Law department managers who use temporary or contract attorneys may find that one of the lawyers does great work, fits right in, wants to join the department – and there is an open position. If the law department hires the lawyer, the department may owe the temp agency an extra fee. Paul Roy, Director of Finance & Administration of Time Warner Cable’s Law Department, points out that usually the temp agency carefully provides in its contract for a large charge for those who snatch away their talent. The agencies sometimes refer to this fee as the “conversion rate.”
Typically the conversion rate is a sliding scale, with lower payments the longer the person has stayed with the law department. For example, according to Roy, at the start you see conversion-rate charges of 20-25 percent of the person’s first-year compensation, then maybe 10 percent after three months (See my posts of Sept. 21, 2005: secondments and non-hire agreements; Dec. 17, 2007: temporary and contract lawyers; July 14, 2005: temporary staffing arrangements; and Nov. 26, 2006: contract lawyers and references cited.). In other words, the cost of a temp-to-full-time conversion amounts to roughly the same as the placement fee executive search firms charge (See my posts of Jan. 10, 2006: some cost comparisons on temporary staff; April 9, 2006: contract staff versus temporary staff; and Aug. 2, 2006: Sears’ experience.).