Ethics 20/20 Commission Releases Draft Report on Outsourcing, Seeks Feedback

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The ABA Commission on Ethics 20/20 today issued the latest in a series of discussion drafts on various topics relating to globalization and technology.

But commission representatives also cautioned that it is too early to interpret any of the drafts as the final word on recommendations that eventually will go to the ABA’s policymaking House of Delegates.

The discussion draft (PDF) issued today addresses ethics issues that law firms should take into account when they outsource work to lawyers and nonlawyers in the United States or overseas.

In terms of substance, the draft contains no dramatic changes in the ABA Model Rules of Professional Conduct to account for the growing use of outsourcing by U.S. firms. But the draft does set forth comments to three model rules recognizing that lawyers may outsource work as long as they take reasonable steps to assure that the work is performed in accordance with ethics standards for U.S. lawyers. (The Model Rules are the direct basis for lawyer ethics codes in every state except California.)

“We’re in an outreach mode of soliciting public comment,” says Kathryn A. Oberly, a judge on the District of Columbia Court of Appeals who chairs the outsourcing working group of the Ethics 20/20 Commission. “It’s a draft proposal, but we’re not wedded to it. The point of our draft is to get comments from anybody and everybody who wants to comment on it. We’ll see what people have to say.”

Outsourcing has been a hot-button issue for some who view it as a threat to employment prospects for lawyers during the recession, even though the discussion draft notes that most outsourced legal work goes to lawyers or support services in the United States rather than overseas.

Some skeptics about outsourcing are concerned that an ABA ethics opinion issued in 2008 already opened the door to more use of outsourcing by U.S. law firms.

In Formal Ethics Opinion 08-451 (PDF issued Aug. 5, 2008), the Standing Committee on Ethics and Professional Responsibility concluded that “There is nothing unethical about a lawyer outsourcing legal and nonlegal services, provided the outsourcing lawyer renders legal services to the client with the ‘legal skill, thoroughness and preparation reasonably necessary for the representation’ ” under Rule 1.1 of the Model Rules. “The challenge for an outsourcing lawyer is, therefore, to ensure that tasks are delegated to individuals who are competent to perform them,” states the opinion, “and then to oversee the execution of the project adequately and appropriately.”

The Ethics 20/20 discussion draft covers some of the same ground as Ethics Opinion 08-451, and does not find inherent ethics barriers to outsourcing, but it makes a point to acknowledge concerns about the practice.

“The Commission was particularly sensitive to the current employment market for lawyers and the economic hardships faced by those lawyers currently seeking jobs, particularly young lawyers,” states the draft. “The changes to the Comments to Rules 1.1, 5.3, and 5.5 of the Model Rules of Professional Conduct recommended herein constitute neither endorsement nor rejection of the practice of outsourcing by lawyers and law firms. Rather, they are an important and direct response to the existence and growth of outsourcing practices, intended to help lawyers engaging in the practice to do so ethically and responsibly.”

The initial approach to outsourcing also may be appropriate for other issues the commission is studying, says Jamie S. Gorelick, one of its co-chairs. “We have a set of principle-based model rules,” says Gorelick, a partner at Wilmer Cutler Pickering Hale and Dorr in Washington, D.C., “so in many instances it might be the commentary that needs adjusting to explain how those principles apply.”

(The commission’s other co-chair is Michael Traynor, senior counsel to the Cobalt law firm in Berkeley, Calif., and president emeritus of the American Law Institute.)

The commission is seeking to receive comments through January. After that, the outsourcing working group will review its draft before preparing a final version for consideration by the full commission and then, depending on the nature of the final recommendations, by the House of Delegates. While no specific schedule has been set, the commission expects to submit most of its recommendations for consideration by the House during 2012.

In addition to outsourcing, the commission has created working groups on implications of new technologies, which has issued two discussion drafts; inbound foreign lawyer issues, which has issued one discussion draft; law firm rankings and ratings; conflicts of interest, uniformity and choice of law; entity regulation and alternative business structures; and alternative litigation financing.

“I think we have some interesting questions to ponder,” says Gorelick, “and we’re getting a lot of input.”

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