Outsourcing Legal Services 101: Competence, Communication, and Confidentiality

Competence – When choosing a legal service provider, an attorney must ensure that those hired to do the work are competent to handle the client’s matters.[1] An attorney must provide the client with competent representation, which requires “the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.”[2]

An attorney with managerial authority in a law firm must “make reasonable efforts to ensure that the law firm has measures giving reasonable assurance that all attorneys in the firm conform to the [Model Rules].”[3] Much like when an attorney ensures that in-house employees are doing an adequate job, an attorney must provide the same level of management when hiring a legal service provider.[4]
An attorney has a duty to ensure that the conduct of a legal service provider “is compatible with the professional obligations of the lawyer;”[5] therefore, when sending work to a legal service provider, an attorney must oversee that work to ensure the legal service provider has performed the work competently. These obligations vary depending on circumstances and the type of services an attorney is looking to outsource. Although this rule considers that direct supervision is not always possible when employing a legal service provider, a duty remains to monitor the services provided to ensure competent representation of the client.[6]
If an activity requires the independent judgment and participation of a lawyer, it cannot be properly delegated to a legal service provider.[7]

Communication – An attorney shall “reasonably consult with the client about the means by which the client’s objectives are to be accomplished.”[8] Accordingly, under certain circumstances, an attorney should obtain the client’s informed consent when sending work to a legal service provider.[9] When an attorney asks a legal service provider to perform discrete and limited tasks, especially if the tasks do not require the disclosure of confidential information, the attorney does not have a duty to inform its client. A San Diego County Bar Association opinion indicates that the duty to inform the client is determined by the client’s reasonable expectation as to who will perform those services.[10] If the work is not such that it is within the client’s reasonable expectation that it will be performed by the attorney, the attorney is not necessarily required to inform the client of the arrangement.

An attorney should disclose that it is offloading certain work for the client (1) when the legal service provider performs services without the close supervision of a lawyer, “because the client, by retaining the firm, cannot reasonably be deemed to have consented to the involvement of an independent” lawyer or non-lawyer, (2) when the independent attorney’s fee is directly billed to the client as a disbursement, instead of the law firm paying the compensation, or (3) when the arrangement between the firm and the temporarily hired legal service provider involves a direct division of the actual fee paid by the client.[11]
An attorney may need to disclose to a client that he or she is using a legal service provider if the client would likely consider the information material. In determining whether a client should be informed of the participation of a legal service provider, an attorney should keep in mind factors such as whether a client would reasonably expect the attorney to personally handle the matter, or whether a legal service provider will have more than a limited role in the provision of the services.[12]
A client’s “reasonable expectation” of whether an attorney is performing a particular task is not static and changes over time. The legal industry now operates in a global marketplace and client expectations today will be vastly different tomorrow. Within a very short period, a client’s only “reasonable expectation” may be that the quality and confidentiality of the work-product is maintained by whomever completes it, wherever he or she may be. As the legal profession continues along its evolutionary journey towards commoditization, particularly for certain process driven legal tasks, we may soon reach the day when a client’s “reasonable expectations” will be that work-product should be outsourced to the most efficient and cost-effective provider.

Confidentiality – The attorney-client privilege is a paramount concern for any attorney.[13] When either the attorney or client discloses confidential information to a third party or opposite party this privilege is waived.[14] Many firms may hesitate to send their work to a legal service provider, fearing that sending personal client information to another entity will violate this privilege and essentially waive the confidentiality of the information protected by the privilege.[15]

Subject to certain exceptions, “[a] lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, [or] the disclosure is impliedly authorized in order to carry out the representation.”[16] Virtually every state, including Florida, has similar legislation;[17] however, the Florida committee holds that an attorney should limit access to only the information necessary to complete the project for the particular client.[18]
The degree to which an attorney needs to be concerned with privacy largely depends on the kind of information being shared with the outsourced provider. When an attorney hires a researcher to write a memorandum on a particular legal issue, there are few privacy issues at stake. The researcher is merely researching the law as it applies to facts that are already a matter of public record or will be public as the case moves forward. Still, when a firm hires an outsourcing company to prepare the paperwork for matters such as immigration, bankruptcy, or taxation, the information shared changes dramatically. Rather than dealing with public information, the outsourcing firm is now being given sensitive information such as Social Security Numbers, dates of birth, bank account numbers, and other private data. This data needs to be protected and handled in a way that minimizes the risk of harm to the client.
The contract between the attorney and legal service provider should specifically address the issue of client confidential information.

