NEW YORK CITY BAR ISSUES REPORT ON ETHICAL LEGAL OUTSOURCING

NEW YORK CITY BAR ISSUES REPORT
ON ETHICAL LEGAL OUTSOURCING

New York , November 16, 2009 – As the outsourcing of legal services grows among law firms and corporate law departments, the City Bar has outlined guidelines and best practices for outsourcing legal work ethically overseas. According to the report, foreign law firms may be contracted to perform legal assistance, but only with the proper supervision, disclosure, and confidentiality.

Outsourcing has been a subject of debate within the profession, as foreign attorneys contracted by firms are not admitted to practice law in New York or any U.S. jurisdiction. These attorneys are often hired to conduct legal research, draft memoranda or briefs, review discovery materials, conduct patent searches, perform due diligence, or draft contracts. Concern is great that their use could lead to the assistance of the “unauthorized practice of law” prohibited by multiple state laws.

The report, issued this month by the Committee on Professional Responsibility, finds that firms can take steps to ensure that they are using foreign resources ethically:

• Ensure Competence and Appropriate Supervision

Conduct interviews and check references and credentials on the intermediary; learn about the firm’s ethical, compensation, insurance, and employee feedback practices. Set up rigorous supervision tailored to the work involved and skills of those performing it, and maintain communication with the firm.

• Preserve the Client’s Confidential Information

Assess the risks to client, instruct the firm as to the U.S. lawyer’s obligations, and make compliance with confidentiality provisions a contractual obligation. Review the provider’s data security arrangements, minimize the amount of information shared with the provider, or host the data on the U.S. law firm’s servers.

• Check for Conflicts of Interest

Intermediary should explain how it ensures that the firm providing services has a conflicts-checking system that complies with the New York rules, and the New York firm should probe the firm’s conflict-checking process.

• Disclose the Outsourcing Arrangement to the Client

Client disclosure should be the rule where legal services, as opposed to administrative, clerical, or tangential services, are to be outsourced. There are also certain conditions where disclosure is necessary.

• Avoid Assisting in the Unauthorized Practice of Law

The New York firm must provide adequate supervision – the New York firm cannot abdicate responsibility or rely on the foreign firm’s lawyers being licensed in the foreign jurisdiction, and must make sure of this.

The new guidelines are a follow-up to an influential 2006 City Bar report from the Committee on Professional and Judicial Ethics (Formal Opinion 2006-3), which concluded that New York lawyers may outsource legal support services ethically.

Report Links:

Report on the Outsourcing of Legal Services Overseas, Committee on Professional Responsibility, New York City Bar Association, November 2009: http://tinyurl.com/yj5yqtr

 Formal Opinion 2006-3: Outsourcing Legal Support Services Overseas , Committee on Professional and Judicial Ethics, New York City Bar Association, August 2006: http://tinyurl.com/yzuhqe2

About the Association
The New York City Bar Association (www.nycbar.org) was founded in 1870, and since then has been dedicated to maintaining the high ethical standards of the profession, promoting reform of the law, and providing service to the profession and the public. The Association continues to work for political, legal and social reform, while implementing innovative means to help the disadvantaged. Protecting the public’s welfare remains one of the Association’s highest priorities.

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