Publishing the most detailed guidance on legal outsourcing (LPO) since 2008, the American Bar Association (ABA) Commission on Ethics 20/20 recently released proposed ethical amendments to its Model Rules.

The proposed draft amendments come after a series of meetings and various working group initiatives dating back to 2009.

The amendments provide guidance for commentary on Model Rules 1.1, 5.3 and 5.5, which deal with the competence of services provided to a client and the responsibilities of managing both lawyer and non-lawyer assistants. Amendments are closely aligned to the reports originally published on the LPO Ethics Resource Center in October this year.

Many industry participants welcomed the announcement of targeted guidance on areas such as supervision, client disclosure and collaboration with attorneys based in outside jurisdictions as opposed to a blunt referendum on the practice of LPO.

A key initiative set forth in the ABA’s recommendations is that when outsourcing legal and legal support services, the outsourcing law firm must ensure that “the other lawyers’ services will contribute to the competent and ethical representation of the client.”

While far from ratification, the recent release provides welcome direction for legal professionals seeking to prepare for upcoming regulatory obligations. While the full implications of the proposed changes is far from clear, the general essence of the guidance appears to avoid sweeping regulatory shifts regarding the practice of LPO.

The Commission is now actively seeking feedback from all interested stakeholders on proposed amendments before further review in the new year.

For the near term, legal professionals and industry participants can engage the Commission and prepare for possible alterations in their outsourcing initiatives.

The Commission pushed back earlier plans to submit its recommendations to the ABA House of Delegates from February 2011 to the current deadline in August 2011.

The ABA Commission on Ethics 20/20 is the body set up by the organization to review the ethical implications of technological advances and globalization in the legal profession. The growing popularity of legal process outsourcing has led to significant discussion by the Commission about potential Model Rule changes.

The American Bar Association (ABA) Commission on Ethics 20/20, the body charged with reviewing the ethical implications of technological advances and globalization in the legal profession, has moved away from significant changes to the rules governing legal outsourcing.

Instead, at a series of meetings in Chicago this month, the organization elected to make minor changes to the commentary on Model Rules 1.1 and 5.3, which deal with the competence of services provided to a client and the responsibilities of managing non-lawyer assistants.

The decision, which was supported by the majority of commission members, makes the prospect of more stringent rules restricting the growing practice of outsourcing legal work less likely.

The resolution comes after fractured discussions at the previous August meetings held at the ABA Annual meetings in San Francisco.

Based on the October proceedings, the commission plans to make the edited commentary publically available as early as mid-November of this year.

The proposed commentary changes will bolster the importance of ensuring the competence of outside legal vendors as well as the importance of adequate supervision and monitoring.

Part of the progress made by the commission can be attributed to its expanded cooperation with related ABA bodies including the Standing Committee on Ethics and Professional Responsibility and the Section for International Law.

The meetings, held on October 15^th at the ABA’s Chicago headquarters on 321 North Clark, were attended by Fronterion Managing Principal Michael Bell. At the conclusion of the proceedings, Bell addressed the commission expressing his affirmation of its progress.

The American Bar Association (ABA) has stepped up its review of the ethical implications of legal outsourcing by holding a series of meetings with law firms, clients and LPO vendors in San Francisco.

The ABA Commission on Ethics 20/20, which was set up to assess rules governing the profession, held two days of meetings and public hearings at the Palace Hotel during the American Bar Association’s annual convention in early August.

Speakers included Michael Ford, executive vice president of outsourcing firm UnitedLex, and Mark Ross, vice president for legal services at Integreon. Both addressed the complex regulatory challenges posed by the globalization of legal services.

Key issues at the convention included guidelines for managing and supervising the work of attorneys overseas and the tri-party relationship between lawyers, their clients and outside vendors.

Washington DC based Peter Ehrenhaft, of Harkins Cunningham LLP, spoke about the need for new rules not to restrict the movement of legal expertise between countries.

Ethics commission members discussed different approaches to amending the current ABA rules governing outsourcing of legal services. The results of the commission’s work are expected to be revealed in recommendations made to the ABA House of Delegates in February 2011.

Established in August 2009, the ABA Commission on Ethics 20/20 is charged with assessing the ethical implications of changes in the legal profession resulting from the advancement of technology and globalization. Support and reinforcement of the importance of the work of the commission was highlighted in short addresses given by outgoing ABA president Carolyn Lamm and incoming president Stephen Zack.

