ABA ethics commission outlines beefed-up outsourcing rules

Global vision: ABA responds to rise in outsourcing

Plans to clarify the ethics of outsourcing work to lawyers and non-lawyers, and the circum-stances in which outsourcing would be wrong, are to be put to the American Bar Association (ABA).

Devised by the ABA’s Commission on Ethics 20/20, the changes would mainly take the form of revised guidance, called comments, attached to its model rules on professional conduct – a scheme first proposed in November when it published a discussion draft.

The “initial draft proposals” published this week represent the first attempt by the ABA to specifically address ethical obligations involved in outsourcing within the US and overseas and “are designed to ensure that lawyers engage in outsourcing in a manner that is consistent with applicable rules of professional conduct”, said the commission.

In a report accompanying the proposals, the commission acknowledged outsourcing was “controversial in light of the current employment market for lawyers and the economic hardships faced by lawyers currently seeking jobs”. It stressed the proposed changes were not an endorsement of outsourcing but a response to “the existence and growth of outsourcing practices”.

The proposals are now being consulted on and have not yet gone to the ABA’s ruling House of Delegates or its board of governors for approval.

The commission said guidance attached to the rules covering competence and the use of outside lawyers, and the supervision of non-lawyer assistants, would benefit from clarification.

But the term “outsourcing” itself should be avoided, the commission suggested, explaining it feared the word would either cause confusion or “become dated or fall out of use”. It recommended using the tried-and-tested phrase “retention of nonfirm lawyers” instead.

The commission has hardened its position on the need for the client’s informed consent to outsourcing, which it says should “ordinarily” be obtained; the discussion draft said consent only “may be” required, and that was just in the context of disclosing information to a third party.

It has also beefed up the obligations on lawyers to manage providers, adding a new provision that “when directing or directing a nonlawyer outside the firm, a lawyer should communicate directions appropriate under the circumstances to give reasonable assurance that the nonlawyer’s conduct is compatible with the professional obligations of the lawyer”.

In England and Wales, the new Solicitors Code of Conduct, which comes into force on 6 October, has two specific outcomes (7.9 and 7.10) dealing with outsourcing.

These are far less detailed than the ABA’s proposals and are mainly aimed at ensuring the firm still complies with its obligations to clients and the regulator.

They also require firms to ensure their contracts with the outsourcing provider enables the Solicitors Regulation Authority or its agent “to obtain information from, inspect the records (including electronic records) of, or enter the premises of, the third party”.

The ABA proposals represent part of the first round of a series of recommendations due to be made by the ethics commission on the “ethical and regulatory impact” of technology and globalisation on the legal profession.

The other first-round proposals announced this week concerned confidentiality issues and technology and temporary practising rights for foreign lawyers.

It is for individual states to adopt ABA model rules and the proposal on foreign lawyers aims to encourage a greater take-up among states of the existing rule which allows foreign lawyers to practise temporarily in the US – only Delaware, the District of Columbia, Florida, Georgia, Pennsylvania and Virginia currently allow it.

The proposal also recommends that foreign lawyers be allowed to work in the US as in-house counsel.


    Readers Comments

  • Your statement that [t]he ‘initial draft proposals’ published this week represent the first attempt by the ABA to specifically address ethical obligations involved in outsourcing within the US and overseas” is inaccurate. The ABA comprehensively addressed these issues in 2008, via ABA Formal Op 08-451. The proposed revisions to the Model Rules Comments generally simply incorporate the principles laid out in that opinion into the rules commentary.

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