Fixed-Term vs. Interim Contracts: Choosing the Right Option

In recent years, the way people work within the legal sector has undergone a major transformation. Whether it’s the systems used, or how firms structure their talent acquisition strategy, it’s clear that the traditional legal industry has evolved and adapted to thrive in the modern age. But what do these changes look like? And how do you choose the right option for your legal team?

The introduction of temporary legal professionals

It is important to note that many contract workers will often select this way of working as a lifestyle choice, as opposed to the common misconception that they are unable to find permanent work. Contract work can offer a large amount of flexibility, whether it provides increased control over working patterns, a greater variety of work, or allowing you to balance work around other life commitments, it can be a fantastic option for legal professionals looking to take back control of their career and put the life back into work-life balance.

So, what types of contracts are out there? Well, generally it boils down to two options: fixed-term and interim. Both are good offerings in their own right, but each has their own distinctive pros and cons. Choosing the option which works for you as a business must be decided according to the needs of your legal team at the time.

What is a fixed-term contract?

What is an interim contract?

You will pay the agency a daily, or hourly rate, and this will include: the candidate rate, employment costs (pension, holiday pay, apprenticeship levy, NI) and agency margin. On occasion, candidates will also work via their own limited company. This can be organised independently between the business and the contractor, with the business paying the candidate directly, or via an agency. In this case, it is the contractor’s responsibility to pay the relevant employment costs.

So, what are the pros/cons of the two methods?

With an interim consultant, you only need to give one to two weeks' notice. They are well aware that the contract might wrap up early if their work is no longer needed, keeping things flexible and hassle-free. This can make it easier to scale up and down. For instance, if you require lawyers for a document review exercise, and you think that it will roughly take five weeks from your estimation, but they complete the review in two, you can provide a short notice and quickly scale the resource down again. This is not something you can do with a fixed-term contract, and provides a completely flexible way to boost your legal team as and when needed.

An interim consultant also might be more cost-effective for shorter periods, as their flexibility allows the firm to avoid long-term contracts or benefits typically associated with permanent or fixed-term hires. Since the rate you pay - whether hourly or daily - includes all employment costs, there are no hidden surprises. Everything’s laid out upfront, making it much easier to manage your budget month-by-month.

One of the distinctive differences between a fixed-term and interim contract is that when it comes to the former, it is the employer’s responsibility to payroll the candidate. A candidate coming onto a fixed-term contract with the business for all intents and purposes will be a permanent employee for their contract period. This can mean additional work for the business in terms of onboarding, and offers slightly less flexibility if an earlier termination is required. Keep in mind that, on top of the candidate’s salary, you’ll need to cover additional employment costs, plus the finder’s fee you paid to bring them onboard. This can mean that there are some hidden costs that many businesses won’t initially consider. That being said, if you are savvy and factor in all of the above, you can have a good idea of the fixed cost for a longer set period of time.

Interim contractors will likely be provided by an agency, and therefore they will manage the payroll for that candidate. This can take out a lot of the aggravation of onboarding/offboarding and mean that the agency can assist with performance management, timesheets, payment and many other areas. An interim contract can be beneficial when you are looking to onboard someone quickly, as often these candidates will have already been vetted by the agency and can start work in as little as 24 hours!

Which is better: fixed term or interim contract?

Either way, the introduction of temporary contractors has brought in an increased element of flexibility for firms, so that they no longer have to commit to a larger permanent headcount that could potentially be underutilised at different points in the year (particularly in practice areas that tend to have lumpy work). It’s always beneficial for firms to think about their resourcing strategy and whether there are more efficient ways of working that you could implement.

If you want to have a chat regarding the recruitment and resourcing strategy for your firm, or what models might work for you and your team, please do reach out to me on emily.crisp@f-lex.co.uk and I would love to have a chat and provide you with some advice.