Kevin J. Begley
Attorney at Law
3010 Bordentown Avenue
Parlin, NJ 08859
PER DIEM QUESTIONNAIRE
Understanding why lawyers currently use or do not
use per diems, will help address the concerns of all attorneys,
and point out how to make the use of per diems more desirable.
So, if you would be so kind, please check out the Per Diem Questionnaire,
and if possible, complete it and send same to me. --- THANK YOU
Using Legal Per Diems
Kevin J. Begley, Esq
Few law firms use per diems. Why not? Should they
be? If they should, when does it make sense to use per diem attorneys
An office manager may be impossible to replace on
a temporary basis, but you can effectively use an attorney on
a matter on a short term or contract basis. There are various
situations where the use of the proper per diem attorney or paralegal
is more than suitable, it is preferable and profitable. I will
be addressing attorneys in this article, but many of these comments
will apply equally to paralegals.
Let us step back and look at the average law firm.
The work available waxes and wanes depending upon the economy,
the gaining or losing of a client or clients, ‘events’
such as the ‘correction’ of the stock market, or oil
prices, a war in some far away country, or an attack on our homeland
and the phase of the moon. The people available to do the work
within a firm also varies from time to time, depending upon retirements,
lateral moves to other firms or companies, vacations, illness,
pregnancy, and other causes.
Perhaps a client may start sending you work that
is new to your firm, or new in many regards, such as matters including
maritime or fire loss claims, cases which involve simple or complex
business bankruptcy issues, construction, toxic mold, etc.
Few firms will always have all the experience they
need or would like to have in-house. So what to do? Put a junior
associate on it, directing him to learn everything necessary to
assist in that bankruptcy or construction matter? That is often
what is done, but does that make sense? About as much sense as
taking a new doctor in a general residency and asking him to diagnose
a complicated neurological problem or performing a heart catheterization
with no one to at least guide him or her. So, what does make sense?
You can hire an experienced bankruptcy attorney
for that matter involving bankruptcy, that makes sense, but if
you hire an engineering expert to help with that construction
matter, the engineer may not know the law well enough to be effective,
but an engineer-JD would, providing that you can find the right
per diem attorney. Face it, especially if you want to have an
associate become your in-house “expert”, it makes
sense to bring in someone who can mentor the associate, guide
their learning experience, while providing the expertise necessary
for the matter at hand. Face it, it makes much more sense, and
will produce a better work product and may be be more cost effective,
to hire an engineer-JD, or an attorney with 10 to 20 years of
construction law experience, for a matter involving construction
elements, than to use an inexperienced associate!
Perhaps you can effect a strategic alliance with
another firm that has expertise in bankruptcy, insurance coverage
issues, land use law, appellate practice or some other specific
area, but when that is not practical, perhaps you would be better
off locating a suitable per diem attorney in lieu of trying to
have someone in the firm learn that area of the law, and “re-invent
Will a firm always have sufficient manpower to properly
handle all the work they have? If they do, then they are well
over staffed, and are not operating as efficiently as they should
be. This will either reduce profits, or over price your services.
Can you pull that attorney off those apartment evictions to handle
that doctor’s deposition? Yes, but is it the smart thing
to do? That depends on the experience of that attorney, the complexity
of the case, the timing, and how critical the work and timing
of the work he is pulled off of to ‘put out your fire’.
If you pull someone off one matter to put out a ‘fire’,
even if they can do it well, will other work start to ‘smolder’?
There are law offices, big and small, as well as
corporate legal departments, which have matters in-house where
they could use an attorney, paralegal or ‘other’ person
to assist them. Perhaps they could use someone with certain experience
that they do not have in-house. Perhaps they do have in-house
people with the desired experience, but they just have too much
work for them. The answer may be a per diem employee!
If you don’t have all the tools necessary
in-house, you can and should hire a per diem attorney. Think about
the advantages… You can get the help you need, and the experience
you don’t have or just need more of. When you decide they
are no longer needed, “good bye”. These employees
are typically already covered by your malpractice insurance, so
you have virtually no additional overhead. Employers can contract
specialists in short term, long term, full time and part time
temporary and temporary to permanent positions. The possibilities
are only limited by supply, demand, and your creativity.
