Large Firms Resisting Change?

As readers of this blog know, much of our focus is on emerging trends in the legal profession. And, at this juncture in time, most observers agree that the profession is in the midst of some profound changes in the business of law.

A flattening, global market; legal process outsourcing; captive offshore legal departments, virtual attorneys and virtual associates; web based legal products; evolving business and billing models; and the U.K.'s Legal Services Act 2007 are just a handful of emerging trends adding new colors to the legal canvass.

However, a recent study indicates that for all the talk and analysis, there may be significantly less change or innovation taking place in large firms. At least significantly less than GC's would like.

As reported this month at law.com, a survey released a few weeks ago by Altman Weil had this to say about General Counsels' opinions regarding the large firms with whom they work:

"75 percent of the responding chief legal officers rated their law firms between zero to four on a 10-point scale, indicating their opinion that firms had little or no interest in change. Only 5 percent of the respondents ranked their outside law firms between eight to 10, with 20 percent falling somewhere in the middle.

"This is a dramatic vote of no confidence from chief legal officers," Altman Weil Principal Daniel J. DiLucchio Jr. said in a statement. "Either many law firms just don't understand that clients today expect greater value and predictability in staffing and pricing legal work, or firms are failing to adequately communicate their understanding and willingness to make real change. In either case, it's a big problem."

This perception on behalf of GC's comes after more than 60% of respondents reported putting legitimate, non-negligible pressure on their law firms to change their value proposition.

So, given what appears to be some dissatisfaction in the degree of change being offered by large firms, it can't be encouraging for these firms to know that the survey also reported that 40% of GC respondents expect to give less work to outside firms this year.

To put that number in perspective, from 2000 through 2007, that expectation never surpassed 20%. Now, in a matter of two years, the expectation to give less work to outside firms has doubled.

While this may simply be a temporary blip fueled by the sour economy, history tells us that this window of time may well see some alternative models take hold that will provide GC's with the evolution they are seeking.

Law Firm Apprenticeship Programs

Law.com recently profiled the growing implementation of apprenticeship programs for first-year attorneys.

Notable firms across the country embracing the apprenticeship model include Howrey; Philadelphia's Drinker Biddle & Reath; labor firm Ford & Harrison; Ohio/Kentucky firm Frost Brown Todd; and Dallas' Strasburger & Price.

"Firms are putting new recruits through additional apprenticeship programs that they say will better train their attorneys for life at a law firm and for handling clients. Think of it as the equivalent of a medical residency, only with suits instead of scrubs."

"The latest -- and so far largest -- firm to move to an apprenticeship model, 659-lawyer Howrey, announced its program last week. Starting next year, first-years at the firm will get a pay cut -- from $160,000 to $100,000 in base pay plus a $25,000 bonus to pay down law school loans -- and they'll spend a good portion of their time attending classes with partners and shadowing them on client matters. The apprenticeship period will last two years.

"Robert Ruyak, Howrey's managing partner, said associates will be doing far less client work, and when they do work on client matters it won't necessarily be billed to clients. "We really want them to focus on learning the skill they need to be first-rate litigators," Ruyak said."

"The old model is broken," Ruyak said. "You're bringing on these extremely bright individuals and letting them waste their careers buried in documents where they aren't really learning the practical skills it takes to be a lawyer."

Ah, yes. Here we see -- yet again -- another real-world distinction between the two separate job functions that have been each historically covered by the umbrella term attorney. On the one hand, there is the redundant, commoditizable, associate level work, and on the other hand we have the role of adviser, counselor, manager, and/or litigator.

As we discussed previously, while the future of the legal profession is changing, the need for the experience, insight, and perspective of a seasoned attorney will always be in demand.

These apprenticeship programs seem to acknowledge that, and then take it a step further by explicitly separating the training of litigators/advisers/counselors from the redundant, high volume work that can be executed at a more cost-efficient level, either by in-house staff attorneys or -- with even more cost-efficiency -- by highly trained attorneys at an LPO.

A Lesson from the Engineers

Marketplace, a radio program run on many NPR stations, recently discussed how the sour economy was eliminating engineering jobs at a faster rate than many other professionals, with high profile companies looking to offshore their engineers.

