Lola v. Skadden, Arps, Slate, Meagher and Flom, NY District Court Finds that Contract Attorney Doing Routine Document Review at Direction of Law Firm is a Professional Providing Legal Services and Exempt from FLSA Overtime Provision.

Applying North Carolina’s definition of “legal services,” the United States District Court for the Southern District of New York found that a contract attorney’s work performing document review fell within the definition of legal services and is therefore exempt from the Fair Labor Standard Act’s (“FLSA”) provision for overtime pay.

In this case, David Lola alleged that Skadden, Arps and Tower Legal Staffing violated the overtime provision of the Fair Labor Standards Act (“FLSA”) when failing to pay him for overtime work performed as a contract attorney conducting document review in in North Carolina. Defendants filed a motion to dismiss arguing that Lola and other contract attorneys performing the same work are exempt from the FLSA because they are licensed attorneys engaged in the practice of law.

Lola, a licensed attorney, worked for defendants in North Carolina reviewing documents for a multi-district litigation in Ohio. Defendants closely supervised Lola’s work which involved identifying search terms in documents, putting documents in pre-determined categories and redacting documents based on guidelines established by Skadden. Lola was paid at the straight time hourly rate for the overtime work he performed conducting the document review.

The court noted that while the FLSA requires employers to pay employees time and one half when working in excess of forty hours per week, employees working in a professional capacity are except from this requirement. Additionally, the Department of Labor (“DOL”) defines the exception as applying to an employee holding a “valid license or certificate permitting the practice of law or medicine.” Although the parties did not dispute that Lola was a licensed attorney they disagreed as to whether or not the document review work he conducted for Skadden constituted the practice of law. Defendants argued that although the work was neither “glamorous” nor “high-profile,” in litigation, document review is a “core attorney function” requiring lawyers to use their legal training. Lola’s position was that the work was “mechanical” and did not require legal judgment or discretion.

Noting the lack of interpretive guidance from the DOL or controlling authority from the Second Circuit, the Court decided that for purposes of the FLDA’s professional exemption, the federal court should look to the definition of practice of law from the jurisdiction in which the work is performed.

The court cited North Carolina’s state statute as defining the practice of law as “performing any legal service for any other person, firm or corporation…..” For further clarification, the court turned to a 2007 North Carolina State Bar ethics opinion addressing outsourcing of legal support services which grouped document review in a class called “legal support services” which also included drafting contracts and pleadings and conducting legal research. The ethics opinion distinguished “legal support services” from “administrative support services” such as photocopying. The court noted that the opinion defines document review as legal work as distinct from photocopying and document collating which is clerical work.

The ethics opinion emphasized that lawyers must not permit non-lawyers to do legal support work such as document review without supervision to avoid the “unauthorized practice of law.” Therefore, the court reasoned, document review constitutes the practice of law which can only be performed by a non-lawyer if supervised by a licensed lawyer.
The court rejected Lola’s argument that the document review he performed was not the practice of law because it could have been done by a paralegal noting that the Ethics Committee made it clear that non-lawyers can perform limited legal services as long as those tasks are done under the supervision of a licensed attorney. The only difference between lawyers performing the task and non-lawyers performing the task is that non-lawyers must be supervised.

The court emphasized that whether or not document review is supervised does not determine if it is the practice of law; it only determines if it is the authorized practice of law. The court also rejected Lola position that only tasks requiring the exercise of legal judgment are the practice of law as nothing in the ethics opinion notes that determining if document review is a legal service is dependent on the exercising of judgment or discretion. The Court further noted that it was not persuaded that the exercise of legal judgment and discretion is a “sin qua non” of legal practice, as even undisputed legal services often include the performance of tasks that require little or no legal judgment.

The court rejected Lola’s standard that would require the Court to look at his exact job duties to determine if they required legal judgment and discretion finding it at odds with the DOL framework that licensed attorneys and doctors fall in a special class of workers that may be deemed professionals without an investigation into their job responsibilities. The court noted further that the DOL regulation makes it clear having a law license sets attorneys like Lola apart from non-attorneys doing work that constitutes the practice of law.
The Court ended by stating that if it is unfair that contract attorneys do not get overtime for doing the same work for which non-attorney would be paid overtime, Congress and the Department of Labor can revise the regulation or create a uniform federal standard defining the practice of law.

The court dismissed Lola’s claim finding that he was a licensed attorney engaged in the practice of law and therefore exempt from the FLSA’s overtime provision.
Lola v. Skadden, Arps, Slate, Meagher & Flom, No. 13-cv-5008 (S.D.N.Y. Sept. 16, 2014).

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