Outsourcing Legal Work is Here to Stay, Say ABA Experts
By Ira Pilchen
_ News Service
Aug. 7, 2011
TORONTO–Marc W. Joseph, general counsel for Dallas-based Haggar Clothing Co., first hired outside lawyers 20 years ago when he was heading a major antitrust case for another company and needed document coding.
“In those days we really didn’t think much about the ethical side, it was more in terms of getting the work done,” Joseph told participants at an _ Annual Meeting panel Aug. 6 titled “The Ins and Outs of Contracting Out Legal Work.” The Section of Labor and Employment Law sponsored the session.
For a lawyer, outsourcing can apply to needs ranging from non-legal tasks, such as scanning documents from paper to digital form, to work that requires a lawyer, such as counsel in an area of law unfamiliar to the outsourcer. When it comes to hiring such assistance, Joseph said his attitude mirrors that of his apparel company, which outsources every aspect of production.
“Outsourcing is not only here to stay, but it will grow,” said fellow panelist Mauricio Paez, a partner with Jones Day in New York. Paez advises global clients on privacy and data protection, and strategic sourcing and outsourcing matters.
Panelists shared observations about how lawyers can best outsource work while ensuring quality control, avoiding conflicts of interest and not running afoul of ethics rules.
Gwen Handelman, a scholar in residence at Nova Southeastern University in Fort Lauderdale, Fla., and an ethics co-chair for the Section of Labor and Employment Law, noted that the ABA has worked on ethics issues involving outsourcing for the past 20 years. As part of its review of the ABA Model Rules of Professional Conduct, in light of the globalization of business and advances in technology, the ABA Commission on Ethics 20/20 is developing proposals on outsourcing issues, she pointed out.
Joseph relayed his due diligence when farming out legal and non-legal work. He checks references and visits the firm or company personally, to interview the employees and supervisors. He asks about the firm’s financials and how it protects client information.
To Paez, the paramount consideration involving outsourcing arrangements is cost-effectiveness, followed by competence and maintenance of confidentiality of information.
Andrew Altschul, who founded a small employment law boutique firm in Portland, Ore., said that another important consideration involves what to charge clients for outsourced work.
If the lawyer added value to the outsourced work through supervision or review of the work product, Altschul said, then the lawyer may pass that extra cost on to the client. Otherwise, he said, the lawyer can pass on only the actual cost. In the meantime, he added, it’s important to be clear and upfront with the client what the costs are.
A law student in the audience asked panelists for their views on whether outsourced legal work has a detrimental effect on lawyers who are having trouble finding work. Paez said he believes that lawyer unemployment is cyclical and expects that it will eventually fall. Altschul observed that increased use of outsourcing actually provides more employment options for lawyers, such as part-time work arrangements.
Moderator Allan Hutchinson, a law professor at York University in Toronto, summed up the session at its conclusion: “The lesson is that outsourcing is a risky business and that lawyers would do well to take a more rigorous approach to these issues.”