Legal Process Outsourcing: Ethical, Practical & Legislative Considerations

This session on Legal Process Outsourcing (LPO) was presented by Mark Ross, VP Legal Solutions at Integreon and David Stanton, a litigation partner in Pillsbury’s Los Angeles office. Mark is an experienced UK litigation solicitor and former partner at the UK law firm Underwoods Solicitors. Underwoods was the first UK law firm to outsource legal work to a lower cost common law jurisdiction. David has a large outsourcing practice. Pillsbury has experience managing a global team of eDiscovery providers while meeting US legal and ethical obligations.

[These are my notes from LegalTech NY 2011.  Since I’m publishing them as soon as possible after the end of a session, they may contain the occasional typographical or grammatical error.  Please excuse those. To the extent I’ve made any editorial comments, I’ve shown those in brackets.]


  • Outsourcing is nothing new — it basically is delegation. While lawyers have outsourced and delegated tasks for years, the difference today is that we are delegating these tasks to people who work in another country. This raises new issues.
  • Ethical Obligations Differ Depending on What is Outsourced. Are you outsourcing administrative support or “substantive legal support services”?
  • Client Confidentiality in the Cloud is a Big Issue — however, these go beyond legal process outsourcing. That said, firms considering LPOs are often most worried about preserving the confidentiality and security of client information.
  • ABA Formal Opinion 08-451 key points — US lawyers may outsource, but they remain responsible for rendering competent legal services; US lawyers need to ensure that the conduct of personnel performing outsourced tasks complies with the US lawyer’s professional obligations; US lawyers must retain direct supervisory authority of outsourced personnel and work; US lawyers must make appropriate disclosures to clients; the fees charged must be reasonable; US lawyers much avoid the unauthorized practice of law by the personnel performing the outsourced tasks.
  • Avoiding Aiding the Unauthorized Practice of Law — the mere fact that an LPO provider hires US-qualified lawyers to carry out the work doesn’t relieve law firms of their ethical obligation to prevent the unauthorized practice of law. While outsourcing to US-qualified lawyers may improve the quality of work product, it doesn’t answer the law firm’s ethical obligations. The law firm must closely supervise the work in order to ensure they aren’t aiding the unauthorized practice of law. You need to be sure that non-lawyers are not doing a lawyer’s work. The responsible law firm needs to have a transparent system in place to measure and report on quality/success and to ensure that tasks are carried out by appropriate personnel. What is the response mechanism for addressing inadequate performance and improving performance? How do you document to show that tasks are appropriately assigned and performed adequately? What happens when the client has “preferred vendors” who carry out the work, regardless of the identity of outside counsel — what does that outside counsel need to do to meet their ethical obligations.
  • Review Your Firm’s Malpractice Insurance Poliy — be sure it allows for the hiring of outside providers. If there is any ambiguity at all, be sure to discuss it and resolve it with your insurance carrier.
  • San Diego County Bar Association Ethics Opinion 2007-1 (January 2007) — this is an important opinion and should be read by every firm considering outsourcing. It discusses a hypothetical in which a firm fails to meet its ethical obligation to prevent the unauthorized practice of law because they lacked the necessary substantive legal knowledge required to assess accurately the quality of the work performed by the LPO provider.
  • Disclosure is Key — you need to disclose the LPO arrangement to your client if any confidential information is involved, if the LPO arrangement constitutes a significant development in a matter, if a client has a reasonable expectation of disclosure.
  • Conflicts of Interest — since LPO providers are not bound by the ethical obligations imposed on US lawyers. Nonetheless, US lawyers should be sure to ask their LPO providers to undertake conflicts checks to ensure that they are not doing anything that makes it difficult for the US lawyers to meet their own ethical obligations to avoid conflicts of interest.
  • Confidentiality and Data Security — Ross and Stanton belive this is almost a moot point since most LPO providers have put in place confidentiality and data security measures that are more stringent and effective than that of most law firms.

Teamwork Not Genius

Houston, we have a problem.

For years the legal profession has encouraged individual excellence and rewarded individual productivity.  In fact, we’ve come to admire those outstanding lawyers who define the best of the legal profession.  Every firm has its legendary lawyer — the person who defied odds to win an unwinnable case or found a solution to a seemingly intractable corporate problem.   We may even believe that some of these men (and they almost always were men back in the day) were geniuses. And so we aspire to be brilliant, just like them.