Obviously, this sounds very familiar to legal professionals.

Interestingly, the American Society of Civil Engineers read the writing on the wall long enough ago to start revising their Body of Knowledge, which was created in a 1998 policy statement to define prerequisites for licensure and practice.

Last year the ASCE published Civil Engineering Body of Knowledge for the 21st Century, Preparing The Civil Engineer for the Future, Second Edition.

The purpose of the book is to acknowledge new professional challenges and identify improvements to the education and licensure process. The book states:

"The manner in which civil engineering is practiced must change. That change is necessitated by such forces as globalization, sustainability requirements, emerging technology, and increased complexity with the corresponding need to identify, define, and solve problems at the boundaries of traditional disciplines."

Again, to those following the legal profession, there is a familiar echo: Globalization. Emerging technology. Problem solving at the boundaries of traditional disciplines.

Of equal importance, the ASCE also includes a telling word choice in one of their stated goals for the book.

" [to] focus on outcomes to the proposed changes in the way civil engineering is taught and learned, including the knowledge, skills and attitudes necessary for entry into professional practice."

Pretty striking. The American Society of Civil Engineers -- not a group historically known as wild-eyed, knee-jerk, doom sayers -- is 1) stating that the manner in which they practice their profession must change and, 2) suggesting that a change in attitude is a key component to succeeding in the 21st.

As attorneys peer into the coming years, it might not be a bad idea to steal a page from the ASCE's Body of Knowledge for the 21st Century and acknowledge that a change in attitude may be a successful strategy to address the challenges of globalization, emerging technology, and problem solving at the boundaries of traditional disciplines.

The Business of Law vs. The Service of Legal Counseling

The New York Times ran an article last week on how the most venerable law firms -- we're talking multinational, centuries old, most upper of the upper crust firms -- continue to purge their ranks in unprecedented fashion.

As anyone who is paying attention knows, the landscape of how legal work is organized and delivered is shifting beneath us as we speak. What no one knows exactly is how it's all going to shake out.

But there were a few more interesting signposts offered in the Times article that may at least help shape the way we perceive and articulate it.

Here is what the New York Times had to say (and I'm reordering some of their paragraphs):

"The gentleman’s profession of the law is becoming a vestige of the past, removed enough from reality to be remembered, like phone booths or fedoras."

"... the natural order of this world has been set on end by the economic crisis and the possible disappearance of fixtures like the pyramid system (under which associates are thrown en masse at certain cases, fattening the fees), and the billable hour itself (increasingly replaced by flat rates or retainers in a client’s market). The tectonic plates have begun to shift in a nauseating manner, bringing fear, ambiguity and psychological scars."

Philip K. Howard, a senior partner at Covington & Burling, another multinational firm, laments
that as the bottom line increases in importance, the traditional role of the lawyer as a trusted counselor slips away.

In another passage, Mr. Howard underscores his observation, saying that he's not really "interested in the business of law".

In other words, Mr. Howard is equating the current emphasis on the bottom line with the "business of law", and distinguishing that from the role of lawyer as counselor.

And this is consistent with our conversation regarding the distinction between legal information and legal advise.

The unbundling of legal services that we've been watching unfold in front of us can be framed in this way: the business of legal work is being separated from the service of legal counseling.

If this way of looking at it is accurate, and if this divide -- between the business of legal work and the service of legal counsel -- continues to solidify, that would seem to argue for the continued growth of LPO as attractively priced virtual associates and virtual attorneys to contribute to the business of legal work.

Legal Information vs. Legal Advice

The unbundling of traditional legal offerings -- which is an emerging trend central to Richard Susskind's recent book The End of Lawyers -- has been a hot topic in these parts lately.

The idea of different legal services becoming available in new venues and formats is one that we're seeing manifest itself in a number of ways from web-based companies offering legal forms, legal facts, entreprenuerial start-up guidance, copyright filing, and more.

And it's happening in both the U.S. and the U.K.

In fact, the U.K.'s Legal Services Act 2007 is a national initiative providing a legislative framework to actually reform the way legal services in England and Wales are regulated and delivered.

The Act specifically allows legal services "to be provided under new business structures" with a stated goal of promoting "competition and innovation".

