According to the recently enacted American Bar Association Ethics Opinion 08-451, U.S. lawyers and firms can outsource legal work provided that they adhere to ethic rules on "competence, supervision, protection of confidential information, reasonable fees, and not assisting unauthorized practice of law." The American Bar Association ("ABA") opinion was published one month after the Florida Bar Board of Governors had approved an ethic advisory opinion (07-02) authorizing both domestic and foreign legal outsourcing.
The ABA groups all attorneys who are admitted to any U.S. state bar association. Attorneys are required to follow both the ABA ethic rules and those imposed by the state bar in which the attorney is admitted to practice law. Just as the Florida Bar now allows its members to outsource legal work, other state bar associations are expected to follow the ABA's and the Florida Bar's steps regarding legal outsourcing.
On August 25, 2008, the ABA Standing Committee on Ethics and Professional Responsibility ("the Ethics Committee") rendered its opinion authorizing U.S. lawyers and firms to outsource legal work to domestic and foreign attorneys and paralegals. The ABA Ethics Committee considered this a "salutary trend in a global economy" and a favorable economic measure for small firms that do not have sufficient staff to handle complex litigation work.
Attorneys or firms outsourcing legal services, however, still have to comply with strict ethic rules regarding supervision of employees, confidentiality, legal fees, and unauthorized practice of law. ABA Ethics Opinion 08-451 requires, i.e., that attorneys outsourcing legal services supervise other lawyers and/or non-lawyers to assure that they comply with rules governing lawyers. While the ABA Ethics Committee acknowledges supervision of outsourcing services is challenging, it recommends that U.S. attorneys, at least, conduct reference checks and background investigations of the foreign legal providers and their intermediaries; personally interview the foreign attorney in charge of the project; access the foreign attorney's credentials and qualifications; assess the foreign legal system regulating attorneys and educational requirements for attorneys to make sure they meet the U.S. standards; evaluate the quality and character of the foreign attorney's employees and their access to clients' personal information; analyze the foreign company's security systems; and visit the foreign legal provider premises. The ABA Ethics Committee noted that the degree of supervision may vary depending on the type of service outsourced.
U.S. attorneys are subject to strict ethic rules on confidentiality. Thus, the ABA Ethics Committee advised U.S. attorneys to assess confidentiality rules in the foreign country and the specific country's mechanisms available for clients in case of confidentiality breach. Additionally, the ABA Ethics Committee suggests that U.S. attorneys should obtain the client's consent before engaging in foreign outsourcing. Indeed, written confidentiality agreements are strongly advised; especially in those cases where confidential information is going to be revealed to foreign legal providers.
Regarding fees, U.S. attorneys outsourcing legal services must follow the same ethical rules on legal fees. They may charge clients for reasonable outsourcing costs and services but "no markup is permitted."
While the unauthorized practice of law is seriously regulated in the U.S. and the ABA Committee acknowledged it had not jurisdiction to control this practice in foreign countries, it emphatically noted that if the foreign attorney is found not to be authorized to practice law, the U.S. attorney outsourcing will be responsible for this violation and will be subject to the respective bar sanctions.
One July 25, 2008, just a month before the release of the ABA Ethics Committee's opinion, the Florida Bar Board of Governors (the" Fl. Board of Governors") approved ethics advisory opinion 07-02 which authorized domestic and foreign legal outsourcing. The Board of Governors, after more than 12 months of debates on this issue, decided that there is no ethical violation when a Florida attorney sends paralegal work oversees provided that client's information is kept confidential, supervision is conducted, and rules on unlicensed practice of law, supervision of non-lawyers, conflicts of interest, confidentiality, and billing are followed. The Board of Governors was particularly concerned with the transfer of clients' confidential information and the possibility of disclosure of others' sensitive information such as an opposing party or third parties. They feared that in some cases, not only the clients' sensitive information was to be sent abroad but third parties' information. The final ethic opinion did not include any specific rule regarding this issue and it was left open for further debate. Finally, the opinion did not make it mandatory, only advisable, to inform clients on legal outsourcing of their cases.
Undoubtedly, these ethics opinions are following the path of the no-stopping economic globalization. Legal outsourcing reduces costs and benefits law firms (it may not benefit the U.S. economy as more jobs- in this case legal jobs- will be shipped abroad). But, are U.S. corporate clients willing to let their confidential information fly to other countries? Are wealthy U.S. clients enthusiastic about sending their finances or private information abroad? Does the ordinary and middle class client understand how his confidential information may be compromised? As an attorney, I like this measure because it reduces my overhead and gives me a competitive advantage; but as a client, I would like to have the right to decide whether my information should be processed by other country's attorneys and staff. It should not be a surprise to know that the ethic rules regulating U.S. attorneys are stricter than those in foreign countries where outsourcing services are popular. Foreign attorney ethical standards should be carefully reviewed by any attorney using legal outsourcing services or multiple disciplinary sanctions may follow.