What are the benefits of using per diems?
you do not pay them benefits
you can get rid of then at any time
you can get rid of them for any reason
you make money on them for every hour they work
generally your malpractice insurance covers
them automatically without additional cost (check with your
you can hire them for discrete tasks, especially
if you find an attorney/paralegal with specific training, background
or experience (an MD-JD or RN-JD for a medical expert report
and/or deposition, an engineer-JD for a construction defect
claim document review, a librarian paralegal for the maintenance
of documents for a matter (or a document repository), a broker-JD
for a SEC-NASD broker arbitration, etc. etc.)
What type of assignments can you use per
Document review and management
Evaluating a matter and strategic planning
Research and memo writing
Pleading and brief preparation
Representation at motions and arbitrations
Routine corporate record keeping
Due diligence on large transactions
Drafting/negotiating commercial agreements
Preparation of corporate/SEC/compliance filings
Completing commercial real estate closings/lease
Preparation of bankruptcy petitions/creditor
Preparation and administration of estate documents
Drafting ERISA plan documents
Trademark, patent and copyright filings/prosecution
Antitrust research and analysis
“Peak loading” is a term the power industry
uses to describe sudden or periodic expected or unexpected demands
for more power. A power company plans for this by arranging for
help from outside their company, or by adding additional generators
(typically gas fired turbines) to bring online just to handle their
Most law firms have peak loading problems. Sometime
they have sufficient capacity to handle these problems. If they
do, it usually means they are overstaffed, and not as efficient
and profitable as they might be. Usually, they shuffle staff, taking
staff off work that needs to be done (it’s just smoldering,
and they have a fire to put out!) , to address the emergency. This
creates great inefficiencies, and clients do not want to pay for
inefficiencies in your operation any more. Employers will do whatever
it takes to get the job done, they just don’t handle it in
the most efficient manner.
SOME FEARS. . .
Some firm express concern over losing a client to
a per diem that they perceive as being more attentive. This can
be addressed in numerous ways, by contract, by a covenant to not
compete, peer pressure, common sense (what attorney is going to
hire someone who takes clients – though I’ve had a few
clients I WISH I could palm off on another attorney!).
Have an NASD arbitration? How about finding an attorney
that has the experience you want for a project that lives in Cape
May, New Jersey or has semi-retired to Florida? If you can ship
them the documents they need and/or set up access to them over the
internet, you would not be likely to have a client leave for an
attorney they never meet who is at best many hours away. Some sick
folks actually LIKE writing appellate briefs or doing research.
Why not use per diems if they can do the work efficiently and have
experience in an area that you do not? Concern about the use of
a local per diem seems misplaced, but if it is a concern, perhaps
an attorney from Manhattan, would be more comfortable hiring a per
diem attorney located in Pittsburg, Pennsylvania or Scottsdale,
Arizona to handle your securities or IRS matter, instead of an attorney
located in Brooklyn. That per diem in Pennsylvania or Arkansas may
be less costly also!
So, the big question is why aren't firms using per
diems... As discussed previously, there are many situations where
the use of a per diem not only makes sense, it may be more efficient
that trying to use the resources you have in-house. Most other businesses
use short term or temporary employees or sub-contractors. What is
the obstacle to them using per diems? Is it in mindset? Perhaps
it is just lack of experience in using per diems. At least unconsciously,
people are uncomfortable with or fear the unknown.
A per diem is not like an associate, where if he costs
the firm $100,000 per year, he must generate $300,000 in billings
to turn a profit. Per diems will turn a profit for you from the
beginning, because if you can bill them at $150 per hour, you can
pay the per diem $75 per hour, and make a profit of about $75 per
hour, because you have no insurance costs or other overhead costs
for the use of that per diem. Think about it – you can make
money from the use of per diems from the first day.
I suspect that education is the key. IF convinced
that it is cost effective, firms will use per diems. If it is a
'break even' financial proposition, then they need to get something
they need to make their life or results better.
Well, I think that when firms can find the appropriate
candidates, per diem attorneys not only make sense, but they will
make your matters more profitable, save time, produce a better more
Capitalism Works for Small Firms
Laura Gentile, Esq.
New York Law Journal
As the owner of a small law firm you are both laborer
and capitalist. As a laborer, you earn your wages, which are directly
proportional to the time spent on the services you perform: spend
two hours preparing a will or closing a mortgage, collect some money.
