ABA Ethics Committee Issues Opinion Detailing Lawyer Responsibilities When Outsourcing Legal Work Domestically or Internationally

BY Nancy Cowger Slonim| American Bar Association News Release

U.S. lawyers are free to outsource legal work, including to lawyers or nonlawyers outside the country, if they adhere to ethics rules requiring competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law.

Those are the conclusions of the American Bar Association Standing Committee on Ethics and Professional Responsibility, which describes outsourcing as a salutary trend in a global economy.  Many lawyers do outsource work, using lawyers or nonlawyers as independent contractors, hiring them directly or through intermediaries and on temporary or ongoing bases, says the committee.

Outsourcing can reduce client costs and enable small firms to provide labor intensive services such as large, discovery intense litigation, even though the firms might not maintain sufficient ongoing staff to handle the work, according to a new ethics opinion issued today.   Ethics Opinion 08-451 details ethics obligations of lawyers and firms that do elect to outsource legal work.

Outsourcing lawyers are subject, like all lawyers, to an obligation to render competent legal services, and lawyers who supervise other lawyers or nonlawyers in performing legal services are responsible for assuring the individuals they supervise comply with ethics rules governing lawyers.  The committee notes that outsourcing lawyers may face challenges in assuring competence and in overseeing work by others, particularly when separated by thousands of miles and substantial time differences.  Minimally, outsourcing lawyers should conduct reference checks and background investigations of lawyer or nonlawyer service providers and any intermediaries.  They may also wish to interview principal lawyers on a project, assessing their educational background, and evaluate the quality and character of any employees likely to access client information, review security systems, and even visit the premises of the service provider.

If the provider is in a foreign country, the outsourcing lawyer should determine whether the legal education system in that country is similar to that of the U.S., and whether professional regulatory systems incorporate equivalent core ethics principles and effective disciplinary enforcement systems.  Some circumstances may require more rigorous supervision than others, according to the committee.  The outsourcing lawyer also should determine whether the foreign legal system protects client confidentiality and provides effective remedies to the lawyer’s client in case disputes arise.

Depending on the level of supervision contemplated by the outsourcing lawyer, it might be necessary to obtain informed client consent before engaging outside assistance.  Informed consent also may be required to reveal confidential information, and the outsourcing lawyer should recognize and minimize the risk that a service provider might breach confidentiality, says the committee, suggesting written confidentiality agreements are “strongly advisable.”

Regarding fees, the opinion says outsourcing lawyers may pass along to the client the costs of using the service provider, including a reasonable allocation of associated overhead expenses, but “no markup is permitted.”  The committee also acknowledges it lacks authority to express an opinion about whether any particular service provider is engaging in unauthorized practice of law, but cautions that if the service provider is found to be not authorized to practice law, and the outsourcing lawyer facilitated that violation, the outsourcing lawyer will have violated ethical rules.

The ABA Standing Committee on Ethics and Professional Responsibility periodically issues ethics opinions for the guidance of lawyers, courts and the public interpreting and applying the ABA Model Rules of Professional Conduct to specific issues of legal practice and client-lawyer relationships.

The opinion is available from the ABA Center for Professional Responsibility at https://www.abanet.org/cpr.

With more than 413,000 members, the American Bar Association is the largest voluntary professional membership organization in the world.  As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.