1. Outsourcing: The Ethical Issues Steven M. Richman November 2014

2. Defining Legal Process Outsourcing Delegation to a third party of traditional legal tasks Research, drafting, document review and other tasks generally performed by a lawyer or specialist, as in case of patent claim drafting In brief, it is the delegation of tasks to those outside the law firm retained to perform such tasks

3. Previously “Accepted” Outsourcing Domestic Per Diem Lawyers (deposition coverage, document review) Local Counsel in Other Jurisdictions Jury Selection Companies Specialist “co-counsel” In short, certain “outsourced” functions, like having an independent lawyer cover a deposition, have been around a long time.

4. What is New: The “Foreign” Element Affiliates of domestic law firm Foreign Law Firms Foreign Non-Law Firms In short, what is new has been the technology that enables significant work to be done beyond U.S. borders by either lawyers or non-lawyers, with near- instantaneous transmission of results and communication and economic advantages

5. Ethical Issues Supervision, Responsibility and Control Disclosure and Client’s Acceptance of the Scope and Details of the proposed Outsourcing Protection and Assurance of Client Confidentiality Conflicts of Interest Competent Representation and Independent Legal Judgment Compliance with Requirements regarding Attorneys’ Fees

6. Supervision, Responsibility and Control ABA Model Rule 1.1: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

7. Disclosure and Client’s Acceptance of the Scope and Details of the Proposed Outsourcing ABA Model Rule 1.2 (a) – Scope of Representation and Allocation of Authority Between Client and Lawyer states, in pertinent part, that “a lawyer shall abide by a client’s decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation…”

8. Conflicts of Interest ABA Model Rule 1.7 – Conflicts of Interest relative to Current Clients states that (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.

9. Protection and Assurance of Client Confidentiality ABA Model Rule 1.6(a) – Confidentiality of Information provides that “[a] lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).”

10. Competent Representation and Independent Legal Judgment ABA Model Rule 5.1 defines responsibilities of partners, managers, and supervisory lawyers, requiring “reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance” of compliance with applicable rules, and allocating responsibility for specific conduct. ABA Model Rule 5.3 provides similar provisions regarding non- lawyer assistance.

11. Compliance with Requirements regarding Attorneys’ Fees ABA Model Rule 1.5 requires that a lawyer may not collect an unreasonable fee or unreasonable expense. Other rules may impact, including Model Rules 1.4 (communication with client; reasonably consult), 7.1 (communications concerning a lawyer’s services; no misrepresentations) and 1.3 (diligence) Reasonableness factors include (1) the time, labor, novelty and difficulty of issues, and necessary skill; (2) likelihood acceptance of job will preclude other work by the lawyer; (3) fee customary in locality for such services; (4) amount involved and results obtained; (5) time limitations; (6) nature and length of client; (7) experience, reputation, and ability of the lawyer; and (8) whether fee is fixed or contingent.

12. Ethics Opinion Responses ABA Formal Opinion 08-451 provides that lawyers may outsource legal or nonlegal support services provided the lawyer remains ultimately responsible for rendering competent legal services to the client under Model Rule 1.1. ABA Opinions are NOT ABA policy and do not bind any jurisdiction, but may be persuasive

13. Individual Bar Associations Sampling New York City Bar Committee on Professional and Judicial Ethics Formal Opinion 2006-03 states that “the New York lawyer must be both vigilant and creative in discharging the duty to supervise.” San Diego Bar Association Ethics Opinion 2007-1 states that in order for work to be done competently, the lawyer retaining the overseas firm “must have an understanding of the legal training and business practices in the jurisdiction where the work will be performed, including the educational background and credentials of those actually doing the work.” Los Angeles County Bar Association Professional Responsibility and Ethics Committee Opinion No. 518 states that an attorney may contract with an out-of-state company to draft a brief “provided the attorney is competent to review the work, remains ultimately responsible for the final work product, does not charge an unconscionable fee, protects client confidences and secrets, and there is no conflict of interest between the client and the contracting entity. The attorney may be required to inform the client of the nature and scope of the contract between the attorney and out of state company if the brief provided is a significant development in the representation or if the work is a cost which must be disclosed to the client under California law.”

14. ABA House of Delegates amended comment to Rule 1.1 (Competence) to state: [6] Before a lawyer retains or contracts with other lawyers outside the lawyer’s own firm to provide or assist in the provision of legal services to a client, the lawyer should ordinarily obtain informed consent from the client and must reasonably believe that the other lawyers’ services will contribute to the competent and ethical representation of the client. See also Rules 1.2 (allocation of authority), 1.4 (communication with client), 1.5(e) (fee sharing), 1.6 (confidentiality), and 5.5(a) (unauthorized practice of law). The reasonableness of the decision to retain or contract with other lawyers outside the lawyer’s own firm will depend upon the circumstances, including the education, experience and reputation of the nonfirm lawyers; the nature of the services assigned to the nonfirm lawyers; and the legal protections, professional conduct rules, and ethical environments of the jurisdictions in which the services will be performed, particularly relating to confidential information. [7] When lawyers from more than one law firm are providing legal services to the client on a particular matter, the lawyers ordinarily should consult with each other and the client about the scope of their respective representations and the allocation of responsibility among them. See Rule 1.2. When making allocations of responsibility in a matter pending before a tribunal, lawyers and parties may have additional obligations that are a matter of law beyond the scope of these Rules.

15. Concluding Comments On a certain level, legal process outsourcing implicates no new ethical issues, merely the application of those in place to more frequent international contexts. On the other hand, while choice of law analysis may accommodate the ethical issues, the increasing frequency of the issues may warrant specific commentary or rules modification.

16. Resources The comments in this presentation have been drawn from the ABA 20/20 report as well as the Section of International Law Section report and article on legal process outsourcing in International Law News. For further information, see www.abanet.org/intlaw.www.abanet.org/intlaw smrichman@duanemorris.com