[1]ABA, Formal Op. 08-451; see also, Model Rules of Prof’l Conduct R. 1.1 (Competence).

[2] Id. see also San Diego County Bar Ass’n, Ethics Op. 2007-1 (2007) (requires the lawyer to use the work of an legal service provider based on “informed review, not blithe reliance” and identify “a point at which an attorney will lack sufficient understanding of a kind of legal work that he will be unable to accept the work and outsource aspects of it at all because he will be incapable of critically and independently evaluating the work product he receives”); Ass’n of the Bar of the City of New York Comm. On Prof. & Jud. Ethics, Formal Op. 2006-3 (2006).

[3] Model Rules of Prof’l Conduct R. 5.1(a) Competence.

[4] See Florida rule 5-5.3; See also Fla. Ethics, Op. 07-2.

[5] Model Rules of Prof’l Conduct R. 5.3 (1983); Id. at cmt. 3 (The use of “non-lawyers outside the firm to assist the lawyer in rendering legal services to the client” has been approved by the commission; however, the crux of this rule is that lawyers must make “reasonable effort” to ensure that “services are provided in a manner that is compatible with the lawyer’s professional obligations.”)

[6] Id.

[7] Fla. Ethics Op. 07-2; Florida rule 4-5.3.

[8] Model Rules of Prof’l Conduct R. 14 (Communications).

[9] ABA Model Rule 1.4.

[10] San Diego County Bar Ass’n, Ethics Op. 2007-1 (2007)

[11] ABA Formal Op. 88-356.

[12] Fla. Ethics, Op. 07-2; Fl. Ethics, Op. 88-12.

[13] San Diego County Bar Ass’n, Ethics Op. 2007-1 (2007) (Stating that an additional duty of an attorney who outsources work, whether within the US or abroad, is the “maintain inviolate the confidence, and at every peril to himself or herself, to preserve the secrets of his or her client.”) See California Business & Professions Code section 6068(e).

[14] The New York State Unified Court System’s Rules of Professional Conduct at rule 1.6 states “confidential information” consists of “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential.” See also Model Rules of Prof’l conduct R. 1.7 cmt. (1983) (Recommending that the attorney ensure that (1) the legal service provider clearly identifies their non-lawyer status to prospective clients, (2) they are used for obtaining only factual information from prospective clients, and (3) they give no legal advice concerning the case itself or the representation agreement.)

[15] ABA Comm on Ethics & Prof’l Responsibility, Formal Op. 08-451, Lawyer’s Obligations When Outsourcing Legal and Non-legal Support Services, (2008) (Discussing the ethical nature of outsourcing and the continued need for outsourcing attorneys to comply with certain ABA Model Rules of Professional Conduct.

[16] Model Rules of Prof’l Conduct R. 1.6 (Confidentiality of Information) (2002)(exceptions found in subsection (b)); see also, ABA Op. 08-451 (“where the relationship between the firm and the individuals performing the service is attenuated, as in a typical outsourcing relationship, no information protected by Rule 1.6 may be revealed without the client’s informed consent.”)

[17] See Rule 4-1.6(c)(1), Rules Regulating the Fla. Bar; See, e.g., Cal. Bus. & Prof. Code § 6068(e)(a lawyer shall “maintain inviolate the confidence, and at every peril to himself or herself [] preserve the secrets, of his or her client”)

[18] Fla. Ethics, Op. 07-2.

