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August 8, 2010

Legal Process Outsourcing and ‘Fly In/Fly Out’ Lawyering Addressed at Ethics 20/20 Commission Hearing in San Francisco

Michael Ford, executive vice president of UnitedLex Corp.,told the ABA Commission on Ethics 20/20 that 85 percent of the legal process outsourcing work his firm performs comes from within the U.S.

Michael Ford, executive vice president of UnitedLex Corp.,told the ABA Commission on Ethics 20/20 that 85 percent of the legal process outsourcing work his firm performs comes from within the U.S.

Legal process outsourcing may be a flashpoint in the profession, but outsourcing legal processes is not a new concept, Michael Ford, executive vice president of UnitedLex Corp., told the _ Commission on Ethics 20/20 at a public hearing during the 2010 ABA Annual Meeting in San Francisco.

In fact, Ford said, outsourcing is a fundamental division-of-labor principle at the foundation of the client-law firm relationship, a supply system optimization.  In-house legal departments and law firms cannot support the range of services needed to address the variety of legal issues arising in daily business operations, on the scale that may be needed.  They typically outsource specific tasks—or legal functions—to paralegals, document reviewers, e‑discovery experts, copy services and expert witnesses.

Multinational law firms and corporations have sent legal work across borders for decades, Ford continued.  Estimating that 85 percent of his company’s work is performed for U.S. lawyers, Ford questioned the importance of geographic barriers when law firm clients or the firm’s supervision is appropriate and meets all standards.

Mark Ross, a solicitor in the United Kingdom and vice president for legal services at Integreon, Inc., opened his testimony by noting that his firm does “not, in any jurisdiction, practice law,” but rather, works under the strict supervision of counsel.

Concern about legal process outsourcing taking over the legal practice in the United States is smoke and mirrors.  Ross stated, “You need to be aware of the reality of this industry.”  Even if LPO achieves a $4 billion annual market, it still is only “approximately 1 – 1 ½ percent of the legal market.”  Concern about moving LPO “up the market chain” also is misplaced, believes Ross, suggesting the real path shifts legal service-related functions “down the market chain.”  In the United Kingdom, Ross said, solicitors who once received 1,000₤ for refinancing a mortgage now may earn only 50₤.

Often the impetus for outsourcing legal processes is client demand, noted Ross, but he added that his company views law firms as collaborative partners in serving client needs.  While some clients insist on paying only the cost of outsourcing, others appreciate the value of supervision, lawyer oversight and malpractice insurance, he added.

“I’ve never met a corporate counsel who does not want that law firm to make a good living.  What they want is for the law firm to understand the value a corporation is looking for.  If you provide the value the client is looking for, that is the issue,” stressed Ross.

When asked what role legal process outsourcing provides in lawyer career paths, Ross stated that law schools “need to wake up and smell the coffee.”  Curricula need expanding to include business development, communication, networking and people management skills, as well as the fundamentals of law.

Peter D. Ehrenhaft, of Washington, D.C., addressed a different issue—fly in/fly out lawyering on an international scale, and its implications for unauthorized practice concerns.

Ehrenhaft has practiced transactional law for both U.S. and foreign clients most of his 50 years as a lawyer.  While he suggested his career “has not been run-of-the-mill … neither has it been unusual.”  There are hundreds of U.S. lawyers, he speculated, “engaged in FIFO practice around the globe.”  Ehrenhaft continued, “Not once during [my 50 years] has any question been raised by any regulatory body overseeing the delivery of legal services in this country or overseas about either my services or those of counsel” working on my side or on the opposite side of the table.

That is true despite the fact “none of the ‘foreign’ lawyers in the room (either I or another) had in, any way, been authorized to provide such services in the jurisdiction in which we were working.”  He cited the example of a meeting at the Amsterdam Airport between the CEOs of a Swiss firm and the Italian client he represented, during which the Italian client’s acquisition of a division of the Swiss company operating in Germany was discussed.

Ehrenhaft served on an ABA Commission on Multijurisdictional Practice that addressed domestic lawyers traveling around the United States.  While he noted that most U.S. jurisdictions have adopted that commission’s recommendations regarding domestic cross-border practice, the commission’s suggestions regarding FIFO by foreign lawyers have not been adopted.

His advice was for the commission to “use its 20/20 vision for 21st century insights” and not propose unneeded rules that won’t be enforced.  “The rules that seem to limit or bar FIFO practice by foreigners are disregarded and are not enforced,” Ehrenhaft said, suggesting there be no distinction between foreign lawyers and lawyers licensed in sister U.S. states.

“I would urge even further that FIFO in person or through delivery of services by other means should be recognized and allowed as valid.”  Other rules should subject persons and entities to local law and penalties for harm they cause, whether or not they are physically present, he said.

“The sole license to be required for any lawyer should be modeled on our driver’s licenses — issued on a showing of competence to an authority in the place of the driver’s residence and valid almost globally for ‘FIFO’ driving.”

More information on the work schedule, issues being addressed and comment received can be found online at the Commission on Ethics 20/20’s website.

Comments (1)

  • PrimeOutsourcing
    12:10 PM August 1, 2012

    Thanks for the sharing the video and article of yours! :) I really like the idea of how we can innovate ideas in the world of business.. Outsourcing started from the availability of staff until we realized that we can even outsource staff from different kind of fields of their specialty. That’s how LPO became involved, and it made processing more convenient and beneficial.