How LexInsight is returning control of billing rates back to the contract attorneys
Over the past few decades, the Self-Determination Theory for psychological motivation has been gaining increasing acceptance among scholars. The theory posits that autonomy is a basic and necessary ingredient to professional happiness and contentment. When functioning autonomously, people are more deeply engaged and productive, generating human capital and wellness. According to an in-depth study detailed in the George Washington Law Review, the self-determination theory is particularly applicable in the legal profession. In fact, the study found autonomy to be the single most important motivating factor for attorneys. Unfortunately for Attorneys staffed on document review projects, independence and autonomy have become notoriously lacking.
The dominance of staffing firms
Currently, the legal marketplace for contract attorneys seeking work on document review projects is largely controlled by staffing agencies. In turn, the legal staffing industry is dominated by several large agencies, such as Robert Half Legal and Special Counsel. Inevitably, contract attorneys seeking to work on document review projects must agree to work under conditions imposed by these agencies. Among the most egregious conditions, use of the “competitive market rate” to determine contract attorneys’ billing rates stands out as the worst.
The competitive market rate is a flat rate paid to all contract attorneys assigned by an agency to a specific project. The competitive market rate makes no allowance for an attorney’s skill, experience, or expertise. Furthermore, the staffing agency offers the rate on a take-it or leave-it basis. If an attorney wants to work on one of the agency’s projects, he or she has no choice but to accept the proposed rate. To add insult to injury, the rate is specifically calculated to be as low as possible, allowing the agency to maximize its profits through significant mark-ups. In many cases, the mark-up is as high as 100%. Although the client is willing to pay a much higher rate than that received by the attorney, the attorney is powerless to realize a larger share of the payout because the staffing agency is the conduit through which available document review projects flow. Essentially, the document review attorney must agree to forfeit a sizeable portion of the billable rate in exchange for the privilege of working on the agency’s projects.
Although there is no precise method of determining the competitive market rate, it is set as low as a given market will tolerate. Moreover, agencies routinely outsource document review projects to smaller markets, thereby allowing the agency to drive down a project’s payable rate even further. For example, a staffing agency in New York City may staff its projects from a pool of candidates located in upstate New York. The agency is able to do so because document review projects are now conducted almost exclusively through the use of document review software. Thus, the agency can assign small market attorneys to large market projects. As a result, attorneys located in large markets are without work and without recourse. While the quality of contract attorney’s work and client-benefit should be the sole determinants of attorneys’ billing rates, staffing agencies ensure their business interests supersede all other considerations.
Downward pressure on billing rates
A contract attorney’s ability to exercise self-determination is significantly eroded by the prevalence of large staffing agencies within the document review marketplace, and their strict control of attorneys’ billing rates. Over the last few years, the confluence of these factors has dropped the national average rate received by document review attorneys from $38 per hour to $27 per hour, a 40% decrease. Additionally, staffing agencies are leveraging their power over the document review marketplace to eliminate overtime payments. Presently, document review attorneys are either prohibited from working overtime hours or denied time and a half for any work exceeding 40 hours per week. To sum up, contract attorneys working on document review projects have lost their autonomy, independence, and ability to govern their working conditions in any meaningful way.
How LexInsight is disrupting this model
While the present seems bleak, the future is bright. LexInsight, an on-demand eDiscovery services marketplace, is empowering contract attorneys to seize control over their billing rates. Through an online bidding system for eDiscovery projects, LexInsight allows the contract attorney to negotiate his or her billing rate directly with the end-client. Without the staffing agency acting as a middleman, contract attorneys are able to receive higher rates for their services, while providing the end-client with an overall cost savings. Additionally, document review attorneys can exercise the freedom to accept or reject a project for reasons such as denial of overtime pay. Seasoned document review attorneys are able to receive a billing rate commensurate with their experience. Conversely, a contract attorney just starting out in the realm of document review can agree to a customized rate package allowing him or her to secure much-needed experience on the job.
The days of staffing agencies dictating attorneys’ billing rates are coming to an end. Legal staffing agencies have traditionally positioned themselves at the center of the document review universe, but LexInsight is changing this paradigm by placing the document review attorney back at the center of document review universe.
