July 2014 • Volume 102 • Number 7 • Page 328
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Local Counsel in the Digital Age: The Rise of the Coverage Attorney
More law firms are taking cases from far-flung places, and they need local counsel to make court appearances on their behalf. Find out more about this growing source of business, which can be particularly attractive to new and small-firm lawyers.
The term "coverage" has several meanings. In the insurance business, it refers to the extent of protection provided by a policy. In financial circles, it means the liquid assets reserved to meet liabilities. In horticulture, it's the number of square feet over which a bag of seed or fertilizer can be spread. But in a small law office, it's a way of referring to the practice of appearing in court for another law firm.
Why would anyone appear in court on someone else's case? It may be a friendly gesture, but more often it's a way of making money for the covering firm, and it's becoming more common as lawyers cast their nets further in search of clients.
The growth of local coverage
In the past, the practice of law was pretty much a local matter. Lawyers and their firms were hired by people in the immediate area, often referred by satisfied clients. Occasionally, an out-of-town client might appear, but that was the exception rather than the rule. Harsh advertising restrictions were in place, and there was no Internet.
Those conditions have changed. As restrictions on lawyer advertising lessened, law firms began to advertise in telephone books and newspapers, which often have a wide circulation. A person in a neighboring city or state might see a law firm's advertisement and seek their services.
Law firms rarely turn down lucrative business, and a firm thus engaged would be obliged to provide representation for the out-of-town or out-of-state client. There might be problems associated with the time and distance involved, but the firm would find a way to meet those challenges.
Then, with the advent of the Internet, the exposure of law firms to a wider market grew even more. Nearly every firm, large or small, has a website. Prospective clients now appear from far-flung and unlikely places, needing legal services in a firm's local area.
So, for example, a bank in California or Texas might engage a law firm in Chicago to handle a case or collection matter in northern Illinois. If the case is in Chicago, it presents no problem to the Chicago firm. But if it's in Elgin or Aurora, and the client prefers not to hire counsel in those locales, the Chicago firm has to make some arrangement to see that the client is represented adequately and economically.
Complicating things even more is that certain firms chose to expand to other big cities, opening offices in the metropolitan areas most likely to attract a nationwide clientele. But when some of the firm's cases, for obvious jurisdictional reasons, are filed in smaller cities or rural areas nearby where it has no offices, the same need for local counsel arises.
The immediate solution to the problem is not to open more offices but to engage contractors, local lawyers who are willing to go to court in some distant jurisdiction and appear for the firm's lawyers in various types of hearings that do not require the firm's presence. These contractors are paid on a flat-rate, case-by-case basis, thus avoiding costly hourly billing.
As it turns out, plenty of solo practitioners and small firms welcome this type of business for the additional income it provides. So, in the last decade or two, the practice of filling in or "covering" for larger and distant firms has evolved from a sometime thing into a regular business.
A new practice niche
Older practitioners and judges may be unaware of the extent of attorney coverage. Collection firms, in particular, use coverage attorneys when they have multiple matters in outlying jurisdictions and no crucial decisions need to be made. These attorneys are sent to appear in status hearings, mediations, or motion hearings in foreclosure and small claims cases.
Personal injury firms also use coverage attorneys in status and motion hearings. Bankruptcy firms may need coverage for motion hearings or 341 meetings. On occasion, a coverage attorney may be asked to file documents with a court or make copies of previous filings. Currently, coverage attorneys are not asked to conduct trials, and most wouldn't undertake to do so.
The coverage attorney, then, is the contracting firm's temporary local representative and leg person. Some solo practitioners find this an agreeable way to conduct business - getting paid to appear in court without the stress of trial preparation, discovery, and so forth.
So common has this become that some attorneys do nothing but cover for other attorneys. More commonly, though, the coverage attorney is a solo practitioner - often a new one - who has other business or works for a small firm that does a variety of things, and coverage is only one stream of income.
Finding coverage attorneys
Coverage attorneys were once contacted directly by filing firms who had heard of them by word of mouth or by searching directories or the Internet for someone in City X who seemed to fit the profile of an attorney likely to be available for coverage. This might be a new or young attorney who is either self-employed or works for a small firm, possibly as an independent contractor, and who does not yet have a large volume of business. Retaining such an attorney is simply a matter of making a few phone calls a day or two before the docketed hearing.
But what if the filing firm is unable to locate an available lawyer in the outlying jurisdiction? At least two national services have arisen that offer to put an attorney in any courthouse, anywhere at any time. They have toll-free telephone numbers and websites. "It's like having an associate in every courthouse," according to MyMotionCalendar, one such service. (Another is weappear.com.)
These companies maintain lists of attorneys in various jurisdictions who can do coverage on a contractual basis. Typically, the services cold-call attorney prospects. Those who respond favorably are "on the list." Those lawyers might also be asked to suggest other local attorneys who may be interested.
Being retained as a coverage attorney is sometimes, but not always, a simple matter of responding to a telephone call. Recently, e-mails have been sent out by the national coverage services stating that unspecified "new regulations" are in place. They say banks and lending institutions are becoming more stringent about the attorneys who represent them.
Coverage attorneys working with these services are now asked to provide state bar cards, proof of malpractice insurance, resumes, certificates of good standing, and related documents. Most attorneys who do coverage work gladly comply so they can be on the list.
