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Failing To Make Opinion Available on Outsourcing Is Just So ABA

by Carolyn Elefant on August 26, 2008 · 2 comments

in Ethics & Malpractice Issues, Outsourcing & Hiring

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Perusing five years of archives, I realized that it’s been a while since I’ve bashed the American Bar Association for policies like legitimatizing firm-created obstacles for retiring lawyers to start their own practices or picking on solo and small firm lawyers in the disciplinary process or simply taking a negative view of solos.  I suppose that I’ve mellowed because the ABA — at least on the surface — has changed; it continues to support the now 3000+ strong Solosez.net which is open to non-ABA members and it’s made tons of news content available at the ABA Journal site.

But now, I wonder whether the ABA is reverting back to its old ways.  Earlier this month, the ABA issued an advisory opinion concerning law firms’ use of outsourcing, which concluded that “U.S. lawyers are free to outsource legal work, including to lawyers or non-lawyers outside the country, if they adhere to ethics rules requiring competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law.”   The opinion also addresses whether lawyers can mark-up the cost of outsourced legal work (which I discussed extensively here) and apparently concludes that in some circumstances, mark-ups might not be permissible.

The ABA’s opinion has the potential to impact hundreds of solo and small firm practitioners (myself included) who regularly rely on outsourcing to contract lawyers to handle overflow work, bring added expertise to a project and increase our profitability.  When lawyers are prohibited from marking up contract legal work, they may be deterred from outsourcing.  That’s because merely passing through a contract lawyer’s actual cost of service doesn’t compensate the outsourcing lawyer for the added expenses associated with finding competent contract attorneys, fronting the cost of their work and assuming the risk of non-payment from the client and possibly paying an increased malpractice premium to cover the work performed.

Yet even though the ABA’s opinion may impact many lawyers, the ABA hasn’t made it publicly available for free.  Right now, the opinion is available at no charge only to ABA members; others must pay to download it.  The ABA most likely assumes that only large firms that outsource document review projects are interested in a decision on outsourcing – - and most large firms either belong to the ABA or won’t flinch at paying to download a decision.  However, as I’ve just shown, the ABA decision can potentially impact solo and small lawyers, many of whom eschew costly ABA membership in favor of joining less expensive local bar associations.

So here’s my message to the ABA:  make your new decision on outsourcing available and please clarify that it won’t prohibit solos and small firms from making a little extra profit on legal work that we outsource to others – just as our large firm colleagues aren’t prohibited from earning enormous profits off of their associates.

  • http://www.wiestlaw.com Edward Wiest

    Thanks for picking up on this.
    It never ceases to amaze me how the ABA (for all the good work it does elsewhere) arrogates to itself the right to promulgate ethical and legal education standards with the expectation they will acquire the force of law in a manner in which it is unaccountable to the general public it claims it is trying to protect. Hiding the ball on ethical pronouncements which ABA knows may ultimately govern the conduct of lawyers who are not members hardly seems consistent with promoting the rule of law–as it applies to lawyers.

  • http://texasappellatelawblog.com D. Todd Smith

    A hearty “amen,” Carolyn.
    Here in Texas, we have an equally troubling opinion from the state ethics commission on this issue that I think is just dead wrong. Makes you wonder if the people who write these things ever practiced law at all.

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