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    on Thursday, August 19, 2010
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    ABA Continues Examining Legal Outsourcing Ethics

    I was privileged to be invited as a guest speaker at the August 6th, 2010  ABA Ethics 20/20 Commission public hearing on legal outsourcing San Francisco.  The ABA also heard or received testimony from two other executives of legal process outsourcers (LPO).  Click here for the speaker schedules and written testimony (PDF).  In this post, I report on the status of the ABA ethics consideration process, my testimony, and my take-away from the hearing.  I then share our view on what direction the ethics rules should take.  The post closes with information on upcoming PLI conferences about legal outsourcing.

    The ABA Process.  The San Francisco hearing follows on from the ABA Section of International Law’s Public Forum on Offshore Outsourcing of Legal Services held in New York City on April 17, 2010.  The purpose of that session was “to gather viewpoints for the Section’s Leadership Council, which is considering the formulation of policy recommendations to the larger ABA”.  Integreon also testified at that meeting, as we reported in our blog post, ABA Reviewing Ethics Rules, Examining Legal Outsourcing. At that time, as noted in our post, the ABA had not decided what, if any action it should take regarding the ethics of legal outsourcing.

    Since then, the ABA position seemed to shift a bit.   Shortly before the San Francisco public hearing, a Section of International Law newsletter noted that the Section is “helping the larger ABA wrestle with whether existing ethical rules and regulatory structures adequately address the realities and challenges of a globalized 21st Century law practice…   [the] efforts of the Section’s Task Force and the Ethics 20/20 Working Group have now merged [and] [t]he Working Group has developed proposed amendments to the Model Rules to address ethical issues arising from outsourcing.”  So I went into the hearing assuming that the ABA will amend the Model Rules of Professional Conduct.

    Integreon Testimony and Report on Hearing.  I opened my testimony with a brief formal statement. The Commission then asked me several excellent questions. One inquiry was the nature of the tripartite interaction among a law firm, a corporate client and an LPO provider. The Commission appeared particularly concerned with a scenario where a corporate client has an existing relationship with an LPO provider and “mandates” that a law firm use its LPO.  I advised the Commission that Integreon views law firms as collaborative partners in the delivery of effective and efficient legal services to their clients. I also commented that in my experience, if based on trust and a true partnership, the relationship among the three parties works well.

    Based on what I heard at the hearing, amending the Model Rules does not appear to be a foregone conclusion.  Several options still seem to be on the table, including issuing a best practice guidance, releasing a new Formal Opinion, updating the existing LPO ethics Formal Opinion (08-451), or amending the model rules.

    Integreon Views on the Ethics Issues and Bar Regulations.  In our view and experience, lawyers, law firms, and the leading LPOs will welcome additional guidance from bar regulators.  All are interested in the details of legal outsourcing ethics, what constitutes adequate and effective supervision, and frankly, on what, if any mark-ups, might be permissible. (In general, the ethics rules governing lawyer charges seem to be vague if not ambiguous.)

    The legal support areas most suitable for legal outsourcing are high volume areas, including large scale document review, contract review and drafting, M&A due diligence support and legal research.  Because of the volume, we think even outsourcing naysayers cannot reasonably require that a licensed lawyer review every single decision made by an outsourced resource.  Anyone taking that position would have a hard time justifying the delegation of these tasks domestically to paralegals, contract lawyers, temporary lawyers, and other professionals.  Drawing a line between these positions and outsourced personnel will be hard if not impossible.   Delegation with appropriate supervision has always been and will continue to be an integral element of the effective delivery of legal services.  The introduction of LPO is, in our view, just another resource to which lawyers can delegate work and which lawyers must supervise.

    Upcoming PLI Conferences on Legal Outsourcing.  I encourage readers interested in learning more about legal outsourcing to attend the Practising Law Institute’s Outsourcing 2010: Structuring, Negotiation and Governance (Chicago on September 21 or Los Angeles on October 22).  The faculties are impressive and offer an excellent education about legal outsourcing.  At each, I will present on the Ethics of Outsourcing.  My sessions will include an update on both the ABA’s and the UK Law Society’s ongoing consideration of the ethical issues of outsourcing.