Previous ethical guidance on legal outsourcing issued by the ABA can be found here at the Fronterion LPO Ethics website (www.lpoethics.com). Fronterion is a leading independent legal outsourcing consulting firm, helping law firms and corporations find solutions to their legal outsourcing needs.

For more guidance on legal outsourcing, including the ethical implications, contact us at: info@fronterion.com / +1.312.473.4887

The event of most interest to me was the public hearing concerning the legal outsourcing industry. Michael Ford of UnitedLex and Mark Ross of Integreon, two thought leaders in the legal outsourcing industry, spoke.

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Today’s proceedings commenced at 9:00 am with introductory remarks given by the Commission chairs, followed by updates from the heads of various working groups. Short speeches were also given by outgoing president Carolyn Lamm and incoming president Stephen Zack.

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A new study by consulting firm Fronterion has found that while many United States law firms are using legal outsourcing providers for the first time, few are willing to admit it in public, leading to a culture of secrecy around an increasingly important development within the legal services industry.

In a Fronterion survey of 30 top US firms in the Am Law 50, some 83 percent declined to comment on whether they had used legal process outsourcing (LPO) providers, despite the fact that responses were confidential.

Just one firm confirmed that it has carried out LPO while, to date, no firms in the AM Law 50 have made public announcements about the issue. Thirteen percent of firms contacted said they were not outsourcing.

However, using its own primary source market research, Fronterion conservatively estimates that between 65 and 75 percent† of top 50 firms have used or are currently using LPO providers, either on an ad-hoc basis at the request of clients or through official agreements.

Many law firms cited the sensitivity of the issue as a reason for not participating in the survey.

Fronterion managing principal Michael Bell argues that transparency benefits both the law firm and its clients. With this in mind, Fronterion has launched a new website, the LPO Ethics Resource Center, focusing on legal outsourcing ethics. The website features breaking news, online resources and current positions in jurisdictions in both the US and the United Kingdom (www.lpoethics.com).

“Much of the reticence we are seeing by law firms to acknowledge their use of legal outsourcing vendors stems from ambiguity over ethical issues,” Bell said. “Working with outside vendors, if handled correctly, can be a clear selling point for a firm eager to stand out from the crowd.

“The basis for our LPO Ethics website is completely market-driven. Legal professionals have an inordinate number of questions on basic ethical issues such as oversight, pricing mark-ups and client disclosure, and they didn’t have a reliable, informative online resource to turn to. Now they do.”

In recent months, a number of large UK firms have made public announcements about deals with LPO providers and the potential cost savings they can offer their clients.

The growing popularity of legal outsourcing has also attracted the attention of regulators and bar associations. The UK’s Law Society has begun a consultation into the impact of outsourcing on the profession, trade magazine The Lawyer reports.

Further, the Solicitors Regulation Authority has issued its first public statement on the topic of legal outsourcing this week. The SRA release states, “Where law firms are outsourcing some of their legal or administrative work to other law firms or non law firms, the SRA’s guidance is that this is allowed on the basis that all relevant rules are complied with (Solicitors’ Code of Conduct 2007) and that the arrangement is made transparent and is agreed with the client.” The complete statement by the SRA is available on the LPO Ethics website (www.LPOethics.com).

Meanwhile, the American Bar Association is holding a public forum in San Francisco in August to explore the ethical issues surrounding outsourcing as part of its Commission on Ethics 20/20.

Along with transparency, ethical considerations in legal outsourcing include: how to manage staff when positions are moved offshore or to low-cost onshore service centers, how to supervise and maintain the quality of work carried out by external organizations, and how to set the pricing structure when law firms bill clients for work carried out in conjunction with an LPO provider.

“There are certainly a number of important issues to address when implementing a successful legal outsourcing engagement,” said Bell. “One of the most important indicators of success that we have seen is when firms take a firm-wide or enterprise approach to ensure that all legal and ethical issues are appropriately addressed, and that employees feel included in the process.”

† The basis for the Fronterion estimate on LPO penetration of AM Law 50 firms – ranging from 65%-75% – is a composite scoring of LPO vendor reporting, legal outsourcing initiatives implemented by general counsel that involve their outside counsel, the number of declines by AM Law 50 firms from the current study and Fronterion’s experience working with similar peer firms.

For the purposes of the study, Fronterion defined legal outsourcing as working with outside vendor(s) on either an ad hoc or through established relationship for the delivery of legal and legal support services. Such services may include, but are not limited to document review, contract management, intellectual property support and litigation support. Traditional legal staffing, back office services such as IT and accounting/finance, and low-level legal support such as transcription and typing services where not included in this study.

