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Opinions & Insights
by Gary Zeiss, Esq. on August 28, 2008
Legal Process Outsourcing firms are buzzing about a recent ABA Opinion that discusses Legal Process Outsourcing. The hype would tell you that the ABA gave Legal Process Outsourcing a big "thumbs up," but a closer read of the opinion raises some very important issues (and potential concerns). Certainly, the article reads more like an acceptance of fact than a ringing endorsement - as some of the LPO bloggers would, no doubt, prefer.
As an initial point, it is important to remember that the ABA, while an important organization, has no real rule-making ability. That ability, instead, falls to the state bar associations.
Looking at the article, it is important to note that simply handing off the work to a foreign lawyer - and forgetting it - is not acceptable. Furthermore, the opinion suggests an active management role, including site visits, vetting individual attorneys and other management activities that have proven difficult for companies with a large outsourcing presence, and will likely be near-impossible for law firms, with somewhat arcane management practices, to fulfill.
Fees were another interesting area of the report. The door was open to marking up fees, but such a markup had to be "reasonable for the services rendered." Also, if charged as a disbursement, the fees should be passed through at cost, with a modest administrative charge. This approach is somewhat inconsistent with the approach taken by some local bar associations, who suggest that the charges are a disbursement and must be passed through without markup.
In the end, this Opinion letter will no doubt erase some concerns about Legal Process Outsourcing. However, many questions still remain - including acceptance by the client community, acceptance by more traditional law firms, and a clear understanding of the operation of the rules surrounding the practice of law.
As an initial point, it is important to remember that the ABA, while an important organization, has no real rule-making ability. That ability, instead, falls to the state bar associations.
Looking at the article, it is important to note that simply handing off the work to a foreign lawyer - and forgetting it - is not acceptable. Furthermore, the opinion suggests an active management role, including site visits, vetting individual attorneys and other management activities that have proven difficult for companies with a large outsourcing presence, and will likely be near-impossible for law firms, with somewhat arcane management practices, to fulfill.
Fees were another interesting area of the report. The door was open to marking up fees, but such a markup had to be "reasonable for the services rendered." Also, if charged as a disbursement, the fees should be passed through at cost, with a modest administrative charge. This approach is somewhat inconsistent with the approach taken by some local bar associations, who suggest that the charges are a disbursement and must be passed through without markup.
In the end, this Opinion letter will no doubt erase some concerns about Legal Process Outsourcing. However, many questions still remain - including acceptance by the client community, acceptance by more traditional law firms, and a clear understanding of the operation of the rules surrounding the practice of law.
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