But what happens when the challenges are too big for one person to handle alone? While he doesn’t mean to diminish in any way the accomplishment represented by the theory of gravity or the theory of evolution, Jonah Lehrer reports that things are more challenging now than they were in the times of Newton and Darwin:

…our modern problems have gotten so hard – so damn intractable, complicated and multi-disciplinary – that we can no longer solve them by ourselves. … But the complexity of our 21st century problems (clean coal, hydrogen cars, everything in neuroscience, string theory, etc.) has not just led to a postponement in peak creativity. It has also lessened the importance of the individual. …teams have become a far more important part of intellectual production.

…the era of the lone genius is coming to an end. If our current lists of global thinkers seem paltry, it’s because the best thinkers no longer exist by themselves, toiling away in a vacuum. Instead, they require the constant feedback and knowledge of others. We live in a world of such complexity that our problems increasingly exceed the possibilities of the individual mind. Collaboration is no longer an option.

And here we find our problem.  If the path to innovation and progress lies in teamwork and collaboration, what are lawyers going to do?  Psychological studies of lawyers indicate that they score low with respect to the personality traits most useful for harmonious and productive teamwork.  Furthermore, Lehrer describes the best environment for innovation as one with constant feedback, knowledge sharing and transparency.  Does this sound like your law firm?

As I said earlier, Houston — we have a problem.

[Photo Credit: MsAnthea]


A Better Strategy for Law Firm Librarians

As I venture out onto what may be thin ice, I’d better start with some disclaimers.  I’m not  a law librarian, although I have had responsibility for a law firm library.  I’m not a management consultant with 14 different ways up my sleeve to help you figure out your business strategy. However, I am a longtime consumer of the services provided by law librarians.  And, I am a longtime collaborator with law librarians.  It is from these perspectives that I’m compelled to say that the strategy Greg Lambert suggested in Testing Your Law Library Strategy may not be the best one for law librarians.

To be fair, most of what he says about using the McKinsey tests as a way of examining and strengthening your strategy makes good sense.  While there may not be a 1:1 correlation between the businesses McKinsey usually advises and your law firm library, an exercise like this can often lead you to new insights.  And that’s all good. The part that pulled me up short, however, was the discussion about “beating the market.”  Here’s how Greg defines beating the market:

Beating the Market means that the strategy will better position the law library to compete in the market place against internal and external competitors, and will improve the way the library leverages the use of internal and external competitors.

If that’s the case, good luck to you!

From my perspective as a law firm library client and collaborator, I see things differently:

  • Competition is not the best way to frame this.  Focusing on beating and leveraging the competition requires a lot of institutional strength and influence. While some law firm libraries have this, many do not. It may be fun to consider a David and Goliath scenario that pits your law firm library against Google, but do you actually want to try that in real life?
  • Google is now engrained in our online lives. It is always available and always ready to help. It works outside regular business hours and doesn’t leave me to hanging while it helps someone else. While it doesn’t always guide us to the right resources, how does it stack up against all the super-busy law firm librarians we know?
  • What about the law librarian’s “internal competition”? These are the folks (e.g., paralegals, associates, clerks and secretaries) who are able to provide services comparable to those provided by your library.  Rather than focusing on beating them, I’d focus on understanding them.  Do they really provide a duplicate service? And, are they doing it in a more cost-effective or efficient manner? If so, the law librarian should leave them to it and get out of the way.  If these internal competitors are bringing extra value to the service that you cannot provide, then you definitely should cede this ground.  If, however, they are not bringing value, then it is in the interest of the firm and its clients that you work with them to ensure that the right folks are providing the right services.  This isn’t about competition — it’s about eliminating unnecessary duplication and streamlining your processes.
  • Greg also says: “…even if internal and external competitors end up being the best way to accomplish our objectives, it [should be] accomplished in a way that makes sure the law library is still an important player in that market.”  I’m not sure I agree with that either.  Now you are talking about riding the coattails of more successful “competitors.”  Is that really how you want to spend your professional life?  If Online Tool X is in fact the best way to carry out a research project, then work to ensure that the people in your firm are trained to use Online Tool X efficiently and effectively.  Don’t be tempted to force everyone through the library’s intranet page to win access to Online Tool X.  That doesn’t make the library more relevant.  It just makes it more of a hurdle.

