Are lawyers required to pass on cost savings from legal outsourcing (or any other cost savings measures to clients? Rees Morrison considers this question, first raised in another article on outsourcing to India (Daniel Brook, Legal Affairs, May/June 2005 issue) The article quotes Thomas Morgan, a law professor at GW as stating that bar association ethics rules require law firms to pass on to clients cost savings from outsourcing.
Like Morrison, I’m not familiar with the rule that Morgan mentions. In fact, according to this piece by Lisa Solomon, an attorney specializing in providing outsourcing, the opposite is true: most bars permit lawyers to charge a reasonable premimum or profit for legal research and writing in excess of the actual cost.
If you outsource legal research, do you bill the costs dollar for dollar or take a mark up? And what about outsourced paralegal or secretarial work? Do you charge for that or roll it into overhead, just as many law firms roll the costs of permanent staff into overhead. What’s the most equitable — and ethical — result?