| For the purposes of this article, we will assess the | | | | practice of law. However, assisting others in the |
| American Bar Association ("ABA") Standing | | | | unauthorized practice of law is not a clearly defined |
| Committee on Ethics and Professional Responsibility | | | | action, which means a lawyer should be very careful in |
| Formal Opinion 08-451: 451 Lawyer's Obligations When | | | | deciding which tasks to delegate or outsource and |
| Outsourcing Legal and Nonlegal Support Services, | | | | must supervise work performed in an appropriate |
| published August 5, 2008, and what it tells us about | | | | manner. The appropriate level of supervision is |
| global legal process outsourcing from the perspective | | | | dependent on several factors including the complexity |
| of an American lawyer. Formal Opinion 08-451 touches | | | | of work to be performed, skills of the workers, |
| on key ethical concerns a lawyer or law firm has | | | | education of the workers, and other factors. |
| when outsourcing legal and non-legal work. The opinion | | | | The opinion recognizes the existence of a global |
| acts as a guideline for ethical practice, and the ethical | | | | economy and the fact that lawyers can save on |
| engagement and management of a legal process | | | | costs, and can sometimes pass this savings onto the |
| outsourcing (LPO) provider. The opinion refers to the | | | | client when the outsourced services are performed at |
| Model Rules of Professional Conduct as amended by | | | | a much lower rate than they would have been |
| the ABA House of Delegates through February 2008. | | | | performed domestically or regionally. The opinion, in |
| A lawyer is allowed to outsource legal and non-legal | | | | reference to small law firms handling large |
| work although he/she must be ethically responsible for | | | | discovery-intensive litigation, states: |
| the work performed. Outsourcing is generally allowed | | | | Outsourcing, however, can enable that firm to |
| though the lawyer retained in a matter is still | | | | represent a client in such a matter effectively and |
| responsible to his/her client for any work performed in | | | | efficiently, by engaging additional lawyers to conduct |
| furtherance of his/her representation of the client. The | | | | depositions or to review and analyze documents, |
| opinion states that Model Rule 5.1 and 5.3 apply to the | | | | together with a temporary staff of legal assistants to |
| outsourcing relationship, which means that lawyers | | | | provide infrastructural support. |
| acting in a supervisory capacity must take reasonable | | | | The overriding factor when a lawyer provides |
| steps to ensure that the Rules of Professional | | | | representation is that he/she renders competent |
| Conduct are being adhered to by subordinate lawyers | | | | representation to his/her client with the "legal |
| and/or non-lawyer assistants. Supervising lawyers are | | | | knowledge, skill, thoroughness and preparation |
| responsible for violations of the Rules of Professional | | | | reasonably necessary for the representation." The |
| Conduct by subordinates if there is knowledge or | | | | opinion goes on to state that some lawyers may do all |
| ratification of bad conduct, or if there is knowledge of | | | | of the work himself/herself, some may delegate |
| the bad conduct when it could still be avoided or | | | | certain things to a staff, or some may outsource |
| mitigated but no remedial action is taken. Supervising or | | | | certain types of work. Lawyers can be equally |
| managing lawyers will obviously always be responsible | | | | competent in their representation of a client though |
| for violations of ethical duties if they order the wrong | | | | they differ in how much they utilize legal support |
| conduct in the first place. | | | | services while providing representation for their clients. |
| In pertinent part of Model Rule 1.6, the supervising | | | | The two main challenges in this regard for a lawyer |
| attorney must disclose outsourcing activities to his/her | | | | who outsources are 1) that tasks are delegated to |
| client, if the activities involve the disclosure of | | | | individuals who are competent to perform them, and 2) |
| confidential information, and obtain the informed | | | | that they can oversee the project adequately and |
| consent of his/her client, or may not have to obtain | | | | appropriately. One of the main factors in obtaining LPO |
| informed consent from the client if the disclosure of | | | | services is that the LPO personnel has sufficient |
| confidential information is impliedly authorized in order to | | | | experience and appropriate education for providing the |
| carry out the representation. It seems that the safest | | | | services in question and that the supervising lawyer |
