Legal News and Upcoming Events

Is Mandatory Malpractice Coverage Coming to Washington?

Mandatory malpractice coverage is well known by Oregon lawyers and may be coming soon to members of the Washington bar (WSBA).

In July, the WSBA Mandatory Malpractice Insurance Task Force presented a tentative recommendation to the Board of Governors (BOG) to mandate malpractice insurance for Washington-licensed lawyers. The task force expects to present a final report to the BOG in four short months.

Next steps include:

  1. Considering feedback from the Board of Governors;
  2. Ramping up information efforts among WSBA members, and obtaining and considering additional comments received;
  3. Detailing the recommended malpractice insurance mandate, including the specific
    required coverage minimums;
  4. Identifying in detail the recommended exemptions from the professional liability
    insurance requirement; and
  5. Drafting a proposed Court Rule for the Board of Governor’s consideration

Members may submit comments to insurancetaskforce@wsba.org. The task force continues to meet monthly through the end of the year. Read the interim report here.

Free Access to PACER

This past week, the ABA Journal reported a potential end to PACER fees:

A new bill before the U.S House of Representatives would prohibit the federal courts from charging for public documents. The Electronic Court Records Reform Act would require that documents downloaded from the PACER database be free. Currently, the repository for federal court documents charges up to 10 cents a page.

The article notes that PACER has become a reliable money-maker for federal courts, pulling in $150 million in fees in 2015 alone.

Of further interest to federal court practitioners, the proposed bill would require documents to be posted to PACER within five days of being filed in federal court in a manner that allows for easy searching and linking from external websites.

Additionally, it would require consolidation of the Case Management/Electronic Case Files (CM/ECF) system, allowing for one-stop shopping when searching for federal court cases. Presently, each court operates its own separate CM/ECF system.

Free Data Breach CLEs in Bend and Medford

The Professional Liability Fund is offering two free data breach CLES in October:

These CLEs will explain data breach, what you can do to protect your client’s information, your ethical duties, and what to do if a breach occurs. For more information, follow the links above. Register for the Bend CLE by emailing DeAnna Shields at deannas@osbplf.org. Register for the Medford CLE by emailing Eric B. Mitton at eric.mitton@cityofmedford.org.

All Rights Reserved – 2018 – Beverly Michaelis

Are Contract Lawyers Automatically Independent Contractors?

Many new lawyers seek out contract lawyering assignments as a means of getting their practice off the ground.  If you are interested in contract lawyering, there are many excellent resources to help you get started.

Begin by checking out the following forms and practice aids available from the Professional Liability Fund at no charge:

  • Contract Lawyers Checklist
  • Contract Project – Letter of Understanding
  • Contract Project Intake Sheet
  • Letter Declining Contract Project
  • Project Assignment

Next, order the following free CLEs:

  • Choice of Entity for Contract Lawyers and Sole/Small Firm Practitioners
  • Practical Contract Lawyering

Both can be found on the PLF Web site.  Select Programs on CD/DVD under the Loss Prevention – CLE heading.

Once you’ve done a bit of homework you will start to get the drift that there is a bit more involved in being a contract lawyer than merely taking an assignment and completing a project.  For example, your classification.  Are you an employee or an independent contractor of the hiring firm?

Some contract lawyers assume they are “independent contractors” because they produce “contract work.”  But a true “independent contractor” must meet the criteria of federal and state agencies for income tax, employment tax, wage and hour, pension, health, Medicare, retirement, disability, workers’ compensation, and unemployment insurance purposes – to name a few.  So how to proceed?

In their article Contract Lawyers: Independent Contractors or Employees? Lisa Brown and Jim Vogele provide some answers.

First, enter into a written agreement with the hiring firm confirming your independent contractor status.  Brown and Vogele suggest including the following provisions:

  • The contract lawyer is responsible for his or her own income tax withholding and Social Security self-employment taxes, professional liability insurance, and excess coverage.
  • The firm will issue a Form 1099 for the services performed by the contract lawyer.
  • An acknowledgement that this is not a joint venture and the parties do not have any shared business interests.
  • The contract lawyer is currently licensed and in good standing with the Oregon State Bar, has current professional liability coverage, and has no pending malpractice claims or ethics complaints.
  • The contract lawyer does not have a conflict with any of the parties involved in the assigned project.
  • The contract lawyer agrees to at all times fulfill his or her professional duties to protect the client’s privileged and confidential information.
  • The contract lawyer will at all times comply with his or her ethical and legal responsibilities as a lawyer licensed to practice law in the state of Oregon.
  • The contract lawyer will return all client documents, including all copies of the documents, when the project is complete.
  • The contract lawyer will not receive any employee benefits or workers’ compensation coverage.

Second, behave like an independent contractor:

  1. Maintain your own office (virtual or brick-and-mortar)
  2. Provide services to a variety of firms
  3. Print and use your own business cards
  4. Keep an e-mail account separate from the hiring firm(s)
  5. Use your own online legal research tools, computer, and copying capability
  6. Get your own taxpayer ID
  7. Work independently, setting your own hours
  8. Exercise control over how your work is performed
  9. Invoice the hiring firm and arrange for payment on a project basis
  10. Obtain a 1099 from the hiring firm at year-end
  11. Fulfill the other hallmarks of working as an independent contractor

Read the complete article on the Professional Liability Fund Web site.

Marking Up Contract Lawyer Fees

Can a law firm ethically “markup” fees charged by a contract lawyer?  An interesting question, and one I have been asked more than once in my time as a practice management advisor.

