Cocounsel and contract attorneys can be a great help when you are overloaded or a case comes through the door that puts you outside your “comfort zone.” But different arrangements have different strengths and clarifying the relationship at the outset always makes sense.
Imagine yourself sitting at your desk unable to focus well on any one thing because you just have too much to do. Sound familiar? Then imagine further that you get a phone call from a great prospective client, but the matter is outside your comfort zone. When obligations and opportunities thus conspire, what do you do? Call Ghostbusters? No, you engage cocounsel or hire a contract attorney.
Cocounsel v. Hired Attorney
The choice to engage cocounsel or hire a contract attorney depends on what relationship you seek and what your needs are; both arrangements have their strengths.
If you do not want the client to know you are using “outside” help, use a contract lawyer. A contract lawyer does not have to be disclosed to the client if there is close supervision of the contract lawyer’s work; however, it is a wise practice to always disclose the use of a contract attorney, if only to avoid the possibility that the client might be unpleasantly surprised.
Hiring a contract lawyer also makes sense if you want to earn a profit on the work. According to the ABA, you may earn a profit on a contact lawyer’s work if the work is billed as attorney’s fees.1 If, on the other hand, you bill the work as a disbursement, it should not be “marked up.”
Finally, consider hiring a contract lawyer if you need to have direct control of the handling of the matter. Employing a contract la wyer has been likened to having an associate without the overhead. There is a sense of a boss and a subordinate.
In contrast to the hierarchical relationship that defines interactions with a contract lawyer, a cocounsel relationship is much more like having a law partner. There are many benefits to associating with cocounsel. Scheduling conflicts that might be unavoidable when working with a contract lawyer can be resolved when working with cocounsel. Cocounsel can help you overcome an overload of work while remaining flexible regarding the timing and extent of their involvement; and in such a relationship you avoid the expense of hiring another lawyer. You will then be able to focus and work more effectively.
When you get that call about an interesting case outside your expertise, associating with cocounsel can make your involvement possible. Cocounsel can provide specialized knowledge or experience that serves the client and enables you to take the case. As an added benefit, you expand and deepen your understanding of an area of law while tapping a resource beneficial for your client.
Whether you are a solo or in a firm, working with cocounsel provides a set of fresh and subjective eyes. The synergy of working together and discussing the case can help with ideas and strategy. When a friend engaged me to evaluate a file, we each brought a different perspective to the facts and the relative strengths and weaknesses of each party and witness. Sometimes lawyers get so enmeshed in a file that they lose perspective on the case. They can forget the big picture, or they can overlook important details. Having the right cocounsel involved can prevent that problem.
Proceed With Caution
Whether you are using a contract lawyer or working with cocounsel, there are several important things to remember. The clients’ interests are always paramount. Clients’ confidences must be preserved.2 Make certain there is no conflict of interest. A conflict check must be done with either a contract lawyer or cocounsel.3
Don’t jump into any relationship, whether with a contract lawyer or cocounsel. Investigate the lawyer ahead of time. You don’t want to discover someone’s history of professional discipline after the fact. Ask for attorney references. Spend some time together to see if you can have a productive and comfortable working relationship. Do you think you can work well together? Will there be a personality clash? Are you philosophically aligned on the file? Will there be strategic disputes? Will there be conflicts over division of the workload? How will you clearly define responsibilities? Does either party have veto power? If you address these questions ahead of time, a dispute is much less likely.
Verify malpractice coverage. In a cocounsel relationship, both lawyers can be held responsible for malpractice. Both lawyers are responsible for all deadlines. If cocounsel balks at providing verification of his or her malpractice coverage, run away!
Most importantly, whatever you agree to, reduce it to writing. If it is a cocounsel relationship, the client must be advised and consent. The Minnesota Office of Lawyers Professional Responsibility admonished an attorney following a complaint by a client who had retained the lawyer to represent the client in a criminal appeal. The client paid a $5,000 fee. The lawyer hired an outside attorney to assist in the appeal. The lawyer paid the cocounsel one-half of the fee, but did not notify the client. The Minnesota Office of Lawyers’ Professional Responsibility found several problems: the client had not been advised of the involvement of cocounsel or of the fee paid; the client did not have the opportunity to object to cocounsel’s participation and fee sharing; nor did the client consent to disclosure of client confidences. Even though there was no harm to the client, the lawyer received an admonition.4
Speaking of fees, not surprisingly, many disputes in cocounsel relationships revolve around fees. A thorough written agreement will go a long way to stave off problems.5 In hourly cases, one lawyer may feel “cheated” if the other lawyer is “hogging” the hourly time. Address that issue up front before any work starts. Other issues that need to be addressed in the hourly fee agreement have to do with the actual payment of fees. Who gets paid what and when? Who sends the bill to the client? How will expenses be billed and paid? Who decides with the client whether to incur expenses? What mechanism will be used to handle fee disputes? Who holds the retainer in trust? If the client makes a partial payment on an outstanding account receivable, who gets paid what amount? Taking care of potential fee issues at the beginning will not only prevent later fee disputes, it may also help determine whether you and the cocounsel should work together.
Contingent-fee cases have their own set of rules and issues. When there is a cocounsel relationship in a contingent-fee case in which both lawyers are actively working on the file, the work division should be consistent with fee division. Again, a thorough written agreement will help here. Rule 1.5 of the Minnesota Rules of Professional Conduct deals specifically with fee division, which generally arises in contingent cases when the fee division is between a referring lawyer and a trial lawyer. Rule 1.5 states in subdivision (e) as follows:
(e) A division of a fee between lawyers who are not in the same firm may be made only if
(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable.
The fee-splitting requirements of Rule 1.5 are nonnegotiable and must be followed.
One final arrangement to be considered is a local counsel relationship. When out-of-state clients have a piece of litigation in Minnesota, they need local counsel. Often the client wants their own lawyer to be involved with the Minnesota litigation. A written agreement is equally important here. Even if out-of-state counsel is doing the bulk of the work, local counsel needs to stay involved in the file and should be compensated for doing so. I read a horror story where out-of-state counsel handled the bulk of the workload in a case and the local counsel did not stay on top of the file. The matter proceeded to trial. On the day of trial the judge informed the out-of-state counsel that her docume nts were not in order and she could not try the case. Local counsel had to try the case and was totally unprepared.
The agreement must address who is paying the local counsel’s legal fees. Is it the out-of-state lawyer or the client? It generally will be easier to collect from a law firm than an out-of-state client. If the lawyer is paying the fees, make sure that the lawyer signs the fee agreement along with the client.
For all fee arrangements, include a paragraph that permits you to recover your costs of collection if you have to bring an action to recover your fees and costs.
If Things Go Poorly
In a cocounsel relationship or local counsel relationship, if things go poorly, you can withdraw from representation in state court civil cases, but only if done at a time that will not prejudice the client. In federal court you need permission to withdraw. Nonpayment is not generally considered a good reason for withdrawal in federal court.
1 ABA Formal Opinion 08-451.
2 See Rule 1.6, Minnesota Rules of Professional Conduct.
3 See Rules 1.7 and 1.8, Minnesota Rules of Professional Conduct.
4 Timothy M. Burke, “Using Outside Counsel,” Minnesota Lawyer (09/02/02).
5 A written agreement should be used with a contract attorney but the issues will be somewhat different than for a cocounsel relationship.