LexInsight Blog

Pitfalls of Long-Term Contracting for Freelance Attorneys

Jun 12, 2018 7:00:00 AM / by Erica J. Miller

longterm-contract-attorneys

Maybe you’ve just relocated to a new area and haven’t taken the bar yet.  Perhaps, you have taken time off from working for family or medical leave. It could be you are newly licensed and haven’t found a permanent position, or have made a choice to not to work full-time.  Or, you’re a sole practitioner looking to supplement your income until business picks up. Then, one day your prayers are answered and you realize that Lady Luck has smiled upon you. You have landed yourself a project or contract attorney position and this assignment has no set end-date.  You thank your lucky stars because you are oh so grateful for the steady income and the ability to pay your bills while using your hard-earned legal education.

You’ve gotten into the swing of things and the assignment is going well.  It’s starting to become old hat for you and your employer seems to like you and the work you’re producing.  It seems like you’re winning. So what’s the problem? Some issues can arise if you’re not careful, so take some time to consider the pitfalls of this type of work.

WHAT ARE YOUR GOALS FOR YOUR LEGAL CAREER?

Temporary assignments like document review projects can be a great way to earn extra money for a sole practitioner. If you’re pulling in $1800-$3000 a week or more, you’re doing pretty well, especially if you prefer the flexibility of being a freelancer.  However, it can be easy to lose sight of your personal goals. Why did you go to law school and pass a bar exam? Did you set out to build your own practice and focus in a particular area of law? Maybe you had a dream of being a family lawyer or helping indigent defendants or becoming one of your city’s greatest corporate lawyers.  If you intended to increase your clientele by a certain percentage each year or earn a specialty designation to make yourself more marketable, the long-term assignment may make it harder to reach those goals. Therefore, it is important to keep those goals in mind when you take on a project assignment. It is so easy to become complacent and forget that this is a temporary situation.  One of the things that causes attorney discipline referrals is failing to communicate with a client. So, don’t neglect them. Remember to keep your clients happy and tend to the rest of your practice. Generate weekly reminders for yourself to stay in touch with clients and other legal professionals so that you can continue to grow professionally.

KEEPING YOUR SKILLS SHARP

What if you don’t have a practice but make your living solely from freelance work? Let’s say you have an assignment in an area such as bankruptcy or real estate law and the assignment manages to extend for months or even years.  You are happily collecting a nice, steady check and then all of a sudden, the real estate bubble bursts or the economy takes off and bankruptcy filings fall off of a cliff. If you allowed yourself to get comfortable and stopped thinking about the “what ifs,” you may not have picked up any new skills for a while.  At that point, you may be scrambling to find work because you are no longer marketable. Perhaps, the way to prevent that is by continuing to learn and network while working your long-term assignment. If you are going to take on a longer contract assignment, then make it a point to dedicate some time each week to further some of your professional development.  Stay in the loop by taking a CLE online during your free time and attending networking events with other professionals. If your schedule is flexible enough, maybe you can work on a certification to further your skills. Yet another avenue to pursue is teaching. There may be opportunities in community colleges or online available that can be weaved into a flexible schedule.  Long story short, don’t put all of your eggs in one basket and hopefully, you won’t miss a beat.

THE INDEPENDENT CONTRACTOR DILEMMA

For some assignments, you may be a W-2 wage earner and for others, you may be an independent contractor and therefore, responsible for your own taxes and securing your own benefits.

If you have a long-term assignment and are staffed by an agency, your taxes are probably taken out of your income and you may eventually be eligible for benefits. However, if you are a contractor, you will be responsible for paying your state and federal income taxes on your own.  If you have a spouse and can secure benefits through your spouse’s employer, then that’s great. If not, you’ll likely have to pay out of pocket for health insurance, so that’s something to consider. If you get into a long-term assignment as a contractor, you may find it helpful to live below your means and set a percentage of your income aside for taxes to be paid quarterly.  It’s easy to get behind on paying taxes and you should do your best to avoid that added stress. You will probably find it worth your while to hire an accountant or a bookkeeper to help you keep track of your income and expenses or invest in your own small business accounting software. Also, you may want to think about establishing some type of retirement account for yourself.  Just because you don’t have an employer, doesn’t mean you should neglect your future.

To conclude, as with most situations, there are pros and cons to working a long-term contract assignment.  Losing sight of your career goals and failing to keep yourself marketable are some of the downsides, as are the typical independent contractor dilemmas. For legal professionals, reminding yourself of your goals, engaging in professional development and utilizing professionals to assist with the financial aspects of the situation can go a long way towards providing you with security for the future as opposed to trapping you into complacency.

Topics: For Contract Attorneys

Erica J. Miller

Written by Erica J. Miller

With 20 plus years in the legal profession, Erica has experience as a sole practioner and legal consultant, with concentrations in entertainment law, IP law and bankruptcy. She is a wife and mother who enjoys California’s sunshine and wine.