Uh-oh. Lawyers who do document review may not be exempt from the overtime requirements of the Fair Labor Standards Act, according to a court decision issued yesterday.
Large law firms and legal services vendors often hire stables of contract lawyers to do document review in big cases. Sometimes, the lawyers who do the review are actually reading and analyzing the documents in light of the case and (1) determining whether they’re responsive to discovery requests or subject to objections, (2) using them to investigate the facts, or (3) using them to develop litigation strategy. Ideally, all three.
We aren’t talking about those lawyers.
According to David Lola, a temporary contract lawyer who worked on a 15-month document review project for Skadden Arps through a legal staffing agency, he was given a list of pre-determined search terms and went through each document looking for those terms. He also categorized the documents and did some redactions. He alleged that a machine (or, anyway, a reasonably intelligent non-lawyer) could have done what he did. He was paid $25 an hour, but no overtime even though he sometimes worked 55 hours a week.
Mr. Lola brought a putative collective action against Skadden and the staffing agency (I’ll refer to both the defendants as “Skadden” from now on) for unpaid overtime under the FLSA, and Skadden moved to dismiss his lawsuit, contending that Mr. Lola was exempt from overtime because he was “the holder of a valid license or certificate permitting the practice of law or medicine or any of their branches and [was] actually engaged in the practice thereof.”* Last year, a federal court in New York agreed with Skadden, and dismissed his lawsuit.
*From 29 C.F.R. Section 541.304(a)(1).
Mr. Lola appealed, and yesterday a panel of the U.S. Court of Appeals for the Second Circuit, which hears appeals from Connecticut, New York, and Vermont, reversed, finding that his lawsuit stated a valid legal claim and could proceed.
At this very early stage of the litigation, the court had to assume that all of the allegations in Mr. Lola’s lawsuit about the routine nature of his work were true. Because Mr. Lola’s assignment was in North Carolina, the court looked at North Carolina’s definitions of “the practice of law” and found that such work might not qualify.
Of course, the court’s decision doesn’t mean that document review never qualifies as the practice of law. Often, document review will require the use of an attorney’s independent judgment, as described above. And Skadden may ultimately be able to show that Mr. Lola’s work entailed that, too. But not necessarily.
When I was a new associate (before Constangy), I was invited to help out on one big document review project. I don’t even remember what the case was about, but it must have been an antitrust case or something like that – it was not employment-related. The partner in charge brought us down to a basement full of banker’s boxes full of paper and gave us about a five-minute summary of the case and told us what to look for. Then we plowed through the boxes of paper and looked for certain words or references. Did we exercise independent judgment? You must be kidding. But we didn’t care about overtime because we were earning billable hours, which were far more precious to associates, who — unlike Mr. Lola and his counterparts — had the prospect of becoming partners someday.
This is the way I envision Mr. Lola’s work, in which case his lawsuit may succeed.