This is no different than the hourly wage your father earned as
a bricklayer, except that his was recognized as good honest work.
As a businessperson, you hire other people and you
pay them for their work. As a capitalist, you make money by collecting
the surplus value of your employee's labor, the difference between
what their labor earns you and what you pay them. If you hire an
associate to prepare a will or attend a mortgage closing for your
client, then the difference between what you pay the associate and
what you collect from the client is your profit, after you deduct
your fixed expenses. The more work you can hire someone else to
perform for you, the more surplus value there is for you to collect.
Consider the following scenario. You have settled
a small personal injury matter for $10,000 at the second pretrial
conference after expending $750 in disbursements. Based on the standard
contingency retainer in a tort case, you collect a fee of one-third
of the net settlement or verdict after reimbursements of your disbursements.
The client nets $6,166; your fee is $3,083.33.
What is your profit? It depends upon whether your
were a laborer or a capitalist. The following tasks were performed
in the process of bringing the matter to settlement:
- Intake: 1.5 hours
- Obtaining records: 1 hour
- Draft complaint: 1.25 hours
- Send complaint out for service: .25 hours
- Request preliminary conference: .5 hours
- Prepare discovery responses: 2 hours
- Attend preliminary conference: 3.5 hours
- Respond to additional demands: .5 hours
- Plaintiff/defendant deposition: 4 hours
- File note of issue: .5 hours
- Attend first pretrial conference: 4 hours
- Attend second pretrial conference: 4 hours
- Prepare closing papers: 1 hour
- Total: 24 hours
Of these total hours, there are 4 appearances totaling
15.5 attorney hours and 8.5 administrative hours.
Calculate the hourly rate of compensation if you personally
performed all 24 hours of work by dividing the fee collected by
the hours you spent on the case. Divide $3,083 by 24 hours and you
arrive at a calculation of a fee of $128 per hour. That is an honest
wage for an honest day's work.
HIRE A PARALEGAL?
Now inject some capitalism into the equation and consider
the following thought experiment: If you had a paralegal perform
all of the administrative, non-attorney tasks, would your net hourly
fee increase, or does the expense of the labor result in no increase
Assume a pay rate for the paralegal of $20 per hour
including the cost of benefits, then the labor costs for the administrative
tasks is $170 ($20/hour x 8.5 hours). Deduct this labor expense
from your fee and your net fee is now $2,913 ($3,083 - $170). Just
a bit of capitalism has increased your compensation by almost 50
percent, to $188 per hour.
Take your experiment to the next level. Calculate
the result if you hired an attorney to perform the lawyer's tasks.
A per diem attorney is the most expensive kind of coverage you can
retain, but it is the easiest expense to control and the simplest
way to start bringing in attorneys to help with the work. If you
had a per diem attorney cover all four appearances (a preliminary
conference, one deposition of each of the two parties, and two pre-trial
conferences), the cost of the labor is $850. Does it make sense
to hire per diem attorneys?
Do the math. Subtract the expense of the per diem
attorney and the calculation of your hourly fee is as follows: $3,083
- 170 = $2,913, - $850 = $2,063. Assume you spent two hours in supervision
of employees and talking to the client, your hourly fee on this
case is $2,063/2 = $1,031.50 per hour. Even with expensive per diem
services, your hourly rate increased almost 10 fold, because you
did less work. This is what the founding fathers envisioned when
they created a free market economy with surplus labor.
You do not start making money, of course, until you
have paid your fixed costs. If you have a paralegal, a presentable
office, some equipment, a car, all the necessary insurance for your
business, and you buy a few index numbers each month, your fixed
costs are probably about $6,000 per month. If you are the laborer,
performing all of the tasks on all of your cases, you are working
47 hours each week to keep your doors open. If you have hired a
paralegal and are using per diem attorneys for your appearances,
you can cover your fixed costs in six hours.
Whether your practice specializes in probate matters,
torts or real estate transactions, you can make the calculation
to determine what your profit is. To improve your bottom line, increase
your rate of compensation by raising your fees, hiring staff, or
reducing your fixed costs.
So you are ready to hire your first employee. For
each new employee, you must complete an IRS W-4 (Withholding Allowance
Certificate and the IRS I-9 Employment Eligibility Allowance Certificate),
which confirms that the employee has a status with the INS that
allows him or her to work in the United States. When hiring an employee,
you must carry additional insurance associated with your employees,
you must pay employer's taxes to the city, state and federal governments,
and you must withhold taxes from your employees' salaries and deposit
that money at a bank with a federal voucher.
