Don’t Believe the Hype
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.
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