Primer: How “direct hire” works

Several years ago a number of firms (Covington and Crowell are only two examples) started to change the way they used staffing agencies for projects.  They took the temporary attorneys onto their payroll for the duration of the project.  They did not pay the agencies “the bump” so to speak:  $55 an hour to the agency, wherein the contract attorney was then paid $35 an hour, etc.   In these situations the agency is paid a flat fee for each month the contract attorney worked, or in increments.  We have seen several pricing agreements.  But as example, a law firms pays the agency $2,000 for each 8 week increment a contract attorney works, with $6,000 being the maximum fee the agency can earn. 

The contract attorneys, in effect, comes on board at a prorated salary level equivalent to $32/35 an hour.  We are basing that on average hourly rates paid to contract attorneys over the last two years.

The attorneys are also eligible for health benefits, and other benefits normally available to a full-time employee.  In some cases the firm pays overtime of time and a half times base pay once the contractors reach 40 hours, and other firms pay a bonus (monthly and otherwise) for overtime work, etc.   In many cases a food per diem is paid.

This gives firms a lower cost, closer control over their billing, etc.  It also allows firms to create a pool of contract attorneys they like, decide to roll attorneys on from project to project, terminate them at the end of a project but keep them on an “available” list, etc.  We know about 65 Posse List members at several firms in DC and NYC who have been with those firms for 2+ years, rolled over to succeeding projects.  A number were also hired as full-time staff attorneys.  As we indicated in our post, more firms are doing cost structure reviews and the cost savings is significant, as is the control factor.

When a new project arises, these firms will first check their lists of attorneys they have used to see who is available before they go back to the agency to staff.

Some firms (such as Paul Weiss) go one step further and only hire direct (for instance they post to The Posse List and/or the multitude of job boards) and avoid staffing agencies, or use them on the rare occasion.