Lawyers are taking on side work as a way to make extra money, meet clients, pursue non-legal interests, and avoid burnout. How should law firms respond to this growing trend?
Traditional law firm cultures aren’t exactly side-hustle friendly. There’s a lot of old-school thinking—a mentality that junior lawyers should be 100% devoted to the firm, working long hours and billing as much as possible. Side job? Why not just bill an extra couple of hundred hours? If you’re thinking about outside work, I’m not sure you’re “partnership material.”
But a number of partners freelance in ways that enrich their lives, keep them refreshed, and often help bring in business to the firm. Some states like California and Washington even explicitly protect a worker’s right to moonlight.
If there’s no written policy on side jobs, and lawyers are afraid of the reaction, there’s a real danger that side jobs proliferate under the table, in secret. And that’s where problems really start. Conflicts of interest, unauthorized practice of law, insurance, and improper use of confidential information, are just some of the problems that can arise in the absence of a good policy.
Here’s what firms should do to adapt to the reality of side jobs.
Firms should begin by creating a written policy on side employment in their code of conduct or employee handbook. A good policy will explicitly attempt to regulate an employee’s outside activities only to the extent those activities could impact the firm’s work. Far-reaching restrictions that go beyond what’s necessary to protect the firm’s interests could run afoul of state law and create resentment among employees.
A firm should gather input from across the firm prior to even drafting a policy, and even consider an anonymous survey. Leadership might be surprised to learn that, for example, several of its partners invest together in real estate projects, that several associates teach bar exam courses, or that non-attorney personnel make ends meet by driving for a ride-sharing company. Don’t create a policy that you aren’t willing to enforce against your highest billing partner or rainmaker—the policy will have no credibility if it’s only enforced against junior lawyers.
In putting together a policy, firms may have to start with a clean slate—I reviewed a dozen publicly available law firm codes of conduct, and (aside from pro bono policies) those policies didn’t address the issue of outside employment. As a starting point, I’d recommend addressing five key issues.
First, look at your data and equipment use policy. Firms should be clear that no outside employment can make use of any firm-owned data, including client data, employee data, or internal records or documents. An entrepreneurial associate, for example, wouldn’t be able to use firm documents in building a prototype generative AI tool, and a paralegal hoping to start a home jewelry business can’t use firm or client email addresses to market their products. Firm computers and other property should never be used to operate a business, and the business should be conducted entirely outside the firm’s offices, to avoid any potential for intermingling data.
Second, many law firms carry professional liability insurance to protect the firm and its lawyers against malpractice and related claims. Some small firms carry no insurance. According to a recent Bloomberg Law workload and hours survey, two-thirds of lawyers who have a side gig are working within the legal profession, and that outside work could create insurance issues for the firm.
At a minimum, the firm should consult with their carrier to understand the implications of an attorney’s outside work, and take steps to clarify with the attorney that such outside work isn’t covered. No matter the nature of the outside work, an attorney might be wise to set up their own corporation or LLC to protect themselves against personal liability for their actions in side projects.
Third, law firms have to think how an attorney’s outside work might reflect on the brand of the firm, and bar jobs that could diminish the reputation of the firm or the legal profession generally. Obviously, the side job shouldn’t violate any applicable law. And just as plainly, a law firm attorney should take care never to use the firm’s name in promoting or operating their business.
But with sites like Linkedin, it’s easy enough to connect anyone to their employer. An employee’s work, or association with another company—even without a mention of the firm’s name—could still damage a firm’s reputation. If the outside work involves a potentially controversial area, such as firearms or marijuana or exotic dancing, should the firm care? If the outside work involves a social media media site like TikTok, should the firm applaud the work for cultivating a new generation of potential clients, or protest that it’s diminishing to the firm to be associated in any way with the controversial site?
Fourth, the potential for conflicts of interest abound in side employment. An employee, for example, could end up working at a place or in an area that is in competition with the firm or a key client. Or working with another company that is a party to litigation being handled by the firm. Should an employee solicit or do work for other firm employees as customers, such as the IT person who sets up a side business doing home wifi and entertainment center troubleshooting? Who will troubleshoot the dispute if the work isn’t done right? Should the firm’s policy on accepting gifts apply to the employee doing side work? Firms would be smart to insist that outside work be kept entirely separate from the firm, and avoid the possibility that disputes or favors done around outside gigs don’t spill over into the workplace.
Finally, what happens if the attorney’s side job conflicts with their work at the firm? If an attorney moonlights as a realtor, for example, how do they reconcile an open house with trial prep? Can they get another employee to stand in, or should the firm’s work always take precedence? Can a lawyer ever do side work during “normal” business hours? And how will the firm handle performance issues if the employee’s performance starts to suffer from a lack of focus on their primary job? There’s no right answer that applies to all situations. The key is to work with employees up front, anticipating potential time conflicts up front and agreeing on how they’ll be managed
This side-gig era comes with opportunities, and challenges for law firms. Larger firms should think about establishing an ethics committee to advise and handle ethical issues that arise at the firm, including issues around side jobs. A firm might, for example, require employees to get prior approval for side work, and use the process as an opportunity to anticipate problems that could arise, and counsel the employee on how to avoid the common issues.
There are many ways to adapt, but there’s one path for firms that isn’t going to work—closing your eyes and just hoping nothing goes wrong.
Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor and he writes on in-house, corporate, and ethics issues.
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