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Document review by contract attorney may not be enough to establish ‘practice of law’

July 28th, 2015  |  Ron Miller

What constitutes the “practice of law”? That question was at the heart of a recent Second Circuit decision involving a contract attorney’s claim that he was not exempt from the FLSA’s overtime provisions based on the work he performed for a law firm.

In Lola v. Skadden, Arps, Slate, Meagher & Flom LLP, the Second Circuit agreed with a district court’s conclusion that state law informed the FLSA’s definition of “practice of law” but disagreed that by undertaking document review, an attorney was necessarily “practicing law” within the meaning of North Carolina law.

Exercise of legal judgment. Finding that the exercise of some legal judgment is an essential element of the practice of law and that the attorney-plaintiff alleged that he performed document review under such tight constraints that he exercised no legal judgment, the appeals court revived the attorney-plaintiff’s putative overtime class action.

Licensed to practice in California, the attorney was contracted to do temp work for the New York law firm of Skadden, Arps, Slate, Meagher & Flom for 15 months in North Carolina. He conducted document review in connection with multi-district litigation pending in Ohio. According to the attorney, his work was closely supervised and 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 portions of certain documents based on specific protocols that Defendants provided.”

The attorney was paid $25 an hour for his work and worked approximately 45 to 55 hours a week. He was paid at the same rate for any hours he worked in excess of 40 per week. He brought a putative collective action seeking damages for violation of the overtime provisions of the FLSA.

Practice of law. Moving to dismiss, the law firm argued that the attorney was exempt from the FLSA’s overtime rules because he was a licensed attorney engaged in the practice of law. The district court agreed.

While it was undisputed that the attorney was licensed to practice law in California, the parties disputed whether the document review he allegedly performed was “engaging in the practice of law.” Like the district court, the court of appeals found that North Carolina had the strongest interest in making sure that he was fairly paid. Thus, it concluded that the district court properly applied North Carolina law.

Although North Carolina law does not clarify whether “legal services” includes the performance of document review, a North Carolina State Bar formal ethics opinion sheds light on what is meant by “legal services.” The Bar’s Ethics Committee stated that: “A lawyer may use foreign assistants for administrative support services such as document assembly, accounting, and clerical support. A lawyer may also use foreign assistants for limited legal support services such as reviewing documents; conducting due diligence; drafting contracts, pleadings, and memoranda of law; and conducting legal research. Foreign assistants may not exercise independent legal judgment in making decisions on behalf of a client.”

Document review. But the appeals court disagreed that this necessarily meant engaging in document review per se constitutes practicing law in North Carolina. While the ethics opinion did not delve into precisely what type of document review falls within the practice of law, it strongly suggested that inherent in the definition of “practice of law” in North Carolina is the exercise of at least a modicum of independent legal judgment. Many other states also consider the exercise of some legal judgment an essential element of the practice of law.

The gravamen of the attorney’s complaint, said the Second Circuit, was that he performed document review under such tight constraints that he exercised no legal judgment whatsoever—he alleged that he used criteria developed by others to simply sort documents into different categories. Accepting those allegations as true, the appeals court found that the employee adequately alleged in his complaint that he failed to exercise any legal judgment in performing his duties for Skadden. – See more at: http://www.employmentlawdaily.com/index.php/news/contract-attorney-overtime-claims-revived-document-review-may-not-be-practice-of-law/#sthash.FtXyxJBi.dpuf

The attorney’s complaint was that he performed document review under such tight constraints that he exercised no legal judgment whatsoever, so accepting those allegations as true, the Second Circuit found the employee’s complaint adequately alleged that he failed to exercise any legal judgment in performing his duties for the law firm. Accordingly, it vacated the judgment of the district court and remanded his putative collective action.

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