Thursday, October 18, 2007

Agencies Behaving Badly

Increasingly, certain agencies are secretly paying their contract employees on 1099 so they can increase their profits and not pay unemployment.

55 comments:

Anonymous said...

What's so bad about that? More money for me. With creative tax planning you make out alot better than a w-2 employee. The only main drawback, as you mentioned, is collecting unemployment.

Anonymous said...

1:18 makes a good point. There is better tax standing with a 1099 than with a w-2. There is no benefit to being their w-2 employee (no good health benefits and no good 401k).
From what I read, the only good thing about Doc Review is that it is like being a stripper: it's good money fast and without emotional complications.

Anonymous said...

What agencies are doing this? I haven't heard of any yet. Also, for some folks who can go weeks without work, that unemployment check, all $405 (before taxes) goes a loooooong way!!

Anonymous said...

E.P. Dine is secretly not paying their temp employees at all.

Anonymous said...

Anonymous said...
"What's so bad about that?"

I'm guessing you never took Tax or Employment Law, huh? Poor dear . . .

Anonymous said...

1:27, can you tell us more about what's so bad about agencies 1099ing intsead of W-2ing? I never took Tax or Employment Law, either.

Anonymous said...

Well the bad thing about it is that you will pay ALL of the FICA, whereas if you are on someone else's payroll they pay it, its around 9%, so its kind of substantial. The other bad thing is that you have to pay your taxes on a quarterly basis, so instead of doing that fun process once a year, you get to do it four times a year. The other thing is the agency really already does nothing for you, except take a cut of what you bill and really the only thing they do is payroll, so if they are going to 1099 you as an independent contractor, then you may as well just become one and cut the agency out all together. You can then tax deduct a whole lot of things as biz expenses that you otherwise would not be able to do. If an agency 1099's you, then they are REALLY doing nothing for you. If they 1099 you, then they really are just acting like a pimp, you do the work they get money, and offer no value in return. Its a crappy deal, and any one offering it should be kicked in the nuts.

Anonymous said...

Does is surprise you that EPDine is pulling this shit? Shawn T and Carrie C can lick my brown ass. That agency is by far the worst in the city. We need to stop working with them all together.

Anonymous said...

That was a lie. E.P. Dine is paying temp attorneys in wampum. And all the real $ is going to Carrie Cheskin so she can get her nails done.

Anonymous said...

Well, in a 1099 situation, all the agency is doing is getting the work from the firms. It would be nice to 1099 onself and keep the profits the agency makes, but if the firms won't give you the work, you can't 1099 anything.

Which agencies are 1099ing, anyhow?

Anonymous said...

And Shawn Treadwell can go buy the Roots Deluxe Edition so he can learn to stop exploiting his own people.

Anonymous said...

Dear Tom,

Are there more than one of you that maintain this blog? Whoever posted this is not an attorney. Using a 1099 for an employee would be illegal, and so many people would know, that the agency would be out of business.

Why such inflammatory untruths?

Bob

Anonymous said...

As a contract attorney, I would would much rather be paid on a 1099 basis, but most firms are against it, because they want you to be "employees" of the agencies.

My accountant says it would be much better to be a 1099 than be an employee, because then many more expenses can be deducted. Unemployment insurance is a good back-up, but shouldn't factor into basic career strategies and financial planning. Of course as contract attorneys we are looking for any bit of help we can get, but overall, 1099 is superior if you manage it properly.

If you don't withhold the proper taxes, however, on your own and spend all the money, a whopping tax bill awaits at the end of the year.

Craig said...
This comment has been removed by the author.
Anonymous said...

I agree- one of my problems with te agencies is that they have pretended we are employees when we are not. This limits our tax advantage with regard to health insurance for example. My friend treats in another industry works as a consultant and much of what we pay for out of pocket he pays for with the advantage of also writing it off as a business deduction.

comparing this to other industries where people do consultant work (i have a friend who has been a contract web designer making 60/hr for the same time i've done temp work) there are two ways if you want to increase your value this can go-- ie stop the pretense of pretending we are employees- in which case greater deductions, right off, etc and maybe get rid of the middle men including collective action. or act as employees in which case demand more benefits, better work conditions etc, again through collective action. just some rand observations

Anonymous said...

It seems unlikely that many agencies would 1099 employees. The law firms would not go for it. That would leave them exposed to being hit with back employment taxes.

And, FICA is around 12%, employer and employee splits this amount.