| and most ethical way to outsource work would be to | | | | should provide a reasonable amount of oversight |
| get your client's informed consent. Although there are | | | | regarding the project. |
| issues regarding: whether the work to be performed | | | | What constitutes reasonable oversight will depend on |
| involves confidential information, and whether there is | | | | several factors. A lawyer or a law firm outsourcing |
| implied authorization to relate certain information in the | | | | work should consider doing reference checks, and |
| normal course of representation, it is best to inform, | | | | background checks on the LPO. Principal attorneys in |
| educate, and ultimately gain the client's written informed | | | | a direct outsourcing scenario should be interviewed, |
| consent when engaging an LPO provider who will be | | | | and LPO's should be questioned about hiring practices |
| employing foreign workers for your client's benefit. | | | | regarding the quality and the character of their |
| Strict confidentiality agreements must be in place with | | | | employees. The higher the complexity and sensitivity |
| your LPO provider and conflict of interests must be | | | | of the work to be performed, the more thorough the |
| checked prior to engagement on a specific matter. | | | | investigation into the LPO's security and |
| Under Model Rule 1.5, the attorney must not charge his | | | | professionalism should be, which can include visiting the |
| her client an unreasonable fee or for unreasonable | | | | foreign operations in some instances. When engaging |
| expenses in regards to the outsourced work. This | | | | foreign educated lawyers, the foreign legal education |
| means that the the cost of outsourcing can be passed | | | | system must be assessed and compared the |
| to the client but it can not be an unreasonable | | | | American legal education system, and the foreign |
| expense. It is possible that the attorney or law firm | | | | professional regulatory system should be evaluated |
| could charge the client with a surcharge for | | | | for core ethical principles. This comparative evaluation |
| outsourced work, but the surcharge would have to be | | | | is not meant to reject or accept a foreign country for |
| reasonable. Ultimately this additional fee would be | | | | outsourcing services, but is meant to provide a lawyer |
| strictly related to management and supervision of the | | | | with an idea of how much scrutiny they should apply |
| LPO relationship, project management fees if you will. If | | | | to the work performed by a particular group of foreign |
| the lawyer or law firm passes the cost to their client | | | | workers. |
| as a pure disbursement, no mark-up is allowed. | | | | The opinion also raises the question of how susceptible |
| It is paramount, and should be obvious to any practicing | | | | confidential client information is to seizure in judicial or |
| lawyer, that under Model Rule 5.5, a lawyer must avoid | | | | administrative proceedings in a foreign country. At this |
| assisting others in the unauthorized practice of law. | | | | point in time it seems that confidential or sensitive |
| The opinion goes on to note that many lawyers | | | | information should be housed within the United States |
| outsource work to "other lawyers or nonlawyers, as | | | | with very restricted access by workers who are |
| independent contractors, directly or through | | | | overseas. It does not seem practical to rely on any |
| intermediaries, on a temporary or an ongoing basis, to | | | | foreign judicial system in reference to protecting |
| provide various legal and nonlegal support services," | | | | confidential information, so to take that out of the |
| and speaks of the various types of work outsourced | | | | equation, sensitive information should only be housed |
| including "the engagement of a group of foreign | | | | and accessed within and from the United States. Any |
| lawyers to draft patent applications or develop legal | | | | LPO that has unlimited access to this information |
| strategies and prepare motion papers in U.S. litigation." | | | | overseas is going to be a huge headache for U.S. legal |
| The opinion implicitly states that by outsourcing to a | | | | practitioners from a practical point of view. For this |
| LPO for work equivalent in complexity to drafting | | | | same reason, it seems like a very delicate situation |
| patent applications, development of legal strategies, or | | | | when trying to contract with a completely |
| preparation of motion papers to be used in the U.S., | | | | foreign-based LPO, so delicate that it is probably not |
| lawyers are NOT assisting others in the unauthorized | | | | worth the administrative and ethical headaches. |