Reversing Judge Richard J. Sullivan’s 2014 decision, a panel of the Court of Appeals for the Second Circuit ruled today that a contract attorney who provided document review services on a multi-district litigation for a law firm through a third party staffing firm colorably alleged an FLSA violation based on his assertion that the document review services he provided did not constitute legal work.  Lola, et al. v. Skadden, Arps, et ano., 2d Cir., No. 14-3845, 07/23/2015.

In its decision, the Second Circuit first affirmed Judge Sullivan’s determinations that: 1) state law should apply to determine whether Plaintiff Lola was engaged in the practice of law (and thus exempt); and 2) North Carolina state law applied because Plaintiff lived and worked in that state when he provided the services in question. The court nevertheless reversed Judge Sullivan’s dismissal of the complaint because, based on its review of North Carolina guidance, a hallmark of practicing law in the state “is the exercise of at least a modicum of independent legal judgment.” Because Plaintiff Lola alleged that he exercised no such judgment, his complaint properly stated a claim under the FLSA. The Court observed that North Carolina’s appellate courts would be the preferred forum to determine the practice of law standard for that state, but that North Carolina law does not provide a mechanism to certify such questions for review.

Agencies that provide “contract attorneys” to law firms and firms that directly employ such attorneys must examine the work performed by these individuals and their compensation practices in light of this decision. While the Lola decision is only the denial of a motion to dismiss and the employer may ultimately prevail on the merits, employers may wish to take actions to minimize the risk of such claims.