by Wilton H. Strickland

Legal outsourcing offers many benefits to attorneys, such as saving money on associates, avoiding the specter of employment liability, gaining flexibility in the type and amount of work, and freeing up schedules to do more worthwhile things than research or write. There are, however, certain pitfalls to avoid, and a chief one is knowing when to obtain the client’s consent.

A Panoply Of Vague Opinions

The American Bar Association (ABA) and numerous state and local bar associations have discussed client consent for outsourcing, but the picture is somewhat murky.

ABA Formal Opinion 08-451 was a watershed moment in the practice of law, as it fully embraces the benefits of legal outsourcing and gives guidance on how to do it in an ethical manner. Regarding client consent, the Opinion states that consent “may be necessary” if the outside work will not be closely supervised.” The Opinion becomes a little clearer when discussing confidential information protected by Rule 1.6 of the Model Rules of Professional Conduct: “[W]here the relationship between the firm and the individuals performing the services is attenuated, as in a typical outsourcing relationship, no information protected by Rule 1.6 may be revealed without the client’s informed consent.”

In other words, Opinion 08-451 suggests that consent is not necessary if 1) the outsourcing attorney will closely supervise the outside work, and 2) the outsourcing attorney will not share confidential information.

What complicates the picture slightly is ABA Resolution No. 105C, which was approved in 2012 to add outsourcing commentary to certain of the Model Rules. The new commentary to Rule 1.1 states that an attorney “should ordinarily obtain informed consent from the client” before contracting with outside attorneys for assistance. This seems to establish a default requiring client consent, going beyond Formal Opinion 08-451. Yet page 5 of the Report attached to Resolution 105C elaborates further: “The Commission was reluctant to conclude that consent is always required, because consent may not be necessary when a nonfirm lawyer is hired to perform a discrete and limited task, especially if the task does not require the disclosure of confidential information.”

So, once again, attorneys confront ambiguity because client consent “may not” be necessary in the right circumstances. Adding to the confusion is a collection of state and local ethics opinions, many of which the ABA cited when declaring its own stance, such as the following:

    • New York City Bar Association Opinion 2006-3 — This opinion focuses on outsourcing to non-attorneys. It states that client consent is necessary if confidential information is shared, or the outside personnel play a “significant role” in the matter, or the client expects that only the law firm itself will handle the matter.
    • Florida Bar Opinion 07-2 — Client consent is necessary when sharing confidential information or when the outside personnel plays “more than a limited role” in legal services.
    • Colorado Bar Opinion 121 — Client consent is necessary if the outsourcing is a “significant development” in the representation.
    • Virginia Bar Opinion 1850 — Client consent is necessary when outsourcing to persons “not directly associated with or under the direct supervision of the lawyer or law firm that the client retained.” This does not apply to simple or clerical tasks, but it does apply if the work involves confidential information.

One thing all of these opinions agree on is that client consent becomes necessary if the attorney wishes to add a surcharge to the expense of outsourcing to a non-attorney. Outsourcing to an attorney is easier, as the expense may be blended into the outsourcing attorney’s standard fee, even if that fee is higher than the expense, and regardless of client consent.

A Simple Solution

Outsourcing attorneys who prefer not to tiptoe through this minefield may simply obtain client consent in all instances by adding standard language to the fee agreement. Here is a sample:

OUTSIDE PROFESSIONAL SERVICES

It may become necessary for Attorney to hire outside professionals (lawyers and/or non-lawyers) to assist with the completion of work on behalf of the Client. Client authorizes Attorney to use his or her discretion to select which such persons should be hired. Client understands that Attorney’s decision to hire an outside lawyer will not result in additional separate fees and charges to Client, but rather will be incorporated into Attorney’s standard fee. Client further authorizes Attorney to share confidential information with such outside professionals when necessary, on the understanding that Attorney will enter an appropriate agreement with such professionals to maintain confidentiality and all applicable privileges.


Category: Law Practice

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