In her article, Choosing a Contract Attorney: Tips for Establishing a Working Relationship, Heidi Strauch notes:

“The ABA addresses surcharges to the client for contract attorneys in Formal Ethics Opinion
00-420. Opinion 00-420 concludes that if the cost of the contract attorney is billed to the client as fees for legal services, the hiring firm may add a surcharge, but if the attorney is billed as an expense, a surcharge is not permitted. Although the difference between a “fee” and an “expense” seems to be one of form rather than function, it stems from the client’s expectations based on the label you use. So when you add a surcharge, for goodness sake call it a fee. The amount of the surcharge is controlled by the rule requiring that a lawyer’s fee not be clearly excessive.
RPC 1.5(d).”

I would add that no firm should bill for the services of a contract lawyer unless the client has agreed to pay for those services – regardless of how that time is characterized (“fee” or “expense.”)

Here are the takeaways for those of you who may want to use a contract lawyer on your cases:

  1. Include a provision in your fee agreement permitting use of a contract lawyer;
  2. Clearly describe in your fee agreement how contract lawyering services will be billed;
  3. If you choose to characterize contract lawyering services as an “expense” you must pass on the contract lawyers “fees” at cost (in other words, you cannot mark up the contract lawyer’s time.)
  4. If you choose to characterize contract lawyering services as “fees” you may add a surcharge or markup.  The amount of the surcharge and the overall fee paid by the client cannot be clearly excessive.  A fee is excessive when:

“… After a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:

  • the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
  • the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
  • the fee customarily charged in the locality for similar legal services;
  • the amount involved and the results obtained;
  • the time limitations imposed by the client or by the circumstances;
  • the nature and length of the professional relationship with the client;
  • the experience, reputation, and ability of the lawyer or lawyers performing the services; and
  • whether the fee is fixed or contingent.”

Oregon RPC 1.5(b).

If your intention is to split fees with the lawyer whom you propose to hire as a contract attorney, then the client must consent.  Oregon RPC 1.5(d) provides:  “A division of a fee between lawyers who are not in the same firm may be made only if: (1) the client gives informed consent to the fact that there will be a division of fees, and (2) the total fee of the lawyers for all legal services they rendered the client is not clearly excessive.”  See Chapter 12, “Referral Agreement Between Lawyers” in the OSB Fee Agreement Compendium.  (Login to the members only area of the OSB Web site, and choose Explore BarBooks.)

Copyright 2012 Beverly Michaelis

July Issue of In Brief Now Available

The July issue of In Brief is now available on the Professional Liability Fund Web site.  Articles and announcements include:

  • Modification to Civil Case Management System in Multnomah County
  • Revised Uniform Trial Court Rules Effective August 1, 2012
  • Adjusted Tort Liability Limits Against Public Bodies Effective July 1, 2012
  • Contract Lawyers: Independent Contractors or Employees?
  • New Foreclosure Law Requirements and PLF Practice Aids

 

How to Get the Most Out of Using a Contract Attorney

“The first step in getting the best results from using a contract attorney is to choose the right one (or ones) to hire. Whom do you trust to be competent, fit well within your firm culture, be honest, serve your clients better, and increase your profit?  Once you’ve chosen a contract attorney, the most effective tool for getting the most out of the relationship is to identify and communicate clear expectations.”  (Excerpted from Hiring a Contract Attorney by Heidi Strauch.)

In her full article Heidi addresses the following ethical and practical concerns:

  • How Do I Find a Contract Lawyer I Can Trust?
  • Does the Client Have to Know?
  • What Details Do I Need to Consider For Each Project?
    • Location of Work
    • Scope of Work
    • Access to Client File and to Client
    • Payment and Billing
    • Rate
    • Ethical Considerations
    • Confidentiality and Conflicts
    • Software Compatibility
    • Engagement Letter
  • Additional resources relating to hiring contract attorneys (some of which can be found on the PLF Web site.)

Read this post if you are interested in hiring a contract lawyer or wish to offer contract lawyering services.  The advice applies to both ends of the spectrum.

Remember if you are a contract lawyer claiming an exemption from Professional Liability Fund coverage in Oregon, you must live within the exemption guidelines.  If you are in doubt about how these guidelines work, call our office at 503-639-6911 or 800-452-1639 (toll-free in Oregon).  The guidelines are published on our Web site at the Policies and Forms link under the Primary Coverage heading.  Look for the document entitled “Exemptoin Guidelines: Law Clerk/Supervised Attorney and for Retired or Of Counsel.”

In a nutshell, you may perform legal research and writing without purchasing Professional Liability Fund Coverage, provided:

  • Your work is reviewed and supervised by an attorney with PLF coverage; 
  • You make no strategy or case decisions; 
  • You do not hold yourself out to any client as an attorney; 
  • You sign no pleadings or briefs; 
  • You attend no depositions as the attorney of record; 
  • You make no court appearances as the attorney of record; 
  • You do not use the title “attorney,” “attorney at law,” or “lawyer” on any correspondence or documents; and 
  • You are not listed in the firm name or on the firm letterhead as an attorney or firm member (unless specified as retired). If your are retired, your name may be listed on the firm letterhead as “retired” or “of counsel (retired),” whichever applies. Note that if you are listed on the letterhead in this way, you may be vicariously liable for errors made by other members of the firm under the theory of apparent partnership or partnership by estoppel. The other members of the firm may also be vicariously liable for errors made by you.

For additional considerations, read the complete guidelines.

Copyright 2010 Beverly Michaelis