– When choosing a legal service provider, an attorney must ensure that those hired to do the work are competent to handle the client’s matters.[1] An attorney must provide the client with competent representation, which requires “the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.”[2]

An attorney with managerial authority in a law firm must “make reasonable efforts to ensure that the law firm has measures giving reasonable assurance that all attorneys in the firm conform to the [Model Rules].”[3] Much like when an attorney ensures that in-house employees are doing an adequate job, an attorney must provide the same level of management when hiring a legal service provider.[4]
An attorney has a duty to ensure that the conduct of a legal service provider “is compatible with the professional obligations of the lawyer;”[5] therefore, when sending work to a legal service provider, an attorney must oversee that work to ensure the legal service provider has performed the work competently. These obligations vary depending on circumstances and the type of services an attorney is looking to outsource. Although this rule considers that direct supervision is not always possible when employing a legal service provider, a duty remains to monitor the services provided to ensure competent representation of the client.[6]
If an activity requires the independent judgment and participation of a lawyer, it cannot be properly delegated to a legal service provider.[7]

Communications – An attorney shall “reasonably consult with the client about the means by which the client’s objectives are to be accomplished.”[8] Accordingly, under certain circumstances, an attorney should obtain the client’s informed consent when sending work to a legal service provider.[9] When an attorney asks a legal service provider to perform discrete and limited tasks, especially if the tasks do not require the disclosure of confidential information, the attorney does not have a duty to inform its client. A San Diego County Bar Association opinion indicates that the duty to inform the client is determined by the client’s reasonable expectation as to who will perform those services.[10] If the work is not such that it is within the client’s reasonable expectation that it will be performed by the attorney, the attorney is not necessarily required to inform the client of the arrangement.

An attorney should disclose that it is offloading certain work for the client (1) when the legal service provider performs services without the close supervision of a lawyer, “because the client, by retaining the firm, cannot reasonably be deemed to have consented to the involvement of an independent” lawyer or non-lawyer, (2) when the independent attorney’s fee is directly billed to the client as a disbursement, instead of the law firm paying the compensation, or (3) when the arrangement between the firm and the temporarily hired legal service provider involves a direct division of the actual fee paid by the client.[11]
An attorney may need to disclose to a client that he or she is using a legal service provider if the client would likely consider the information material. In determining whether a client should be informed of the participation of a legal service provider, an attorney should keep in mind factors such as whether a client would reasonably expect the attorney to personally handle the matter, or whether a legal service provider will have more than a limited role in the provision of the services.[12]
A client’s “reasonable expectation” of whether an attorney is performing a particular task is not static and changes over time. The legal industry now operates in a global marketplace and client expectations today will be vastly different tomorrow. Within a very short period, a client’s only “reasonable expectation” may be that the quality and confidentiality of the work-product is maintained by whomever completes it, wherever he or she may be. As the legal profession continues along its evolutionary journey towards commoditization, particularly for certain process driven legal tasks, we may soon reach the day when a client’s “reasonable expectations” will be that work-product should be outsourced to the most efficient and cost-effective provider.

Confidentiality – The attorney-client privilege is a paramount concern for any attorney.[13] When either the attorney or client discloses confidential information to a third party or opposite party this privilege is waived.[14] Many firms may hesitate to send their work to a legal service provider, fearing that sending personal client information to another entity will violate this privilege and essentially waive the confidentiality of the information protected by the privilege.[15]

Subject to certain exceptions, “[a] lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, [or] the disclosure is impliedly authorized in order to carry out the representation.”[16] Virtually every state, including Florida, has similar legislation;[17] however, the Florida committee holds that an attorney should limit access to only the information necessary to complete the project for the particular client.[18]
The degree to which an attorney needs to be concerned with privacy largely depends on the kind of information being shared with the outsourced provider. When an attorney hires a researcher to write a memorandum on a particular legal issue, there are few privacy issues at stake. The researcher is merely researching the law as it applies to facts that are already a matter of public record or will be public as the case moves forward. Still, when a firm hires an outsourcing company to prepare the paperwork for matters such as immigration, bankruptcy, or taxation, the information shared changes dramatically. Rather than dealing with public information, the outsourcing firm is now being given sensitive information such as Social Security Numbers, dates of birth, bank account numbers, and other private data. This data needs to be protected and handled in a way that minimizes the risk of harm to the client.
The contract between the attorney and legal service provider should specifically address the issue of client confidential information.