Engaged in the “Practice of Law” – The Future of Contract Attorneys under the FLSA

Looking to save costs on large-scale document review projects, law firms often turn to “contract attorneys” to handle the grunt-work.  These contract attorneys are licensed attorneys, hired on a temporary basis, usually through staffing agencies, and their contracts run for the length of a project.  Despite often working in excess of 40 hours per week, law firms maintain that contract attorneys are not entitled to time and a half for overtime pay under the Fair Labor Standards Act (“FLSA”) since they are licensed attorneys, considered to be “engaged in the practice of law.”

In two recent cases, Lola v. Skadden, Arps, Slate, Meagher & Flom and Henig v. Quinn Emanuel Urquhart & Sullivan, contract attorneys challenged their designation as exempt employees under the FLSA.  In both cases, the plaintiffs claimed that the document review they conducted was so menial and clerical that they were not actually using their law degrees or engaged in the “practice of law.”  These cases have attracted a significant amount of attention, leading to questions about the manner in which law firms use and pay contract attorneys.

Lola v. Skadden, Arps, Slate, Meagher & Flom

In Lola, the plaintiff was a contract attorney in North Carolina who received a job reviewing documents for Skadden for $25 an hour, through Tower Legal Staffing.   David Lola described his job as “closely supervised” and “extremely routine in nature.”  He explained that his role mostly consisted of scanning documents for predetermined search terms and clicking buttons when he found them.  Lola alleged that he usually worked roughly 45-55 hours a week, but never received overtime compensation for hours worked in excess of 40 per week.  He claimed that since his document review was “devoid of legal judgment,” he was not actually engaged in the practice of law.

Although Lola’s complaint was dismissed in the Southern District of New York, it was later revived by the Second Circuit Court of Appeals.  In the district court decision, Judge Richard Sullivan found document review to be one of the many “legal support services” that “fall comfortably within the heartland of legal practice.” However, the Second Circuit disagreed.  In a unanimous opinion, the three-judge panel held that in North Carolina the “practice of law” requires “the exercise of at least a modicum of independent legal judgment.”  While the Second Circuit suggested that contract attorneys might be exempt under the FLSA, Lola’s status was never fully resolved by the lower court because the case settled in December 2015, with the named plaintiff receiving a $75,000 payout.

Henig v. Quinn Emanuel Urquhart & Sullivan

In a substantially similar suit, William Henig sought overtime compensation for his time as a temporary contract attorney with Quinn Emanuel.  In 2012, Henig was hired, through the legal staffing firm Providus, on a two-month assignment at $35 per hour to conduct document review.   Over the course of his assignment, Henig reviewed nearly 13,000 documents and regularly worked 57 to 60 hours per week, but was never compensated beyond his flat hourly rate.  Henig claimed that he was not actually “engaged in the practice of law” because his work did not involve the exercise of legal judgment.  According to Henig, his job was primarily to exhaustively tag documents as responsive or non-responsive “based solely on the criteria Quinn Emanuel provide him, rather than his own interpretation of what documents were responsive or not responsive to discovery requests.”

Despite the unquestionably monotonous nature of his work, Judge Ronnie Abrams of the Southern District of New York dismissed Henig’s claims on summary judgment in December 2015.  In her opinion, Judge Abrams stated that “in a litigation in which a good deal of money is at stake, attorneys generally must review thousands, if not millions of documents and analyze them for relevance and privilege using their legal judgment.”  Judge Abrams added that document review might not be “law at its grandest but all of it is the practice of law.”  Judge Abrams distinguished her decision from Lola by noting that New York and North Carolina have different definitions for “practice of law.”  Judge Abrams also emphasized that the plaintiffs in Lola worked under very tight constraints and “exercised no legal judgment whatsoever,” whereas the plaintiffs in Henig had looser constraints that allowed them to exercise some legal judgment.

The Future of Contract Attorney Status

In both cases, the courts failed to draw a clear distinction between exempt and non-exempt legal work.  While neither Lola nor Henig definitively resolved the status of contract attorneys, these cases have at least recognized that some document review is not the “practice of law.”  They have also put firms on notice that contract attorneys must generally exercise “a modicum of independent legal judgment” to qualify for the exemption. That being said, it is doubtful that the FLSA’s “practice of law” exemption was meant to cover an attorney doing work similar to that of a paralegal.  If future plaintiffs can prove that their work was basic enough that it could have been conducted by a paralegal, they might have a much greater likelihood of success.

The blurred line between contract attorney and paralegal work could be extremely important since the FLSA’s “learned professional” exemption specifically excludes paralegals. Under the “learned professional” exemption, an employee (1) must perform work requiring advanced knowledge; (2) the advanced knowledge must be in a field of science or learning; and (3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.  The regulations also note that “paralegals and legal assistants generally do not qualify as exempt learned professionals because an advanced specialized academic degree is a not standard prerequisite for entry into the field.”   If contract attorneys can establish that their work does not substantially differ from that of paralegals, who do not need a specialized degree, they may be able to convince a court that they are not “actually engaged in the practice of law” or using their law degree (even if they are exercising some legal judgment).

Contract attorneys may also be able to bolster their cases if they can prove that the law firms use contract attorneys to avoid paying overtime to paralegals.  Given that time and a half for a paralegal would likely bring their hourly wage even higher than that of a contract attorney, it is very plausible that many firms choose to farm the work out to avoid paralegal overtime.  If contract attorneys can establish that their document review is substantively similar to paralegal work, and was only assigned to them over paralegals for economic reasons, they may be able to sway a court.

Although Lola and Henig may motivate some firms to adjust their use of contract attorneys, we are unlikely to see any dramatic changes, such as increased mechanization of tasks. However, many predict that we will see more contract attorney overtime claims.  Thus, it would be helpful for either the courts or the Department of Labor to answer the call for clear guidance on the issue.