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The New Short-Term Solution: Inside the Growing Legal Gig Economy.

Byline: Gabrielle Orum Hernandez

I started my career, like many college graduates with an interest in law, as a paralegal. With few personal connections to firms in my college town of Boston and the threat of student loan repayments beginning to loom, I started looking for legal support work on Craigslist. A few emails later, I'd secured a couple of job interviews, and a couple weeks later, I started a full-time job as a paralegal in a firm handling Social Security disability casework.

Craigslist's legal postings for both attorneys and legal support staff look a little different these days--and a little less likely to favor full-time employment. The website's legal "gig" section has ballooned, as firms are increasingly likely to advertise for contract-to-hire, temporary, or part-time positions and staffing agencies look to place contract attorneys and legal support staff on specific projects.

Gig economies that have become a kind of new normal in industries across the United States are beginning to work their way into the legal space. Gig workers drawn from both Big Law layoffs and shifting workplace flexibility needs are quickly replacing junior associate classes and changing the labor landscape of the legal industry. Given their increasing reliance on these contract workers, firms and in-house departments, along with the platforms connecting them to these gig workers, are likely to be pressed to consider the responsibilities they may have in supporting this new workforce.

Legal's 'Online Marketplace' Model

In other industries, tech startups acting as an online marketplace for gig workers have fared extremely well in their first years of investments and revenue, but they are also starting to draw both public scrutiny and litigation for the relationships they've established to gig workers.

The most obvious example, Uber Technologies Inc., has become a hallmark case study of this phenomenon. Venture capitalists across the country are tripping over one another to finance and profit from startups promising to be "the next Uber," but the company has faced a whole range of issues in recent years surrounding its responsibility to its "independent contractor" workforce. Most recently, Swiss public sector insurance company Suva found that Uber's drivers should be considered workers, forcing the company to shell out for Social Security benefits for its drivers, while popular opinion has also soured following a number of high-profile allegations of sexual harassment and gender discrimination within the company.

The optics around Uber have cast a long shadow for other online marketplace startups. In the legal sector, where firms and in-house departments lean on reputation and legitimacy, the hits to Uber's business model in recent years have made it difficult for startups who've sought to inhabit the "Uber for lawyers" space.

Some of the most highly financed startups in legal technology, "disruptors" like Avvo Inc. and Inc., have faced setbacks in building out their consumer-facing attorney bidding platforms, as state bar associations crack down on the attorney fee-splitting mechanisms employed by many online marketplace business models. Smaller online marketplace startups in this space have had even less luck: Shpoonkle and Lawtender each shuttered within about a year of operation.

Nikhil Nirmel faced these struggles when he first launched his startup, Lawdingo, as a consumer-facing on-demand attorney marketplace for basic legal services. "That was operational and working for a while, but became hard to scale because of regulation in that industry and competition in that space," he said.

Since the company initially launched, Lawdingo has pivoted its business model a couple of times, first from a remote working platform, to a monthly legal services subscription service to its current model as an on-demand paralegal marketplace. Nirmel said Lawdingo has found interest among smaller firms and solo practitioners who don't necessarily have steady streams of work. "For the lawyers who do want to cut down on their overhead and don't want to be on the hook for paying salary and benefits when they don't have enough work for them, this model works out great for them," he explained.

Hire an Esquire Inc. founder Julia Shapiro tried to take on a similar staffing problem for firms and in-house departments, but found a different set of difficulties. "The legal industry was not receptive," she said of her initial days pitching the attorney staffing startup to law firms. "We got a lot of attorneys to sign up, but even getting a small law firm to sign up was hard," she later added.

It wasn't until investors caught wind of the startup and started pushing it on their law firms that she was really able to break into the market.

This client-side push, which seems to buoy legal tech adoption across the board, has helped Hire an Esquire scale. "We've had a lot of growth from Fortune 500 clients. A lot of times, they make their law firms work with us," she explained. The company recently partnered with global firm Dentons' innovation arm NextLaw Labs, perhaps indicating a further trajectory into Big Law.

