Outsourcing Legal Support Services

Reprinted from:
Published 2/10

Outsourcing can contribute to work and cost efficiencies, if used correctly as a transparent resource. Here is an overview of the economics and ethics of this HR innovation.

Law firms of every size face increasing client pressure to build greater value and efficiency into the legal services cost structure. One result is the growing popularity of administrative service outsourcing. The principle of outsourcing is fundamental: Do what you do best—practice law—and let others do what they do best, most efficiently and at least cost to both you and the client .

Ethical Issues

Outsourcing is familiar to law firms, which for years have hired outsiders to handle mailroom and records-management functions. The more recent and dramatic direction of outsourcing is the use of Internet technology to connect firms with the growing pool of highly educated talent in developing countries where the use of English is widespread, with India being a prime example. Such offshore legal service providers can reduce by up to 80 percent the cost of functions like transcription, research, document review, patent searches, data entry and billing. This is not the practice of law. It’s the provision of quality, low-cost legal support products for licensed attorneys, with work delivered electronically and produced under the firm’s supervision.

There are definite ethical requirements to be observed when outsourcing. American Bar Association’s Formal Opinion 8-45, issued in August 2008, states the obvious: A lawyer may outsource work to lawyers and non-lawyers when such support is appropriate to represent the interests of clients, but the outsourcing lawyer is responsible for all the work done. This formal approval includes several parameters for the outsourcing lawyer. The fee for outsourced work must be reasonable. Clients should be informed of, and may need to consent to, the arrangement.

Passage to India

People the world over have similar capabilities and can achieve them through digital and electronic technology that makes the “playing field” flat and level for everyone. It thus offers a solution to the problem of clients becoming angry with their lawyers over charges they consider overhead and part of the cost of doing business—whether photocopies, file management or word processing. However, the cost advantage raises other issues. It’s clear that a lawyer who outsources practice activities will soon become more a manager of legal services and less of a hands-on lawyer. Some can handle this role change, some cannot. This is particularly true for firms that utilize global outsourcing.

Firms tend to hire persons who have an undergraduate degree in English and no more than two years of experience in Indian law (so that they do not have to unlearn old habits to provide the services American firms expect). Most firms will want to review credentials and conduct interviews remotely, then go to India for final interviews and hiring.

Sometimes the credentials of new hires can be vetted online, particularly if they are graduates of a top 10 Indian law school. Firms have found it best to hire fully credentialed lawyers but for practical purposes to regard them as paralegals, which still gives the Indian lawyers a substantial pay boost by their local standards. They also prefer to locate the lawyers at a dedicated facility (with high-speed Internet) in a major city with international air service like Mumbai or New Delhi; power supplies and personal access in the countryside are too uncertain.

Virtual Assistants

The foregoing are complex considerations and firms that do not want to deal with them have an outsourcing option that typically is closer to home. Virtual assistants (VAs) are paralegals or other administrative specialists who work offsite and online, creating work product to the firm’s specifications and tailored to its practice. As an independent business owner, the VA is neither employee nor subordinate. VAs resemble an accountant or any other business consultant with whom the lawyer has an ongoing, collaborative relationship. They become familiar with your practice and attuned to your business needs as much as any service provider engaged for a substantial length of time.

VAs should be selected like any other professional-service provider. Such criteria as an informative and well-constructed Web site, a business track record stretching at least three years, and adequate professional references are minimums. Don’t make a final selection without benefit of an interview, in person or by telephone. It is important to ensure that the VA has the technical skill and sophistication to conduct an effective online business relationship. Evaluate VA costs using your own professional yardstick. Too low a cost structure may indicate lack of business viability, while one that is too high will not enable you to accommodate it while still giving your clients the value they demand.

Beyond these business considerations, think through the professional qualifications that you want from the VA. A paralegal should have credentials from an accredited educational institution and should demonstrate knowledge of local rules regarding court and civil procedure, in addition to practical insights pertinent to your practice. Depending on your needs, a VA paralegal also can be expected to prepare documents for various proceedings, summarize depositions and conduct research.

An administrative VA should demonstrate the ability to organize documents and chronologies and create and maintain client files. Because all these activities must be performed electronically from a remote location, technology requirements include compatible e-mail, word processing, document management and database capabilities. There are, of course, other document exchange tools (fax, overnight courier, even surface mail), but effective electronic integration is a must.

VA Caveats. One of the most important considerations about the outsourced VA relationship is to ensure that it is in fact an engagement of an independent contractor. Do not think that every part-time or offsite paralegal or legal assistant qualifies. If the person you hire does not have independent control of their work process—if they rely on their employer for direction not only on what should be done but for how it should be done—that person may in fact fit the legal definition of an employee and subject you to all the legal requirements that employers must meet.

Note also that a VA relationship is different from that with a temporary employment agency. The latter can be a viable solution to small firm or solo personnel needs but if you need anything other than the most basic clerical assistance, it would be wise to consider and select a temporary on a long-term basis, known as “temp to perm.” This option accommodates extended projects and protracted litigation but should only be pursued with a temporary agency that specializes in temporary legal personnel.

Accountability and Value

The specialization issue again raises accountability concerns when using any outsourced function. A lawyer’s responsibility for his or her own firm is magnified by the requirements of the profession’s rules of conduct. These often extend well beyond the basics of individual ethical practice. There are, however, many other applications of the governance principle.

For example, a lawyer who engages an outside source to enter content onto a Web site or blog still has legal responsibility for the content. Firm administrators, no matter how grand their titles, are responsible only for profits, organization and efficiency. The firm’s lawyers, either collectively or as a management committee, are responsible for the quality of legal services. In these and other examples, the message is clear for your firm—the responsibility ultimately rests with you.

Legal outsourcing can contribute to work and cost efficiencies if used correctly as a transparent resource. However, that transparency must include proper oversight and quality control. The outsourcing of any aspect of legal practice should never be undertaken cavalierly. The financial incentives of cost-saving or fee-splitting may be offset by a host of ethical and client-service problems created by inadequate oversight.

When it comes to outsourcing, value is determined by the client, not the lawyer. But the lawyer must educate the client about value through effective communication. Outsourcing can benefit all sides in the legal services equation. The key to doing it successfully is to understand the nature of that value and to convey that understanding to the client.

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