Anonymous said...

I know for a fact that this is going on. It's not common, but it is going on. Any temp that does this is retarted. They think they are getting a good deal, tons of money upfront, etc., but just wait until you need to collect Social Security or Unemployment.

carrie c said...

Anonymous I would love to lick your brown ass and anything else you want me to lick!

Anonymous said...

Dear Carrie C.,

Shut up, go paint your nails, and get ready to be bitchy on the telephone tomorrow. This is a very serious discussion. We don't need any more of your rocket red lipstick, Bride of Frankenstein-esque pale skin, and bleached blonde hair distractions, okay?

Anonymous said...

http://www.abajournal.com/magazine/manhattan_work_at_mumbai_prices/

Not to change the subject, but most of us won't have jobs soon anyway, if this trend keeps up...

Anonymous said...

Ok, enough of this. I am really tired of all this outsourcing nonsense. Outsourcing will be limited in its scope. Why?

Litigation gets fucked up:

In-house counsel to law firm, "You used WHAT??? Indians who can't even properly take a Sallie Mae call. MALPRACTICE."

Or, insurance company insuring companies underlying litigation losses, "You used WHAT??? We are out millions because you wanted to save a few nickels on cheap Indian labor. We were never properly consulted and are therefore denying your claim." Years of costly litigation ensue.

Anonymous said...

It's all about appearance, not reality. Sure, trained chimps standing one-legged, blindfolded, on a stool can do this work. That's not the point. The point is that each layer in this litigation gamut needs to properly cross their t's and q's, in order to be properly indemnified. Saving a few nickels on outsourcing would most likely make economic sense, but is a HUGE risk. Who wants to be seen as having signed off on that when shit hits the fan, and it's time for blame to go around?

Anonymous said...

It seems, however, that the outsourcing is largely client driven, they want to reduce costs and document reviews are notoriously expensive and are often inefficiently run by law firms (as to maximize billing). Not to mention the difficulty in hiring, training and managing the tiolet grad american lawyer temps who feel entitled to all of the perks of associateship, who constantly bemoan their fate and cause trouble for agencies and firms.

On the other hand, the eventual result is that entire legal projects will be outsourced, cutting out American firms completely.

I heard that the DC bar is doing more to protect its members by requiring that this work be peformed by local, DC barred attorneys. Why hasn't NY done anything to protect its licensed lawyers from losing their jobs overseas?

Anonymous said...

Yes, but clients also want as little hassle as possible with insurance companies covering their losses.

Anonymous said...

12:01, I'm confused. Why would a chimp standing one-legged need a stool?

Anonymous said...

One more thing 12:01. You cross your T's and dot your I's, but you mind your P's and Q's. Stop mixing things up.

Anonymous said...

http://www.digitalmandate.com/default.asp?W=firstpass

Anonymous said...

Go away, Greg. Nobody is interested in your "fault proof" [yeah, what could possibly go wrong], nickel and diming, digital mandate shit review service.

Anonymous said...

"The Plan" is as follows:

India sends thousands of English-speaking people to US law schools. Third-tier, Fourth-tier, Tenth-tier -- it doesn't matter. All that matters is that they get a US law degree so they can sit for the bar somewhere. They pass the bar, then go back to India, where they're officially "US-Licensed Attorneys," and can thus do document review and make "substantive calls" on documents for $12 an hour.

That's how this game is going to work. Remember: citizenship is not required to hold a law license in a US jurisdiction.

Anonymous said...

I sure hope Abu isn't going to pay American 3/4/10th tier tuition. His hut in Mumbai will be awful shitty.

Anonymous said...

Apu doesn't pay for anything. The Indian gov't does. And I think it's only a one-year deal because they already have Indian law degrees, which the shithole schools honor and only require one year of US ABA-accredited US law school classes to make them eligible to sit for the bar exam.

Anonymous said...

Regarding Digital Mandate: Can a machine outperform a third-tier law school graduate at document review?

Watching this unfold is going to be more exciting than Kasparov vs. Big Blue.

Anonymous said...

Using Indians and machines may be better, but that doesn't really matter. Using such creative, alternative methods would only give insurance companies an excuse to bail out on or stall on their obligation to cover defense costs/legal losses. Not worth it.

Anonymous said...

Insurance company to Fortune 500 corporation:

"You used a machine (and Apu in Mumbai) to review your sensitive documents, and now you want us to cover your 500 million dollar liability? We weren't properly consulted (even though they probably were)".

