Implications of ABA opinion on Legal Outsourcing

May 28, 2009

The American Bar Association with an ethics opinion on legal outsourcing has literary blessed the outsourcing trend.

Legal outsourcing has in recent times become a salutary for the globalized economy. A growing number of legal process outsourcing (LPO) companies have come up to offer the services of lawyers abroad to handle the most labor-intensive aspects of legal matters, especially document review in large-scale litigation. India has been the most popular destination for legal outsourcing because it has a common-law system and English is widely spoken.

Companies operating in the outsourcing space hailed the advisory by the ABA's ethics committee as a major step forward for their nascent industry and that the advisory would help set industry standards for newcomers and also comfort potential clients still wary of outsourcing legal work. A prevailing though is that the ABA opinion on legal outsourcing lays out the framework for how to do this. Ethics Opinion 08-451, dated Aug. 5, states that sending legal work overseas is ethically permissible as long as the lawyer doing the outsourcing takes steps to ensure the protection of client confidences and preservation of attorney-client privilege. The advisory also states that attorneys should check to make sure that foreign lawyer are suitably trained and competent and that bills for outsourced work be reasonable.

The advisory noted that outsourcing "affords the lawyers the ability to reduce their costs and often the cost to the client to the extent that the individuals or entities providing outsourced services can do so at lower rates than the lawyers' own staff." The ABA also said outsourcing created new opportunities for smaller firms to handle larger matters.

But in the entire circumstances one question gains precedence that does it implicitly set a new, higher standard for lawyers who delegate work, irrespective of they delegate onshore or offshore?

EDD consultant and author Conrad Jacoby wrote ABA Outsourcing Opinion - What it means to You as a Litigation Support Professional in Litigation Support Today (Feb/Apr 09). He analyzes the American Bar Association formal opinion 08-451 regarding outsourcing legal and ancillary services. Jacoby writes - "ABA's opinion was driven by the need to clarify the role of third party document review services, the language of the opinion is much broader, serving as a yardstick to measure any outsourced service provided to a legal team..... the Opinion makes it clear that blaming performance issues entirely on a vendor is no longer a winning defense inside a litigation matter."

The opinion suggests specific due diligence steps for offshore work but the implicit standard it sets apply to any outsourcing, including domestic. Conrad Jacoby is of the opinion that the burden on law firms has shifted from demonstrating that they outsourced a project to demonstrating the reasonableness of their oversight of an outsourced project.

He presents good practical advice for legal assistants and litigation support professionals, especially concerning keeping records of their interactions with vendors. He also notes that the opinion makes "clear that a legal team that elects to outsource work still retains full responsibility for the quality of the work, just as if the work had been performed directly by members of the legal team."

Applying the duty of care implied by the opinion, the law firms seem to be subjected to the same tests to which they must subject vendors?

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