(CN) - A big-name law firm may have to pay overtime to temporary lawyers whose document review work could have been done by a machine and took no "legal judgment," the Second Circuit ruled.
David Lola, a North Carolina resident, filed a Fair Labor Standards Act class action against the prestigious international law firm Skadden, Arps, Slate, Meagher & Flom LLP in 2013. Tower Legal Staffing Inc. was also named a defendant in the Southern New York district court lawsuit.
Lola, an attorney licensed to practice in California, says he worked for the companies in North Carolina for 15 months, starting in April 2012, reviewing documents related to a multi-district litigation pending in Ohio.
Skadden and Tower closely supervised Lola, whose "entire responsibility" consisted of checking documents they provided for search terms, marking the files into categories, and sometimes redacting text based on Skadden and Tower protocols, according to court documents. But Lola says although he worked roughly 45 to 55 hours a week, he was paid at the same rate - $25 an hour - for any overtime hours he worked.
Skadden and Tower moved to dismiss the complaint, arguing that Lola was exempt from the Act's overtime rules because he worked as a licensed attorney practicing law, not an employee.
U.S. District Judge Richard Sullivan granted the motion last year, finding that Lola was an exempt employee because his work amounted to "practicing law" as defined by North Carolina law. Lola, who is not licensed to practice law in North Carolina or Ohio, appealed.
The Second Circuit vacated the lower court's ruling and remanded the case last week, finding that Lola was not "practicing law," despite agreeing that North Carolina law applies.
General statutes do not clarify whether Lola's work amounted to "legal services" but the North Carolina State Bar issued a formal ethics opinion explaining the term in 2007, the ruling states.
"The district court erred in concluding that engaging in document review per se constitutes practicing law in North Carolina," Judge Rosemary Pooler wrote for a three-judge panel. "The ethics opinion does not delve into precisely what type of document review falls within the practice of law, but does note that while 'reviewing documents' may be within the practice of law, '[f]oreign assistants may not exercise independent legal judgment in making decisions on behalf of a client.' The ethics opinion strongly suggests that inherent in the definition of 'practice of law' in North Carolina is the exercise of at least a modicum of independent legal judgment."
Lola's work for Skadden and Tower is not considered "legal services" under North Carolina law, the judge ruled.
"The gravamen of Lola's complaint is that he performed document review under such tight constraints that he exercised no legal judgment whatsoever-he alleges that he used criteria developed by others to simply sort documents into different categories," Pooler wrote.
"Accepting those allegations as true, as we must on a motion to dismiss, we find that Lola adequately alleged in his complaint that he failed to exercise any legal judgment in performing his duties for defendants. A fair reading of the complaint in the light most favorable to Lola is that he provided services that a machine could have provided. The parties themselves agreed at oral argument that an individual who, in the course of reviewing discovery documents, undertakes tasks that could otherwise be performed entirely by a machine cannot be said to engage in the practice of law."
Courthouse News is awaiting comment from Lola and Skadden. Merrie Slavin, Tower's Marketing Director, said the company has no comment at this time.
Boasting about 1,700 attorneys and more than 50 distinct areas of practice, Skadden's 23 offices serve clients in every major international financial center, including almost half of the Fortune 250 industrial and service corporations, according to the firm's website.
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