Years of costly, drawn out insurance litigation ensues"

Anonymous said...

Look, people. You need to look past all the scare tactics and smoke and mirrors that these agencies, firms, and other middlemen who like to take a cut of your wages like to throw up. With a little cohesiveness, you are actually in a sort of position of power.

My dad used to work in the insurance industry. He always used to say son, "when you work in insurance, you realize that insurance controls and underlies everything." Everything in our society rubs up against insurance: litigation losses, acts of god, even 9/11. Insurance companies try to do everything in their power to deny claims, that is how they make money. Anything that is creative, or not by the book provides insurance companies with an excuse to raise a red-flag and deny coverage.

In the high stakes field of litigation, NOTHING can be done creatively. There is too much at stake, the insurance companies are extra vigilant, and no career track middle man is going to risk their job by doing anything differently. Too many things can go wrong in the ordinary course of events. This is why the Cravath's and Wachtell's of the world prosper, not because they are necessarily the most efficient, but because they are perceived as being the best in their league.

Consequentially, when it comes to the mindless, pointless task of document review clicking, the same rules apply. In the realm of perception, state licensing, via state bar admission, provides the standard stamp of approval that things were done by the book. Not necessarily that state licensing provides competent, effective, efficient reviewers, but it is an objective standard, and in insurance land objective, measurable standards mean everything. The holder of a "standard" is in a position of power. They can tell a deadbeat insurance company to fuck off, that they did everything by the book, and get that summary judgement motion passed. Entities who utilize machines and Indians to conduct discovery, however, are putting themselves in a precarious position.

Anonymous said...

But what if the computers are better at reveiwing documents than third teir law school grads? Within the next two years one of the big project will switch to a technology based solution and fire all of you. Without docment review how will we make money?

Anonymous said...

It doesn't matter. What company would risk a drawn out, costly pissing contest with an insurance company to determine if computers are more effective.

Anonymous said...

Insurance company told the insured to look into it to cut defense costs. Its going to happen.

Anonymous said...

the studies showing the computers to be more effectiver have already been done. Temps are DONE.

Anonymous said...

Not likely. Overpaid, inexperienced, junior associates are more likely on the chopping block.

Those "studies" were conducted by the document review computer software company.

Anonymous said...

Let me get this straight... first you all bitch and moan and curse out the legal staffing industry, now you are crying that it might all disappear? Which is it?? Can't live with it, can't live without it?

Anonymous said...

If any of this info is true, we are toast:

http://www.h5technologies.com/news/pr_20051101.html

Anonymous said...

It might be true:

http://iblsjournal.typepad.com/illinois_business_law_soc/2007/03/automated_docum.html

Anonymous said...

Hmmm, article's sources all relate back to the Kershaw article. I never saw so many "id's" in my entire life. Kershaw runs a management consulting firm, has a financial stake in this debate, and therefore lacks credibility.

Come back with some unbiased, objective studies. Thanks.

Anonymous said...

And I am sure you (as a temp) don't have any financial stake in this debate.

But point is, it is a debate firms and clients are now having. Your days as temps are numbered.

What will you do when the computers are better than you at doc review?

Anonymous said...

Celebrate.

Anonymous said...

That's why I am leaving temping to go become a lawyer for an insurance defense firm!

Anonymous said...

Didn't Big Blue beat Kasparov at chess?

Doc review isn't as difficult as chess.

Anonymous said...

11:21 - the point is that the Indians WILL BE US-licensed attorneys when they're in Mumbai reviewing documents.

What gripe can the insurance companies possibly have? The Indians will be legit, US-licensed attorneys. It doesn't matter that they're actually in India doing the review. They can be anywhere there's internet access.

Anonymous said...

"the point is that the Indians WILL BE US-licensed attorneys when they're in Mumbai reviewing documents."

What proof are you basing this assertion on?

Anonymous said...

12:22 - Did you read the posts before 10:27's?

Anonymous said...

Anonymous said...
12:22 - Did you read the posts before 10:27's?

___________________________________

Yes. Where did any of those posts point to data showing that Indian doc reviewers practicing in Mumbai will or are U.S. licensed attorneys?

Anonymous said...

2:24, it is G-d's will.

Anonymous said...

eat my ass

Anonymous said...

you deleted my comment. Doing this would be illegal and too many would know. You lie so much in the blog you sound like a nigger.