The BBC recently reported on this, highlighting that "future providers, including large retail brands, could seek a license to offer legal services."

The article includes opposing views, including an attorney who says the move "demonstrates utter contempt for the consumer of legal services. The solicitor profession faces being all but wiped out by a government seemingly intent on robbing the public of access to good quality, local legal advice."

Ah, but here is something to keep in mind: As we talk about the fragmenting of legal offerings, it's important to be consistent in distinguishing between legal information and legal advice.

In fact, it could be argued that the BBC's reporting fails to do this. Or, at the least, it allows for the interchanging of the terms.

The American Bar Association distinguishes between legal information and legal advice. Legal information is general, non case specific, and can be provided by anyone. Legal advice, on the other hand, is "provided by a trained lawyer who uses his or her knowledge of the law to tell you how the law applies to your specific circumstances."

When listening to all the voices on both sides of the conversation, it's important to keep the distinction in mind and remember that legal advice isn't going anywhere.

Legal experience, insight, and strategy aimed at an outcome will always be in demand. What is evolving, and will continue to evolve, is how the more rudimentary and "commoditizable" aspects of the law will be unbundled and delivered.

The Managing Onshore Attorney - Part II

Law.com's Legal Blog Watch summarizes a recent study of emerging trends for contract lawyers conducted by The Posse List. In regards to Legal Process Outsourcing, they write:

"Though firms are under pressure to cut costs, data security and quality of work are two key deterrents to sending projects to India. Still, Bufithis notes that "off-shoring is not going away." It's moving toward a blended approach, with a first pass at review in India followed by second review in the United States."

Here is another acknowledgment that the blended onshore/offshore model provides the benefit of a second layer of quality control and oversight from the onshore attorneys, and it dovetails nicely with the second part of our conversation with Managing Onshore Attorney, Chris Crawford.

Q: Generally, what is the breakdown in terms of the percentage of work executed by the offshore attorneys and the percentage executed by the onshore staff?

A: “It can really vary. Depending on the complexity of the work, it ranges from 10% onshore to 90% onshore. The benefit to the client is that the cost does not change whether the work is performed by a U.S. trained attorney or an India trained attorney.”

Q: What are the types of work that you have seen translate successfully to being outsourced?

A: "India is a common law country, and the attorneys there have all gone to law school. So they can be trained to do any legal work that a U.S. attorney can be trained to do. We have successfully assisted law firms and corporations in many areas of the law including research and writing, contract drafting and review, discovery and document review, drafting of motions, briefs, and pleadings, as well as all general paralegal services."

Q: What are the educational backgrounds of the offshore attorneys?

A: “All Indian attorneys have graduated from an accredited Indian law school, which requires either three or five years of schooling, depending on the law degree obtained. We only hire those that have graduated within the top 10% of their class.”

Q: How are the attorneys trained once they join LegalEase?

A: “LegalEase has its own six month training program, designed by a Harvard Law School graduate. All LegalEase attorneys must complete that training program before working on live projects. This program is designed to teach the attorneys the major distinctions between U.S. and Indian law, and to give the Indian attorneys an opportunity to further hone their writing skills.”

Q: How do you address ethical concerns, e.g. how do the off-shore attorneys ensure confidentiality and conflict checking?

A: “All attorneys working for LegalEase sign confidentiality agreements. In addition, most clients require that LegalEase employees sign confidentiality agreements before commencing work on a project. Regarding conflicts of interest, we have an internal conflict checking system to ensure that we do not undertake work that would present a potential conflict of interest with another client.”

Q: How do you guarantee client satisfaction?

A: “We have always provided our clients with a 100% satisfaction guarantee. If the client is for some reason dissatisfied, we only ask that they provide the reason for the dissatisfaction and give U.S. an opportunity to re-work the project until it is to their satisfaction.”

You can read the first part of our conversation here.

The World Gets Flatter -- Virtual Law Firms

Another dispatch from the front line of the rapidly shifting landscape of legal outsourcing and offshoring.

Virtual law firms are not a new or particularly cutting-edge idea. A wikipedia page on virtual law firms notes that they have been around since 2004. And, if you think about it, even having a wikipedia page probably precludes any sort of "underground" status.