The rule of thumb is that an employer spends an additional
30 percent over the actual salary to cover all the expenses associated
with employment, including full health insurance and vacation pay.
You can reduce this amount by limiting benefits, but in the long
run, the goal is to have a strong benefits program to keep your
well-trained and productive employees on staff.
You are required to carry workers' compensation insurance
and disability insurance. You must pay employment taxes on a quarterly
basis and file summary reports with state and the federal tax authorities,
and you must deposit the employee's share of employment and social
security taxes that you have withheld from your employee's salary.
By the end of January each year, you must generate and distribute
W-2 forms, and by the end of March you must file the W-2s with the
IRS as an attachment to a W-3 form.
A small firm typically cannot justify the expense
of a full time bookkeeper to take care of the employment tax and
You can do it yourself. Any of the advanced accounting
packages, including Quickbooks and Peachtree, will allow you to
press a few buttons to cut paychecks with the proper taxes deducted.
These programs will generate the data required for the quarterly
and annual tax forms.
It is easy enough to lose track of these requirements,
though, and incur penalties and interest charges. You can hire a
payroll service to cut paychecks and make all necessary tax filings
for about $50 per employee each month. Your accountant can also
provide this service for you. Chances are, the added expense of
hiring a service to take care of these items will be offset by the
elimination of penalties for late and inaccurate filings.
It may be possible to fulfill your staffing needs
with independent contractors, rather than direct employees. A per
diem attorney, for example, is an independent contractor. There
are no taxes withheld for independent contractors, who receive an
IRS 1099 form at the end of the year. You are not required to carry
any insurance for independent contractors. You must take care, however,
that the work arrangement qualifies for independent contractor status
with the IRS. If you do not meet all of the requirements, you will
incur severe penalties and back taxes. Proceed carefully, with the
advice of an accountant.
Once all of this is done, you can start watching the
clock and tapping your fingers until your paralegal arrives between
9:15 and 9:20 a.m. for his or her 9:00 a.m. shift. It's the trains
-- you know how it is. You once were an employee, too.
Laura Gentile is managing partner of Gentile &
Associates in Manhattan and teaches at City University of New York
School of Law, Queens College. - firstname.lastname@example.org
New York Case Law on the use of per diems:
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
GEORGE CONSTANT, INC.,
Plaintiff, Index No. 604507/01
- against -
MEYER ABA BERMAN and KATIA CHRISTINE BERMAN,
Charles Edward Ramos, J.S.C.:
This is a motion by AG, Esq., a per diem attorney who was sanctioned
for not appearing at either an initial court conference, nor the
conference that he insisted on rescheduling. He seeks to vacate
25, 2003 order.
This is an action to recover $180,000 for interior
The facts of the case are not relevant to this motion. Rather, this
motion addresses the increasing use of per diem attorneys and
illustrates problems which may arise as a result.
A preliminary conference was scheduled for June 20,
2002 at 9:30. When
plaintiff's counsel had yet to appear by 9:50, defendant's counsel
was directed to call LS, plaintiff's counsel of record. Messages
left for LS in two offices where only answering machines were present.
Thereafter, the conference was held with only GB and a preliminary
conference order issued. It directs GB to fax a copy of the order
plaintiff within 24 hours. Sometime that morning, AG appeared in
courtroom and demanded to see my court attorney and an adjournment
the conference which he had already missed. AG admits that he was
because he accepted two conflicting per diem assignments scheduling
himself to be in two different courts at the same time. He was advised
to call his adversary upon whose agreement, another conference would
scheduled. In the absence of GB's objection, and at AG's request,
scheduled for June 25, 2003 at 9:30. Again, no appearance by either
nor AG on June 25, 2003. LS's office was called and she informed
Court that AG was expected to appear for the conference. Accordingly,
the Court sanctioned AG $860 to be paid to GB.^3
This situation is not at all like Walsh v the State
of New York, 206
AD2d 434 (2d Dept 1994), a case relied upon by AG. In that case,
attorney appeared 23 minutes late for a hearing and was sanctioned
The attorney was late because he was engaged in a hearing before
judge and had asked another lawyer to advise the other court that
would be late. Here, AG did not advise the Court that he would be
Moreover, in this case, the Court with the adversary's agreement,
accommodated AG by scheduling another preliminary conference on
that AG requested. In Walsh, the sanction was for 23 minute tardiness.