For the firm that hires contractors to do its legwork, there is an obvious economic advantage. An attorney who travels from, say, Chicago to Joliet for a hearing spends 90 minutes traveling each way, or three hours altogether. The hearing itself may take no more than 30 minutes, most of which is spent waiting in the courtroom and only a few minutes of which is actually appearing before the judge.
Courtroom time is generally billable, but courts have pretty well agreed that travel time is not. In this scenario, the in-house attorney has wasted three hours of travel time for a 30 minute hearing, and only the hearing is billable to the client for this half-day commitment.
Suppose instead that the in-house attorney stays in Chicago and works on billable matters all morning. The firm hires a coverage attorney in Joliet, who typically charges a substantially lower hourly rate. The coverage attorney attends the hearing, sends in a report, and gets a check. The firm is obviously ahead financially.
Ethical and malpractice risks
Are ethical and malpractice risks inherent in the coverage-lawyer model? It's a question worth considering.
Competent representation. Rule 1.1(a) of the Illinois Rules of Professional Conduct states that "[a] lawyer shall provide competent representation to a client" and that "[c]ompetent representation requires the legal knowledge, skill, thoroughness and preparation necessary for the representation." In too many coverage cases, the preparation consists of reviewing a document or two (e.g., a motion and order), which is e-mailed to the coverage attorney several hours, or at best a day or two, before the hearing.
The information may not be really adequate, but often the contact person at the filing firm, usually a clerk, says nothing more is available. Some coverage lawyers have been known to arrive at court early to read the case file on the court's computer system (to which they rarely have remote access).
In many cases, coverage attorneys are newly licensed or practice outside the area of law in which they are appearing. But as is noted above, some coverage attorneys are being required to provide more background information. If the "new" regulations imposed by the national coverage firms become the norm, some of the least qualified attorneys may be weeded out by the screening process.
So far, we know of no court that has ruled attorney coverage to be unethical based on a covering lawyer's lack of specific knowledge of a case. If that happened, many large regional and national law firms would be scrambling to send attorneys to court, enduring the attendant expense and inconvenience.
Malpractice coverage. Is sending an attorney to court with limited knowledge and limited authority malpractice per se? Again, we know of no court that has so ruled. Nevertheless, the national services and some large firms demand proof of malpractice liability insurance before retaining a coverage attorney.
That leads to another question: do standard malpractice policies cover this situation? Some standard policies include under the definition of named insured "any contract or temporary employee of a Named Insured" and "any lawyer acting as 'of counsel.'"
That may provide adequate coverage for a filing firm, but it is not entirely clear that the contractor is covered for negligent acts of the firm he or she temporarily represents. And what are the rights of the original client against either provider? To what extent and to whom do the rules of agency apply? These are unanswered questions thus far.
'Are you even a lawyer?'
For the practicing attorney who agrees to do coverage, there are only a few pitfalls. Most hearings go smoothly, and issues are quickly resolved by the court. But not always.
Some judges, particularly those of long tenure, may be confused by the appearance of a coverage attorney. The attorney may be asked for knowledge of the case history, and upon being unable to provide it, be asked what her position in the firm is.
When she says she is not with the firm, the next questions are "Whom do you work for?" and "Whom do you actually represent?" Now the coverage attorney tries to explain that she is a contractor, and the judge asks, "Are you even a lawyer?" This type of exchange may end with the judge ordering someone from the filing firm to physically appear at the next hearing. Naturally, the firm will be unhappy about this.
One way to minimize the judge's probing questions is to introduce yourself as "so-and so, local counsel for firm PD&Q, attorneys for the plaintiff." Judges seem to understand what "local counsel" is, and oddly do not expect local counsel to have all the answers.
Sometimes opposing counsel will also take issue with a coverage attorney's credentials or authority. "Why can't you simply agree to this order? What are you trying to pull on me? Who are you, anyway?"
To those questions, the coverage attorney's explanations sound like weak excuses. Of course, the more knowledgeable attorneys know what's going on and do not expect a coverage attorney to do anything off-script. Such are the necessary limitations of coverage. Sometimes opposing counsel is a coverage attorney, too, so both sides are eager to dispose of the matter amicably. The solution may be to just continue the matter to another date.
It is seems clear from the increasing demand for coverage in remote areas and the appearance of online services designed to provide such coverage that the practice is growing. Consequently, judges and lawyers should accept that not everyone who appears in court is employed by the firm for which he or she is stepping up.
The covering lawyer may not have extensive knowledge of the cases at bar or authority to act independently. At best, she is the "eyes and ears" of the firm to which she is contracted.
That realization alone can help avoid the most serious misunderstandings. Ideally, courts will make allowances for the limitations of this type of practice, which increases the efficiency of the justice system and provides welcome business opportunities in a tight legal market.
Charles R. Wolf is principal attorney of his own firm, Charles R. Wolf & Associates in Joliet, which handles bankruptcy, probate, real estate transactions, small claims and collections, and, of course, coverage for other law firms.
Ethics and the coverage attorney
In addition to Rule 1.1(a)'s requirement that lawyers provide "competent representation" (see the "Ethical and malpractice risks" section), coverage attorneys should think about the possible impact of these and other ethics rules:
Rule 1.6. - Confidentiality. Rule 1.6(a) says "a lawyer shall not, during or after termination of the professional relationship with the client, use or reveal a confidence or secret of the client known to the lawyer unless the client consents after disclosure." Might your appearance trigger that duty?
Rules 1.7 through 1.9 - Conflict of interest. Might you have a relationship with a party on the other side of a case in which you're appearing? If so, what conflicts issues could that raise?