The ABA's Law Practice Today generally characterizes virtual law firms as having the following traits:

1. A stable core group of attorneys
2. Established collaborative relationships with other specialized law firms that possess expertise that’s occasionally needed
3. Technologically linked infrastructure via appropriate computer and telecommunications systems
   
4. Ability to expand and reduce personnel as needed

In other words, we're talking about a team of attorneys -- saving on overhead by forgoing the traditional bricks and mortar office buildings -- networked together via the web.

Some virtual law firms employ attorneys scattered throughout the U.S.. Other virtual law firms, like Rimon Law Group (a firm with a very creative and intriguing billing model that factors client satisfaction), manages to reduce overhead even further by including attorneys who live in locations with lower costs of living -- areas in the United States as well as other countries.

And this makes perfect sense as a business model.

Because virtual law firms employing U.S. attorneys located outside the U.S. are leveraging the exact same dynamic as Legal Process Outsourcing: Work is completed by qualified colleagues who live in areas with lower costs of living, and those savings in overhead translate to lower costs to the client.

An interesting element at play here is the distinction in terminology.

Whereas a network of U.S. attorneys living in different countries is a "virtual law firm", a network combining U.S. attorneys with attorneys trained and accredited in other countries is thought of as "offshoring".

As the lines between old guard legal paradigms and new, global legal paradigms blur, it is likely that the terminology will, too. So, when an LPO engages offshore attorneys to perform some of the more redundant legal processes (litigation support, legal research/writing, contract/document review, etc.), couldn't we just call them "virtual associates"?

The Onshore Attorney's Role in the Review Process

When United States attorneys evaluate the efficiencies and savings of outsourcing certain legal tasks, they find themselves weighing the merits of two different LPO business models: The entirely offshore model versus the blended onshore/offshore model.

While an entirely offshore model connects the client directly with the offshore office, the blended onshore/offshore model inserts a layer of United States based attorneys to work with the client and shepherd each project.

This layer of onshore managing attorneys serves a number of crucial functions, including project management, quality control, and as a liaison directly from one U.S. attorney to another.

LegalEase's managing onshore attorney, Chris Crawford, recently explained the organizational structure and the managing attorneys role in the workflow and review process. Here's an excerpt from that article.

When a client approaches an LPO with a blended onshore/offshore model, how is the work organized and what is the workflow process?

“Initially, the client will contact the U.S. office about a project. A U.S. based attorney will then get the client specifications for the project, including all facts, documents and directions needed to complete the project. The U.S. based attorney then reviews the project, doing preliminary research and drafting as necessary. He/she then assigns components of the project to the offshore attorneys with specific instructions for the completion of the project.”

What is the review process?

“The U.S. and offshore team work together to complete the project, much the same way an associate and a partner would work to complete a project at a law firm. There is a constant, open line of communication between the two offices for feedback and to answer any questions that may arise. Once the project is complete, a U.S. attorney gives it final review and approval for delivery.”

Media Round Up

LegalEase Solutions and one of the company's founders, Tariq Hafeez, were profiled recently as a Michigan based business in the Ann Arbor Business Review. A few of the topics touched upon...

The ABA's approval of legal process outsourcing:

"He said the industry was boosted by an August 2008 ruling from the American Bar Association's ethics committee outlining lawyers' responsibilities in outsourcing, but deeming it morally acceptable.

The practice is allowable, the panel found, if the participating lawyers "adhere to ethics rules regarding competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law," according to an ABA statement."

Perceptive challenges still facing LPOs.

"Hafeez said confidentiality and quality are the two issues prospective clients hesitate most about. He said the company's internal processes of training the lawyers in India and doing all quality control in Ann Arbor should calm those fears."

Efficiencies and cost savings.

"Like most outsourcing, the business model is relatively simple - use offshore employees for repetitive and less complex tasks at lower costs. In LegalEase's case, Indian lawyers fluent in English and trained in American law can take care of legal research, drafts of pleadings and document review, among other services, at $60 per hour or less, Hafeez said. "

To read the complete profile, click here.

Also, this blog itself received a nice recognition from oDesk.com as one of the 100 Best Outsourcing and Offshoring Blogs and Resources.

