Disclosing the Use of Freelance Lawyers to Clients

May 22, 2012

One of the first questions hiring attorneys ask me is whether they have to disclose the use of a freelance lawyer to their clients. The short answer shouldn’t surprise them — it depends.

If a hiring attorney passes the cost of the freelance lawyer as a cost or disbursement, then he must disclose the use of a freelance lawyer and is not permitted to charge a markup.

If the hiring attorney passes the cost of freelance services along to the client as legal services, then disclosure obligations become murkier. Generally speaking, if there is no client information of a sensitive nature released to the freelance lawyer to do the project and the hiring attorney is closely supervising the freelance lawyer’s work and adopting it as his own after exercising independent judgment, then the hiring attorney does not have to disclose the use of the freelance lawyer.

However, if any of those conditions are not satisfied, then use of the freelance lawyer must be disclosed.  For projects requiring extremely sensitive client data be shared with the freelance lawyer, then the client must give informed consent.

Now, all this is general because (1) it is pursuant to the ABA Formal Opinions on the matter (00-420, 08-451, and, to a lesser extent, 88-356), and state ethical requirements do vary (sometimes considerably), and (2) because this is a simplification of a rather complex ethical inquiry and is instead a broad statement of what appears to be the trend in professional responsibility.

The hiring attorney may choose to simply disclose the use of a freelance lawyer to his client to avoid having to figure out the ethical obligations particular to his jurisdiction (although a good freelance lawyer would offer to figure it out for her Attorney Client). The good news is that hiring attorneys generally do not have to disclose the amount of the mark up, even when they disclose use of the freelance lawyer (I’m actually not aware of any exceptions to this generality, but that’s not to say none exist).

So, the hiring attorney tells his client: “Hey, I’ve got someone I like to use to do these summary judgment motions, and that will cost you $175 an hour instead of my usual $225 an hour. She’s pretty quick, so I think it’ll be more cost-effective for you.  I’ll supervise her work and review it to make sure it’s what we’re looking for, but she’s done a great job for me in the past.”

Most clients jump at the opportunity to save between $50 and $200 an hour (depending on the difference between what the hiring attorney bills for an associate’s or freelancer’s time and what he bills for his time), and will appreciate that their attorney is thinking about handling the case in a cost-effective manner.

The hiring attorney’s client will not know whether he the freelance lawyer is paid $75 an hour or $150 an hour — that’s a private arrangement between the hiring attorney and the freelance lawyer, same as it would be for an associate. The hiring attorney is left with increased revenues, and more free time to work on other pursuits, professional or personal.

Solo and small firm attorneys should contact me by email or phone at 608-620-3529 to schedule a free consultation.

Advertisements
%d bloggers like this: