In an overcrowded job market, many attorneys turn to doing document review for legal firms to help make ends meet. Document review may consist of such tasks as scanning and categorizing documents, using search terms, and redacting text. Often times, many of these tasks are performed by non-lawyers, such as paralegals, rather than attorneys.
While lawyers are not generally classified as non-exempt employees because of their learned profession, they may still be able to receive overtime pay for a document review assignment. Our Award-Winning NY Employment Attorney has been asked to comment on this issue.
As we have previously detailed in our earlier postings, under the Fair Labor Standards Act (FLSA), covered nonexempt employees must be paid one and a half times their regular rate of pay after completing 40 hours of work in any given work week. Licensed attorneys are usually considered to have jobs involving professional skill and therefore are usually exempt workers under federal and state law. As a result, they are not paid overtime, although most work well in excess of 40 hours in a week. However, document review often requires more than 40 hours a week, and the work the attorney may be performing may not be of the type which requires exercising independent legal judgement.
The U.S. Court of Appeals for the Second Circuit recently decided to allow an overtime pay claim under The Fair Labor Standards Act (FLSA) by an attorney who engaged in document review in North Carolina to proceed to discovery. The decision, in Lola v. Skadden, Arps, Slate, Meagher & Flom, 2015 WL 4476828 (2d Cir. July 23, 2015), raises the risks to law firms that used such attorneys in the past and continue to use them now.
In Lola, the plaintiff alleged that “his entire responsibility…consisted of (a) looking at documents to see what search terms, if any, appeared in the documents; (b) marking those documents into the categories predetermined by defendants, and (c) at times drawing black boxes to redact documents based on specific protocols that defendants provided.” Lola argued that the document review he performed was not the practice of law because it was so “mechanical” that a paralegal could have done it.
The defendants raised the “professional” exemption from the FLSA’s overtime pay requirement as an affirmative defense; the plaintiff had a law license, he performed work for a law firm on a lawsuit; therefore he was “engaged in the practice” of law and the professional exemption applies. The district court agreed and dismissed plaintiff’s complaint.
On appeal, the Second Circuit reversed the district court’s dismissal. Essentially adopting Lola’s arguments, the Second Circuit held that North Carolina courts “consider the exercise of some legal judgment an essential element of the practice of law” and that plaintiff adequately alleged that his document review was devoid of legal judgment such that he was not engaged in the practice of law.
While plaintiff won an important victory, it is far from clear that this, or any other attorney-plaintiff, will actually win his or her case. This is only one case where attorneys who perform document review services are seeking overtime pay. This is an area to watch.
Mitigating Risks and Considerations
To prevent future claims including potential class actions, firms can take one of two routes: (1) pay the attorneys hourly, including overtime pay; or (2) treat them as exempt and take appropriate steps to mitigate risk.
Probably the most important step a law firm can take to protect itself is ensuring that “document review” work includes some elements of legal judgment. If the document review project can be done by paralegals or is rote, the element of legal judgment may be missing. Firms should take care to include specific tasks that “involve the rendering of legal advice and opinions directed to particular clients.”
Firms can further mitigate risk by limiting overtime hours and recording the overtime hours that attorneys work. Of course, this can affect the speed at which it can deliver work to its client.
Lola increases the risks to law firms that have used attorneys for document review in the past and continue to use them now. Nevertheless, firms that used attorneys for document review can still mitigate their legal risk from such claims. Contact our office today at (800) 893-9645 to learn your rights as a document review attorney and your options and best practices as an employer.
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