More Commoditization -- Putting A Price On Experience

Still ruminating on our recent post regarding the commoditization of some legal services.

The commoditization is coming hand in hand with the unbundling of legal services. Some legal tasks, which historically have been conducted en masse in one office, are being fragmented and driven down the workflow pyramid to their most cost efficient layer -- even if that layer is in another zip code.

This natural process (aligning the work with the most cost-efficient execution of the work), which has always occurred within the confines of a single firm, is slowly taking place across the country and the planet. Essentially, the walls of the single firm are coming down. And, with the removal of some office walls, the consumer, end-user, and attorneys themselves have increased access to legal process efficiencies.

To put it another way, the unbundling of legal work is a natural byproduct of increased access.

As for the increased access, well, there's that darned internet again. Okay, it is both obvious and a monumental understatement to say that the internet has and is changing the landscape of many professions (ask any travel agent if his/her job evovled in the mid 1990's). But there is no denying that, in terms of evolution, we are knee deep in primordial soup watching a surge of business models bubble to the top, each with the goal of leveraging the end-user's increased access to legal efficiencies.

One of these new strands of business models that is especially noteworthy is unbundling and commoditizing not just legal tasks, but another entity entirely -- legal experience.

Tologix offers software to attorney's who conduct research in specialty areas of law. A firm's (or even a single attorney's) years of work can be collected, captured, and organized so that the aggregate can be searched and monetized on a subscription basis to end-users.

Websites like justanswer.com allow consumers to name their price and receive one-off legal information directly from a network of experienced attorneys online.

Both are prime examples of the wave of creative business models surging right now to leverage the unbundling of legal offerings resulting from increased accessibility via the internet.

Again, it's way too early to say which models will thrive and which will flame out in short order. But it sure is fascinating to watch.

The Face of LPO: Sacha Baren Cohen?

And then there are developments that no one saw coming.

A few years worth of both professional and academic studies, articles, and books weighing in on the efficiencies and cost-effectiveness of Legal Process Outsourcing, and the LPO sector received its most high-profile, mainstream splash of exposure this week thanks to...?

Sacha Baron Cohen. That's right. Borat. Ali G. Bruno.

This past week, Los Angeles Superior Court threw out a defamation suit against actor/comedian Sascha Baron Cohen. What is noteworthy about the coverage of the suit's dismissal is the very public recognition and credit being given to the Indian attorneys who contributed to the victory via Legal Process Outsourcing.

One of the most widely read websites covering Hollywood and the entertainment industry, the L.A. Weekly's Deadline Hollywood Daily, quoted one of the defense attorneys saying, "...combining the skills and expertise of U.S. attorneys with U.S. law-trained Indian attorneys has proved to be an innovative and cost-effective way to fight and win the suit.”

To have both the quality of the work and the contribution to success praised so publicly is impressive.

The Wallstreet Journal's website references the case, "Sacha Baron Cohen Uses Outsourcing for the Win," and provide links to other articles discussing the story.

The Commoditization of Legal Services

Every now and then an idea or meme seems to catch fire and become ubiquitous in a very short time. In the past couple weeks, discussions and examples of the growing commoditization of legal services has come from a number of fronts.

Marketing pushes from consumer-targeted, off-the-shelf legal forms companies like LegalZoom, LawDepot, and USLegalForms are examples of legal products replacing services. Similarly, companies targeting the small business market, like Direct Incorporation and Business in a Box, are attempting to carve out their own niches.

One interesting element of the trend is the actual language being used to describe it. Language that Robert J. Ambrogi nails in a recent post at Legal Blog Watch.

"Legal services are evolving from a highly bespoke, highly customized product toward becoming a commodity. As part of this evolution, legal work will be unbundled into its constituent tasks and many of those tasks will be standardized and systematized."

From the perspective of an LPO (which provides actual services, rather than off-the-shelf products), the key word in that passage is "unbundled". Because the value in legal process outsourcing is identifying which legal tasks can be efficiently unbundled and outsourced for significantly lower costs.