The Modern Legal Gig Worker

While the market downturn may have created new demand for "gig workers" instead of full-time staff, in the legal economy, contract attorneys and paralegals are certainly not a new phenomenon. Firms and in-house departments have hired and used contract attorneys and paralegals for decades now to support project-based work.

New pressures around e-discovery and cybersecurity have created some changes to the kinds of gig workers firms and legal organizations hire, and the ways that they hire them. A number of law school graduates unable to find Big Law work have migrated into document ("doc") review and e-discovery positions, much of which is paid on an hourly wage well below what a junior associate previously charged with the same tasks might make.

Shapiro graduated from law school in 2007, at the height of the economic downturn, and took a job as a contract attorney for Pepper Hamilton. Many of her peers, faced with dwindling Big Law opportunities, cobbled together similar kinds of freelance jobs, often in computer science and engineering career tracks. Shapiro noted that even with full-time work, partner-track associate positions don't really have the kind of security they did a generation ago.

"People 10 years into their career were looking for something different. It didn't seem to be worth it to be on the partner track. The rewards weren't there anymore," she said.

But while contract jobs have certainly boomed in legal, they don't typically come with the perks of full-time employment, things like job stability and health care benefits. Lance Murphy, a Florida-based paralegal, has been working on a contract basis for upwards of 30 years, largely advertising his services on Craigslist. Although he's worked long enough that he can draw on federal programs like Medicare and Social Security, Murphy said that earlier in his career, he had to purchase an expensive independent health care plan. When the Affordable Care Ac passed in 2010, he switched onto an Obamacare insurance plan. Given legislative challenges to the ACA, this option may not be available to contractors much longer.

Shapiro, wary of the instability that contract work can put new legal gig workers in, made Hire an Esquire a W-2 employer, which gives workers access to a different tax structure, liability insurance and employer-based health care if they work for Hire an Esquire for at least 30 hours a week for over 60 days.

"We think it's a responsibility," she said, adding that investors didn't necessarily see it the same way. Though enterprise clients can be held liable without offering things like liability insurance and employee benefits, investors tended to balk at the costs of providing such benefits.

Turning to Technology

Instead of offering full-time work's stability, startups readily tout the flexibility of gig work as part of the strength of their model. Trying to cater to workers with a different outlook on traditional legal careers, though, is just one piece of the current flexibility narrative.

Marketplace startups in this space do create more flexible hours for workers, but many have also happily capitalized on market downturn. Large-scale layoffs of attorneys and legal support staff at big firms have created new employment scarcities for legal workers in the last decade that haven't really reversed course. Fast Company reported that 20 percent of the attorney network on UpCounsel Inc., a marketplace startup connecting small businesses to contract attorneys, had been recently laid off, which is more likely a reflection of employment needs than a desire for flexible schedules.

Both Shapiro and Nirmel have explored using their platforms to help contract workers get hired in permanent capacities. Shapiro believes in her company's capacity to be a "career partner" for contract attorneys. "We know that attorneys' job changes multiple times, and we know that most people will have contract work as part of their career," she said. She also added, "What we're seeing is that the average length of a job is two to three years for Millennials, so everyone's job is kind of a contract job."

But flexibility from these technology platforms can also help for other reasons. Murphy graduated from Florida State University College of Law early in his career, but he wasn't able to get barred because of a previous drug conviction. He found that he was able to do a lot of the work he'd hoped to do by working for attorneys, something that's had both pros and cons for him.

"I have managed to make a somewhat decent living somewhat without the headaches," he said, though he noted that he certainly doesn't make the kind of money he could as a formal attorney. "The attorneys out front, they're the ones who put their face on everything. I don't have to mess with that, finding clients and all that kind of stuff," he said.

Murphy, now in his 60s, now feels grateful for the flexibility. "The freedom to do what you want to do, usually that's reserved for rich people. People who work for themselves have that freedom in some ways too, and I like it," he said. "I just do what I want to do."

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Author:Gabrielle Orum Hernandez
Publication:Inside Counsel Breaking News
Date:May 24, 2017
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