Here, the sanction was for dragging his adversary to court, not
twice, and failing to appear both times.
In opposition to the sanction, AG disputes that he
was ever engaged by
LS to appear on June 25, 2003. Alternatively, he asserts that as
diem lawyer, he is not the lawyer of record and thus not responsible.
LS and AG battle over whose responsibility it was
to cover the June 25,
2003 conference. LS is counsel of record. Ultimately, this is who
be held accountable to the client. However, from the Court's
perspective, only AG had appeared so far for plaintiff.
Resolution of this dispute would require a time consuming
NYCRR '130-2.1(d). See also, Balter and Simone, "How Judges
Civility By Punishing Frivolous Conduct", NYLJ, Aug. 25, 1998,
at 1. The
Court is not inclined to participate in the battle between LS and
Happily, GB does not oppose this motion. Therefore, the motion is
However, the Court is concerned about two important
raised by this motion: Is AG correct that per diem lawyers have
responsibility? Alternatively, can the attorney of record absolve
herself of responsibility for a per diem attorney's violative behavior?
The Court acknowledges the growing use of per diem
attorneys to appear
in court at conferences and practical reasons for lawyers to engage
diems. Laura Gentile, "Per Diem Work, "Covering All the
Sept. 5, 2003, at 16; Jones, "As in Comedy, Secret to Small-Firm
Lawyering is Timing", NYLJ, Aug. 5, 2003, at 1. Laura Gentile,
Profits Capitalism Works for Small Law Firms", Practice Development
Solos & Small Firms, Vol. 2, No. 5, Jan. 2002, at 3; Laura Gentile,
"Capitalism Works on a Small Scale", NYLJ, Oct. 12, 2001,
at 16; Rivkin,
"Per Diem Lawyering Offers Solo Extra Cash and Flexible Scheduling",
NYLJ, Dec. 13, 1999, at 1. Busy attorneys relying on colleagues,
associates or partners to cover an appearance is a tradition in
profession. See, Levin, "Symposium: Preliminary Reflections
Professional Development of Solo and Small Law Firm Practitioners",
Fordham L. Rev 847, 869-870 (2001); Anthony Gentile, "Benefits
Per Diem Attorneys", NYLJ, Aug. 22, 2003, at 2.
However, attention must be given to communications
between the attorney
of record and the per diem attorney. See e.g. Levin, "Symposium:
Preliminary Reflections on the Professional Development of Solo
Small Law Firm Practitioners", 70 Fordham L. Rev 847, 869-870
93. Otherwise, as one commentator has acknowledged "[i]f a
attorney fails to show up in court and the case is dismissed, you
attorney of record] are on the hook." Laura Gentile, "Small
Handling the Mishandled File", NYLJ, Aug. 30, 2002 at 16. Likewise,
attorneys, per diem or otherwise, who attend conferences are required
be prepared. Rules of the Justices of the Commercial Division, Supreme
Court, New York County, Rule 1, 9. An unprepared attorney can be
equivalent of no appearance at all for which the case could be
dismissed. 22 NYCRR '202.27 and Rule 13 of the Rules of the Justices
the Commercial Division, Supreme Court, New York County. From the
diem lawyer's perspective, her reputation is at stake if an appearance
is not adequately described. Laura Gentile, "Per Diem Work:
the Bases", NYLJ, Sept 5, 2003 at 16.
Attorneys using per diem attorneys and per diem attorneys
only fully and completely communicate. They must be aware that,
diem lawyers do have a responsibility to the court and to the client;
no attorney of record can absolve herself or himself of responsibility
for a per diem attorney's violative behavior; and 3) that
notwithstanding that a per diem lawyer is not the attorney of record,
responsibility attaches once any agreement, action or appearance
taken in furtherance of the representation. Clearly, an unprepared
diem attorney does not serve anyone.
In the battle over whose responsibility it was to
cover the June 25,
2003 conference, both are responsible to the client and answerable
ORDERED, the motion to vacate this Court=s June 25,
2003 sanction order
Dated: November 21, 2003