This idea of unbundling is also prominent in Richard Suskinds new book, "The End of Lawyers? Rethinking the Nature of Legal Services". This description from Oxford University Press cuts right to the chase:

"It is argued that the market is increasingly unlikely to tolerate expensive lawyers for tasks (guiding, advising, drafting, researching, problem-solving, and more) that can equally or better be discharged, directly or indirectly, by smart systems and processes. It follows, the book claims, that the jobs of many traditional lawyers will be substantially eroded and often eliminated. This is where the legal profession will be taken, it is argued, by two forces: by a market pull towards commoditisation and by pervasive development and uptake of information technology. At the same time, the book foresees new law jobs emerging which may be highly rewarding, even if very different from those of today. "

For another of the many voices discussing the commoditization of legal work, the Chicago Lawyer has an excellent overview.

Evaluating What Not To Outsource

Any conversation about which legal processes are prime candidates for outsourcing must also include evaluating work that is less suitable for outsourcing.

Obviously, LegalEase Solutions believes wholeheartedly in the value of targeted legal process outsourcing, but by the same token it would be disingenuous not to acknowledge that some legal work is not efficiently outsourced.

A quick review of work that is successfully and efficiently outsourced provides some broad-stroke common traits: the work is typically less complex, more repetitive, and provides time and cost efficiencies.

Conversely, it follows to reason that the first area of work that is best kept solely in-house are cases dealing with complex, uniquely fact-driven subject matter. A prime example would be IP litigation.

Work that has a very high level of complexity and case-specific data can practically become its own field of study, which means that the amount of time required to bring outside attorneys up to speed would outweigh the potential reduction in costs.

If you are an attorney who has identified additional legal work that is not appropriate for outsourcing, feel free to contribute to the discussion in the comments area.

India Business Law Journal

There was a very comprehensive overview on the state of the Legal Process Outsourcing market in the March issue of the India Business Law Journal. Industry leaders from top LPO's were interviewed, including LegalEase Solution's CEO Tariq Akbar. Here are some of the highlights of the subjects addressed, as well as observations about the industry quoted from the article:

• The cost factor. "Corporations are no longer willing to pay the high fees that are traditionally associated with the review process,which accounts for around 60% of litigation costs."

• Process efficiencies. "Once a project is underway, clients see other benefits like process efficiencies, quality improvements."

• Climbing up the value chain. "Once clients are comfortable that the quality of outsourced work is not compromised, it allows them to transition significantly more work both in terms of value and quantity."

• Crisis-driven demand. "The events occurring in the global economy are unprecedented … they are forcing companies of all sizes in all industries to ensure that they are spending every penny wisely."

• Outsourcing decision makers. "The major decision makers are the end clients of the law firms – the corporate legal departments who now want a lesser burden on their resources."

Trend Spotting

There is an interesting trend developing lately in terms of how large law firms are adapting their business models to incorporate LPO. Interesting, because it's evolving in a way few had predicted.

If you sort legal offices into three general categories, they shake out like this: In-house corporate counsel, large corporate law firms, and small/medium sized private practices. In many peoples' minds, the most likely LPO early adopters would be the in-house corporate counsels, because the culture of big business has already embraced outsourcing an array of other back office functions. That is, for corporations there is less of a mental shift required to see the value in LPO. Additionally, corporate attorneys already outsource significant amounts of work to outside counsel. Again, no change in worldview required.

Many industry watchers then site the small and midsize firms as the next enthusiastic users of LPO, thanks to the ability of an LPO to provide flexibility, e.g. overnight turnaround, ultra affordable pricing, and scalability to support peek demands on a smaller firm.

The sector that many thought would be the slowest to embrace LPO was the well established, conservative larger firms. The conventional wisdom was that these firms, with their seasonal hiring patterns, established hierarchies, and entrenched billable hours model would be the slowest to evolve based simply on inertia.

So much for conventional wisdom.

The trend that we're seeing take root is that of large firms actively aligning with an LPO to then present their services to corporate counsel in a convergence that benefits each party. The large firm gains an advantage over their competitors with the significant savings the LPO provides; the LPO benefits by the association with well established domestic firms; and the in-house counsel enjoys the dual benefit of cost savings managed by a firm with whom they already have a business relationship.

And it doesn't seem unreasonable to conclude that the driving force behind the trend is the recent financial crunch, which has forced corporate counsel to demand changes from the firms they traditionally hire.

