LAW FIRMS LOOK ABROAD TO OUTSOURCE LEGAL ANALYSIS

Houston Business Journal - June 1, 2007
by Lam Nguyen

Like the shoemaker in the popular Brothers Grimm fairy tale, every intellectual property attorney would like to wake up and find his work done during the night.
Because of globalization, the fairy tale has become a reality for some attorneys. Growing numbers of Fortune 500 companies and large law firms are exploring the benefits of outsourcing legal work to entities outside the U.S., known as legal process outsourcing.
Offshore legal service providers are normally staffed by foreign lawyers who are licensed to practice law in a foreign jurisdiction but who are not licensed in any U.S. state.

Countries such as India and the Philippines have a large number of foreign-trained lawyers who are willing to offer legal services at billing rates that are a fraction of the billing rates of large U.S. law firms, but businesses and law firms that consider such outsourcing, however, need to proceed with caution. They need to consider:

Confidentiality: Outsourcing legal work complicates the ability to safeguard confidential information, because a U.S. lawyer might have to share confidential information with the LPO provider. Law firms can mitigate the risks of confidentiality breaches somewhat with standard confidentiality agreements that hold vendors to the same confidentiality standards as U.S. lawyers.

Conflicts of interest: U.S. law firms usually require their lawyers to run extensive conflict checks before agreeing to represent a potential client. An overseas legal provider might provide services to several law firms, making it more difficult to maintain the integrity of a law firm's conflict check procedures. Using the services of a dedicated team of hand-selected Indian lawyers who will provide services only to a specific firm helps avoid this problem.

Accountability: LPO initially began as an outsourcing strategy limited to administrative tasks, such as data entry and document scanning. Success with that work has led more companies and law firms to consider outsourcing work that involves legal analysis. This can be problematic, because only lawyers licensed by a U.S. jurisdiction may lawfully provide legal advice.

U.S. lawyers are accountable for all work product given to a client, even if the lawyer played a limited role in preparing it. Proper supervision helps prevent the unauthorized practice of law by an unlicensed person and helps lawyers avoid malpractice lawsuits. Having all work prepared by the LPO providers reviewed by a firm attorney minimizes this risk.

Client consent: Questions still exist as to whether U.S. lawyers have an ethical obligation to receive their clients' approval prior to using overseas legal services. It is also imperative that LPO arrangements are well conveyed to those they affect.

Only the largest law firms can take advantage of LPO services right now. Despite the 24-hour cycle and cost savings, the logistical and ethical issues involved with launching an LPO initiative and maintaining quality of service represent significant impediments to smaller legal service providers using overseas help.

This makes it unlikely that foreign lawyers will be handling traffic tickets or divorces for U.S. clients any time soon. That's still just a fairy tale.

About the author: LAM NGUYEN is an associate at Haynes and Boone LLP, which, later this year, plans to increase its use of Indian lawyers.