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Outsourcing Legal Tasks: Five Potential Ethical Violations to Avoid

Law firms regularly outsource a variety of tasks to save both time and money for the firm, and ultimately for clients. Because Legal Process Outsourcing firms (LPOs) are located offshore all around the world, outsourcing can provide another benefit to clients: round-the-clock service. Until recently, administrative tasks such as payroll or photocopying have been the most common functions selected for outsourcing. However, over the last decade it has also become increasingly popular to outsource low-level legal work, such as document review, contract review, legal research, and e-discovery.

While outsourcing saves time and money, it has the potential to create ethical violations for the attorneys. When outsourcing work to LPOs, counsel remain responsible for meeting all ethical obligations. Meeting these obligations can be tricky when numerous individuals work on a project. Therefore, attorneys need to be extra diligent in their efforts to maintain compliance when outsourcing work to third parties.

Here are five potential ethical violations of which attorneys should be aware when outsourcing legal tasks.

  1. Unauthorized Practice of Law

Model Rules of Professional Conduct (MRPC) Rule 5.5(a) states that “a lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.” Ultimately the attorney is the one responsible for complying with the rule, not the LPO. As this rule relates to legal outsourcing, there are a few things an attorney should do to ensure compliance.

  • Select the right LPO. Working with an organization that is cognizant of the MRPC requirements and equipped to support attorneys in their need for compliance is paramount to maintaining ethical obligations.
  • Maintain supervision over any tasks that could be deemed as the practice of law. Attorneys must take ownership of the work completed by the LPO. This includes, at a minimum, reviewing and approving all client deliverables. It is also important for attorneys to ensure that they are not simply assisting the LPO in practicing law, but that they are actually performing all legal tasks.
  • Review all communications between the client and the LPO. To ensure compliance with Rule 5.5(a), as well as maintain attorney-client and work product privileges, attorneys should require their LPO and clients to copy them on all communications. Law firms and corporate legal departments that are exploring the use of LPO service providers should consult with their malpractice insurance carrier to ensure sufficient coverage for outsourced tasks under their policy.
  1. Competent Representation

Under MRPC Rule 1.1, attorneys need to provide competent representation for their clients. This responsibility extends to any work performed by an LPO. It is the attorney’s responsibility to ensure the outsourcing company meets the requirement of competent representation. There are certain precautions an attorney should take prior to outsourcing legal tasks to ensure compliance.

  • Prior to hiring an LPO: Attorneys should investigate an LPO’s reputation and determine whether the work processes, quality levels, and outcomes meet their expectations. Additionally, the attorney may also want to request bios or CVs, including references, on the specific individuals that will be working on the project.
  • After qualifying and selecting an outsource provider: Attorneys should continue to maintain constant communication with the LPO to ensure that the individuals understand the assignment and that they are following the ethical standards. Transparency is important for attorneys to meet the ethical requirement of competent representation. Attorneys should require their LPOs to consult and inform regularly.
  1. Communication with Client and Confidentiality of Information

MRPC Rule 1.6 imposes a duty on attorneys to keep confidential any client information relating to representation unless the client gives informed consent. However, there is an implied authorization to disclose information necessary for the attorney to properly represent the client. Prior to outsourcing a legal task:

  • Determine whether any confidential client information will be disclosed. If so, the attorney should obtain consent from the client prior to outsourcing. Even if the legal task will not require the disclosure of confidential information, depending on the nature of the task the attorney may still need to inform the client that they will be outsourcing the work.
  • Identify measures for maintaining confidentiality and protecting the security of electronic information. It is important to also ensure that the LPO has non-disclosure and confidentiality agreements in place as a condition of employment. An attorney outsourcing to an LPO should also have a confidentiality agreement directly with the LPO.
  1. Conflicts of Interest

MRPC Rule 1.7 and MRPC Rule 1.8 state that attorneys must avoid cases with a conflict of interest. This naturally extends to all legal tasks that are outsourced. While an LPO is working on a legal task, the attorney must ensure that there are no conflicts of interest between the company and the task. (See, for example, Professional Ethics of the Florida Bar Opinion 07-2.)

When outsourcing a legal task, the attorney should inquire into the LPO’s procedures regarding conflicts of interest. To help ensure that the proper procedures and safeguards are in place, attorneys should ask:

  • Does the LPO keep records of their existing and former clients?
  • How does the LPO track the work it does for other clients?
  • Does it check for conflicts of interest with each employee or independent contractor working on a particular task?
  • Will it turn down work if there is a conflict of interest?
  1. Billing the Client

MRPC Rule 1.5(a) states that attorneys cannot collect an unreasonable fee for the work that they perform. When attorneys contract with an LPO, they will ultimately be responsible for paying the LPO fees. Attorneys then will need to determine how or if they will pass the cost on to the client.

  • If an attorney knows that they will be outsourcing certain tasks, the retainer agreement should state how the costs will be allocated.
  • If it is not stated in a written agreement, the attorney is allowed to charge the client the actual cost incurred by the attorney from the LPO as well as any reasonable overhead associated with the project.

The main goal is that the client is not charged an unreasonable fee for the work performed.