Protecting Client Confidentialy through Personnel Management

We've discussed the tangible, hard-wired aspects of protecting client confidentiality through data security -- the systems an LPO needs to have in place to control data collection, as well as access and utilization.

The other aspect of protecting client confidentiality is a bit, well, squishier. It's not the binary, flow-chart dictated, password protected black and white of data systems. Instead, it is the softer science of personnel management and all that it entails -- personalities, histories, and motivations.

Softer, yes, but no less demanding and integral to the ethical obligation of ensuring confidentiality. So, to fully realize the duty of confidentiality, an LPO needs to compliment data integrity with a multi-faceted approach to personnel management.

Employee Vetting - The first step, clearly, is the completion of a thorough background and reference checks, as well as confirmation of professional standing.

Contractual Provisions - Each employee - onshore and offshore - must be subject to Confidentiality and Non-Disclosure Agreements.

Education and Training - Admission to the Bar in most jurisdictions is contingent on passing the Multistate Professional Responsibility Examination, so it reasons to follow that offshore attorneys should be proficient in the same model rules.

Business to Business - An additional mechanism that can be employed is an individual confidentiality agreement between the LPO and counsel.The ABA strongly advises these agreements, and the Association of the Bar of the City of New York (Ethics Opinion 2006-3) recommends “contractual provisions addressing confidentiality and remedies in the event of breach, and periodic reminders regarding confidentiality.”

Corporate Culture - Another consideration for an LPO is cultivating a corporate culture that puts a premium on low attrition. A stable work force to some degree reflects company loyalty, and it can mitigate confidentiality risks by minimizing the number of former employees in circulation


Just like data systems need ongoing QA efforts, personnel protocols also need periodic reinforcement to be maximized. Personnel management within an LPO -- in the service of protecting client confidentiality -- must be understood to be an continual process.

The Paperless Office and Data Security

There are a number of components to ensuring data security within an LPO. We’ve discussed the importance of onshore servers for housing all data.

One fundamental purpose of the onshore server is to allow offshore access to information without actually capturing that information. Furthering the safeguard against third-party personnel capturing any data is the implementation of the paperless offshore office.

Obviously, the paperless office has no, um, paper. In the event that any paper or writing instruments are occasionally necessary, it is an important requirement to shred the paper at the end of every shift and collect all writing instruments.

But the paperless office goes further than that, encompassing a complete defense against any method of capturing data, including:

• Restricted computer functionality for individual computers with limited user rights and disabled media drives and USB/printer ports
• Secure individual computers with PC firewall and antivirus protection
• External internet access restricted to certain sites/computers within office locations
• Network monitoring and tracking capable of producing audit trail records of all files accessed on the server and logs of all incoming and outgoing mail from the servers
• A secure internet network incorporating Proxy/Firewall NAT and Port filtering
• The prohibition of cell phones and cameras in any area where client work is processed

Onshore Servers and Data Security

During March we’ll be discussing part two of our series Ethical Imperatives For An LPO: Protecting Client Confidentiality. And a key component to protecting confidentiality is data security.

For U.S. attorneys considering the value of outsourcing legal work to an LPO, there is one question that must come first regarding data security: Are the LPO’s servers on U.S. soil?

All other security safeguards come second.

When all data is stored in onshore servers, offshore attorneys are only accessing the data to complete the work, and not holding or storing the data on offshore computers or servers.

Why is this so crucial? Because data stored on servers is subject to the state and federal laws applicable to the physical location of the data. That means for data housed on domestic servers, U.S. law applies. In the rare event of some sort of breach, the originating counsel needs to retain as much recourse as possible, and part of that includes U.S. jurisdiction over the server.

Data stored on offshore servers puts the data beyond the jurisdiction of established U.S. security laws. In this instance, the originating counsel would have uncertain control over investigating and/or enforcing security concerns.

Additionally, while the risk of third-party data security breaches (that’s a lot of syllables to say “hacker”) is the same regardless of the server’s physical location, the United States’ long-arm statutes allow plaintiffs to extend personal jurisdiction throughout the country. Just one more advantage to requiring onshore servers from your LPO.

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.