]]> http://lpoethics.com/united-states/wall-of-silence-surrounds-emerging-legal-outsourcing-industry/feed/ 0 http://lpoethics.com/united-kingdom/sra-first-to-weigh-in-on-the-practice-of-legal-outsourcing/ http://lpoethics.com/united-kingdom/sra-first-to-weigh-in-on-the-practice-of-legal-outsourcing/#comments Tue, 06 Jul 2010 23:01:59 +0000 mbell2 http://lpoethics.com/?p=653 The Solicitors Regulation Authority (SRA) issues its first public statement on the ethics of legal outsourcing.]]>

The Solicitors Regulation Authority (SRA) issues its first public statement on the ethics of legal outsourcing which OKs the practice as long as contingent ethical obligations are satisfied, including client disclosure.

As originally reported by the LPO Ethics Resource Center (www.LPOethics.com), the Solicitors Regulation Authority (SRA) statement reads, “Where law firms are outsourcing some of their legal or administrative work to other law firms or non law firms, the SRA’s guidance is that this is allowed on the basis that all relevant rules are complied with (Solicitors’ Code of Conduct 2007) and that the arrangement is made transparent and is agreed with the client.”

The statement continues with the citation of existing ethical guidelines, which the SRA deemed applicable to outsourced legal services.

In its conclusion, the SRA notes, “In accepting work from a client, the firm must always consider whether the work should be outsourced at all as they should have the necessary resources and competency to undertake the task. In summary, a firm must act in the best interests of their client and comply with their core duties.”

Managing principal of Fronterion Michael Bell said “We believe this is the first public statement issued by the SRA on the issue of outsourced legal services and expect further guidance to follow this statement by other representative bodies.”

The complete statement by the SRA is available on the LPO Ethics website.

Preceding the SRA’s public statement, United Kingdom’s Law Society began a consultation into the impact of outsourcing on the profession, trade magazine The Lawyer reports.

The recent singular announcement by the SRA stands in contrast to multiple comments made by legal organisations in United States. Ethical guidance has been provided in some US jurisdictions as early as 2006. The most notable guidance in the United States is Opinion 08-451 issued by the American Bar Association Standing Committee on Ethics and Professional Responsibility in 2008.

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A public forum on the ethical implications of legal outsourcing is to be held in San Francisco in August as part of a drive by the American Bar Association to respond to the fast-growing new industry.

The ABA Commission on Ethics 20/20 is hosting an open meeting and public forum on August 6th in San Francisco as part of the Commission’s continued efforts to address the ethical implications of legal outsourcing domestically and abroad.

The meeting is scheduled to follow a similar format as the spring ABA Section of International Law meetings in New York this past April. The April meetings included panel discussions and public hearing sessions in which audience members were encouraged to address the Commission members in attendance.

At this juncture, the objective of the Commission is to explore and research the issues surrounding legal outsourcing, but the Commission is not expected to make any definitive statements regarding ethical or regulatory issues. Rather, the Commission plans to continued exploration and research of the legal outsourcing industry landscape.

The Commission is currently reviewing topics on the agenda for the upcoming meetings and should make these topics available within the next several weeks.

The public hearings are part of the Commission’s broader dedication to solicit public comment from legal professionals, law firms, legal outsourcing vendors and others on issues related to legal outsourcing.

The ABA Commission on Ethics 20/20 was established in August 2009 as part of a projected three-year initiative to study the ethical and professional regulatory implications of a globalizing and technologically-advancing legal profession. A prominent focus of the Commission includes legal outsourcing in both domestic and international contexts.

The Commission’s study of the ethical implications of legal outsourcing follows Formal Opinion 08-451 issued by the ABA Standing Committee on Ethics and Professional Responsibility in August 2008.

The Law Society of England and Wales, the representative and regulatory body for solicitors in England and Wales, is in the process of reviewing the growth and impact of LPO in the legal profession with a view to making recommendations and providing guidance for its members. To date, the Law Society has not released any details on its timeline or what legal professionals can expect in the way of guidance.

Only recently, the Solicitors Regulation Authority released its first public statement on the practice of legal outsourcing.

LPO has caught the attention of a number of UK-based legal professionals with several landmark deals grabbing headlines in the past 12-18 months.

Unlike the UK, US courts, bar associations and other organizations have published a number of ethical issuances, including the American Bar Association’s Formal Opinion 08-451 released in 2008.