Legal Outsourcing As Part of a Cost Containment Initiative

The economic downturn recently made its presence emphatically felt throughout the legal community -- with more than 1,100 attorneys pink slipped in a single day, February 12. Call it Black Thurdsay or call it the Valentines Day Massacre, the underlying fact remains: These were uncharacteristically extreme – and very public – cost cutting measures from a traditionally conservative, even-keel industry.

And while no one expected the legal community to be immune from the frailty of the economy, the reality was sobering nonetheless.

With balance sheets for 2009 already falling short of expectations – and a sort of collective acceptance that the economic challenges aren’t going away quickly – attorneys in every type of office are reevaluating staffing paradigms and cost structures in order to ride out the storm.

Large firms are assessing wage cuts, delayed hiring, reduced starting salaries, and additional layoffs. Small and mid-sized firms are evaluating their practice areas, the changing needs of their clients, reduced staffing, and cutting overhead. In-house counsel are investigating consolidating outside firms, implementing new terms for retention, mandating outsourcing, as well as reducing internal staffing.

With attorneys scrutinizing every aspect of their business, LegalEase Solutions has developed a three-tiered platform of support options for firms and counsel assessing cost containment measures.

• Project Based Support. A LegalEase staff attorney can be assigned to complete associate-level work, including pre-litigation support, legal research and writing, deposition summaries, drafting of memoranda, contract and document review, preparation of pleadings and briefs, discovery, patent services, and more. The client dictates timeline and budget goals, with hourly rates typically coming in at $60 per hour.

• Part Time Staff Attorney. A staff attorney dedicated at 80 hours per month, with a natural expertise developed by the dedicated attorney to counsel’s needs. Counsel determines the reasonable timeline and budget, with hourly rates at $40 per hour.

• Full Time Staff Attorney. A staff attorney dedicated at 160 hours per month, as well as a backup attorney included at no charge. Counsel determines the reasonable timeline and budget, with hourly rates at $30 per hour.

To learn more about LegalEase’s commitment to ensuring confidentiality and protecting against conflicts of interest, please read our white papers.

Conflict Checking Software

We’ve discussed the ethical obligation an LPO has to protect counsel and counsel’s clients from conflicts of interest, as well as the need for a comprehensive conflict checking form to capture searchable data.

Once that data is collected, a mechanism must be in place to allow sufficient cross-referencing to detect potential conflicts. Companies have essentially three types of options in terms of conflict checking programs: Stand Alone conflict checking software, Custom-Developed databases, or integrated Case Management or Time Management programs that include a conflict checking functionality.

Stand Alone conflict checking software programs can range in complexity and, accordingly, price. One caveat to consider is the potential for redundancy if a Case Management or Time Management system is already capturing this information. A couple examples of Stand Alone programs are Conflict Checker and RTG Conflicts.

Custom-developed databases can be built in products like Access. Like any system, there are pros and cons. The upside here is that the system will be completely customized to your company’s specific needs. The cons are the cost of custom programming, the cost of future upgrades, and the potential for redundancies – if you are also utilizing a Case Management or Time Management system you may already be inputting much of this information in the existing system.

The other option is to utilize your organization’s existing Case Management or Time Management system if it incorporates a conflict checking feature. In this scenario, the management system that is already in place to track projects and hours can become a one-stop hub for all information, including conflict checking.

Case Management or Time Management software can be web based or locally hosted, and a couple examples are Bill 4 Time and AbacusLaw.

The products mentioned are obviously not exhaustive or even necessarily endorsed. If you have products you’d like to add to the discussion, feel free to note them in the comments section.

Conflict Checking Request Form

LPOs have a professional and ethical duty to the counsel they support to protect both counsel and the counsel’s clients from conflicts of interest. The ABA’s Model Rule of Professional Conduct 1.7 states: “A legal outsourcing company should have a conflicts checking procedure in place that… includes avoidance of a concurrent conflict of interest with a client already engaged, and avoidance of a significant risk that the representation of one client may be materially limited by responsibilities to another client.”

In order for an LPO to thoroughly vet potential or perceived conflicts, the LPO needs a comprehensive Conflict Checking Request Form to capture sufficient information to populate cross referencing. Conflict checking should comprise information about counsel’s firm and participants, the counsel’s client, a business’s history and participants, as well as an overview of the case at hand.

Counsel Information

• Firm name
• Firm’s counsel involved with the case
• Associates or paralegals involved (including maiden names if possible)
• Adverse Party’s Counsel’s Firm Name

Counsel’s Client Information

• Names of all involved parties (including maiden names if possible)
• Family members
• Names of adverse parties

For corporate or business entities, also include:

• Corporate and business names
• Any trade or alternative names under which the entity carries on business
• Names of the parent company or controlling shareholder of a corporate client
• Business names of any subsidiaries or other relevant affiliated companies
• Names of officers and directors of the corporate client, any subsidiaries, and the parent company

Matter

• Description of Matter that will include an overview of the case or complaint.

LPO’s obviously serve the counsel who partner with them, but they also, by extension, serve the counsel’s interest in their client. To act as a complete outsourcing partner, the LPO must take conflict avoidance as seriously as counsel does, and a thorough Conflict Checking Request Form is a crucial component of that obligation.

Protecting Attorneys' Ethical Obligations

Every business assesses the obstacles in its path – hurdles that can range from a crowded marketplace to shifting customer trends to a lack of eyeballs. From the perspective of a Legal Process Outsourcing firm, one of those hurdles is attorney reticence.

In-house counsel and firm-based attorneys both share a strong and altogether appropriate sense of loyalty to their clients. So when an attorney weighs the pros and cons of outsourcing legal work, the scale looks a little something like this: On one side is the efficiency and significant cost savings that every client is looking for, and on the other side is the nagging twinge of concern that outsourcing could expose their client to certain risks, like conflicts of interest.

Attorneys work hard to ensure that neither their firm nor their employees have any competing interests that would conflict with the best interests of their client. And attorneys have every right to expect an extension of that trust from an LPO.

That's why it's crucial for an LPO to step up and 1) acknowledge those concerns as legitimate, and 2) proactively take every step to protect both the original counsel and the counsel's client.

In-house and firm-based counsels’ conservative approach to LPOs makes sense when you consider the relatively young nature of legal outsourcing. Other business process outsourcing areas have decades of history and a track record that can be evaluated, whereas LPO is relatively new to the game. So, it makes sense that attorney trepidation stems from lack of familiarity.

That’s why one of the first orders of business for an LPO – and a mandate at LegalEase Solutions – must be protecting the ethical standards that counsel promises their clients.