A recent ruling reducing an attorney’s fee award under New Jersey’s Law Against Discrimination because plaintiffs’ firm used per diem attorneys has rattled the plaintiffs bar and seems headed for state Supreme Court review. The case centers on the hourly rate charged by the per diem lawyers the plaintiffs’ lawyer, Peter van Schaick, hired to cover a brief court appearance.
Generally, when a lawyer hires a per diem attorney rates, it’s to handle a specific task or project such as drafting documents, conducting legal research, or appearing in court on a temporary basis. Clients benefit from the cost savings and flexibility of hiring a per diem attorney, as opposed to paying the hourly rate of a full-time associate for the same work.
Hiring a per diem lawyer may present ethics issues, however, because New Jersey Rule 1.10 requires that lawyers disclose to their clients the nature of any arrangements by which a nonlawyer or non-lawyer entity may provide legal services, and that all such matters are subject to the rules and regulations of the New Jersey State Bar. This includes, among other things, the requirement that lawyers “make reasonable efforts to ensure that a potential client’s engagement with the per diem lawyer is not a prohibited conflict of interest.”
One method for doing so is to include the per diem attorney’s rate in the hourly rates the client is charged. A per diem lawyer’s hourly rate is usually based on a combination of their own normal practice rates, plus the standard fees imposed by the state courts for each service performed. In some cases, the per diem attorney’s hourly rate also takes into account certain extra expenses the firm may incur in providing services to the client such as photocopying, faxing, and travel.
Another way for a lawyer to engage the services of a per diem attorney is through an online legal directory, where a law firm (“the Hiring Firm”) retains a lawyer to perform specific tasks such as document drafting, research or an appearance in court. Typically, the Hiring Firm remains the attorney of record and all court filings are submitted by the Firm. In these situations, the obligations of the Rule apply equally to both the per diem attorney and the Hiring Firm to make reasonable efforts to avoid conflicts.
When the Hiring Firm hires a per diem attorney, however, it may be able to take advantage of the exception to Rule 1.5(b), which allows lawyers to “communicate the basis or rate of the fee and expenses for which a client will be responsible.” This approach may help level the playing field for firms that utilize per diems. It could be argued, however, that the distinction between disclosing an associate’s mark-up to the client and that of a per diem attorney is unfair, as other professionals are not required to do so. Furthermore, requiring that a firm disclose the difference in mark-ups for both its associates and per diems could create serious problems with client relations.