes sense to focus first on getting and keeping a stream of business and secondarily on looking like a formal business.

<!How do you set your rates for contract work?

<!  Charge what your customers are willing to pay.  In setting your rates you may look at rates being charged by your competitors.  One of the challenges of working for yourself is estimating accurately how long projects will take in billable hours.  Flat fee arrangements are attractive but dangerous – try to avoid them unless it is necessary to get in the business and then be careful to leave yourself carve-outs for additional work. Anecdotally, many practitioners report they underpriced themselves starting out.  However if you are trying to develop a stream of business and/or if you are practicing in an  area of law which is new to you, you may have to charge less than your time is worth until you are established.

 

<!Will doing contract work hurt my chances of getting a permanent job?  How should I mention it on my resume?

It It depends:  if the work you are doing is interesting and gives you valuable experience for the potential permanent employer, it may not be much of an issue.  If on the other hand the work is very routine and undemanding, such as doing document review it probably isn’t going to impress employers particularly – you would be well-served to try to balance it out by also doing more advanced legal work, even as a volunteer. If you have a choice, factor in how contract legal work fits into your long-term career plans, including how you will account for it on your resume. 

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