Current Trend To Outsource Legal Work Abroad and the Ethical Issues Related to Such Practices, The

INTRODUCTION

In the legal profession where costs and efficiency matter, law firms, like other companies and corporations, have begun to take advantage of the benefits realized by tapping into the foreign workforce.1 Lawyers have begun to realize the rewards of cost-savings, convenience, and efficiency through the outsourcing of legal work to foreign countries, such as India.2 The "highly educated, English-speaking" foreign workers employed by law firms are expected to carry out legal and administrative tasks that in the past would have been handled by junior-level employees, such as paralegals.3 As outsourcing strategies have become increasingly popular, questions have arisen about the legal and ethical consequences of such practices.

The recent downturn in the U.S. economy has driven numerous American corporations to begin outsourcing and offshoring their legal work to professionals in countries such as India, New Zealand, South Korea, and other countries where the cost of labor is significantly lower.4 One recent study reports that employees in India charge only $40 an hour as compared to the $120 an hour charged by U.S. firms for comparable work.5

In the past four years, more than three million U.S. legal jobs have been outsourced to foreign countries, according to the U.S. government.6 It is estimated that in the next ten years more than thirteen million U.S. legal jobs will be moved offshore to be performed by foreign workers.7 This growth of outsourced legal work by U.S. companies could make up two percent of all new legal jobs.8

According to the U.S. Bureau of Labor Statistics, in 2004 there were approximately 530,000 lawyers and 215,000 paralegals employed in law firms and other organizations in the United States.9 In 2002, it was estimated that U.S. lawyers and law firms received legal services from approximately 1,300 Indian workers.10 These Indian workers produced approximately $52 million in revenue for the U.S. lawyers and firms for which they worked.11 It is predicted that by the year 2015, if the current growth rate continues, Indian employees will have increased the amount billed to U.S. firms to $970 million.12

Outsourcing is still a relatively new phenomenon in the legal market but scholars, lawyers, and paralegals all feel the effects.13 As future predictions foresee increased outsourcing and offshoring, it is important to understand the ethical and legal effects of this practice and to develop guidelines for firms and lawyers who decide to undertake and engage in this strategy.

This Note will discuss the issues of conflicts of interest, client confidentiality, lawyer supervision, and disclosure to clients that their work is being performed by employees abroad as they relate to the outsourcing of legal work. In addition, the Note will provide suggestions on how the Model Rules of Professional Conduct should be amended and enforced to take account of the increased practice and concerns raised by the outsourcing of legal work abroad. Part I presents an overview of what outsourcing entails, and will explain the specific types of work that law firms have begun outsourcing abroad. Part II addresses the ethical issues implicated by outsourcing legal work abroad. Part III discusses the future of legal outsourcing. Finally, Part IV provides suggestions for monitoring compliance with applicable ethical rules by law firms that decide to outsource their legal work abroad.

I. WHAT Is OUTSOURCING OF LEGAL WORK?

Outsourcing is the "sending of work traditionally handled inside a company or firm to an outside contractor for performance."14 The main advantages to a company or firm that outsources work are convenience, cost-savings, and problem solving.15 Outsourcing results in efficiency and convenience to the company or firm because the outsource worker is able to perform the required tasks on a schedule that meets the company's or firm's needs.16 For example, the time difference between the United States and countries to which work is outsourced provides a convenience to U.S. law firms and gives the lawyer a sense of operating on a 24-hour-basis.17 The companies that outsource also realize a financial advantage because the outsourced work is completed at lower rates than those incurred by domestic companies or firms.18 U.S. firms can also decrease specific costs by outsourcing legal work, especially costs associated with employee salaries and office space rent.19 Despite the occasional price markup for outsourced work, "lawyers say that the financial incentive of outsourcing legal work is the factor that most impresses their clients."20 Finally, outsourcing involves a problem solving technique for firms-the outsource worker assists the firm with its unique requests that would otherwise require a significant and costly commitment by the firm if it were to perform the task in-house.21

Traditionally, the work that is outsourced abroad to third-party vendors entails work similar to that completed by paralegals and legal assistants in the United States.22 This type of work is typically called "commodity work," which includes, "[d]ocument review, online and legal research, patent applications, contract and other document drafting, litigation support, and paralegal services."23