I’ve worked with collaborative librarians and I’ve worked with competitive librarians.  As a client and a collaborator, I can tell you that the collaborative law librarian is infinitely better than the one who is constantly battling me and others for turf, influence and credit.  The collaborative law librarian works with me in such a way that our joint work product is appreciably better than anything either she or I could have produced independently.  Once I’ve seen a result like that, she becomes a key part of my team because she makes both of us look good. And, more importantly, the net result is better for the firm and its clients.

    In short, Greg’s approach to beating the market seems born of a rather grim, Manichean view of the world.  It really shouldn’t  be about us versus them because if it is, law firm librarians may well be toast.  I’d recommend following a more lighthearted guy, Ronald McDonald, who once famously said:  “If you can’t beat `em, join `em.

    [Photo Credit: Adrienne Massanari]


    Times Are Changing — Are You?

    For the last few Sunday nights, my family has been completely absorbed by the upstairs downstairs drama of Downton Abbey. This English import provides a glimpse of life in an aristocratic home just before the First World War. One very poignant moment occurs early in the series when a man trained to be a gentleman’s valet realizes that the skills he has spent a lifetime perfecting are no longer needed.

    I found myself thinking of that valet as I read some recent posts on the shifting boundaries of law firm knowledge management. There are some who seem bewildered to find themselves in a world where the traditional things they have done don’t seem valued anymore. Meanwhile, there are others who are finding increasingly inventive ways to stretch their job descriptions.

    If you think we are not in a period of flux, you would do well to read some of the posts below. Taken together, they present a picture of law firm life and the role of the knowledge manager that is rather unsettled and unsettling. In the face of these tensions several law firm knowledge managers I know are looking for ways to ensure their continuing relevance. As is so often the case, the interests and innate abilities of particular individuals lead them to explore avenues (and hidden alleys) that may not have been within the traditional territory of knowledge management. I expect this will only accelerate. No matter what our views are on these developments, it’s hard to ignore the pace of change around us. The question for each of us is how are we going to reshape our jobs before the oncoming revolution does it for us?


    What Makes Lawyers So Challenging?

    What makes lawyers so challenging?

    No, this is not the beginning of a lawyer joke! Rather it’s the question that was answered at an informative session held at the Practising Law Institute in New York City.  As part of a day-long program on legal project management, the organizers asked Mark I. Sirkin, Ph.D., to speak about the personality traits of lawyers and their suitability to lead or serve on project teams. (Dr. Sirkin is the co-managing partner of Threshold Advisors, LLC and was formerly a consultant with Hildebrandt.) Using recent research and the Hogan Personality Inventory Scales, Dr. Sirkin identified the following challenges:

    • Lawyers are not designed for teamwork. Most lawyers have the personality trait of Autonomy, which means they would prefer to do their own thing rather than work with others.  Further, not only do they score high in Autonomy, but also in Skepticism and Pessimism. They are trained to assume the worst, look for problems, issue spot. Taken together, these traits can make them hard to be around.
    • Lawyers don’t find it easy to work with others. Lawyers score below the general population in Sociability (i.e., the need for social interaction) and Resilience (i.e., they are thin-skinned).
    • Lawyers are trained for independent action. Law schools traditionally have emphasized individual performance. Contrast this with business schools, which require teamwork from their students from the beginning.
    • Law firms traditionally have rewarded individual performance. If the compensation system of a firm is individualized and competitive, it does not provide incentives for teamwork and cooperation.
    • Lawyers feel fungible. If a lawyer feels like a fungible billing bot, that lawyer will find it hard to identify and pursue an inspiring goal. Sharing inspiring goals is key to establishing team spirit.
    • Lawyers tend to be adversarial. Dr. Sirkin’s data show that many (if not most) lawyers tend to be adversarial by nature. Further, they are tough-minded and tolerant of conflict.
    • Lawyers have high Urgency. A high Urgency score indicates a tendency to rush to action.  Most lawyers score high in Urgency, which means that they tend to lack patience for the early planning that is required for project management and teamwork.
    • Lawyers are not detail-oriented. The data supporting this assertion will surprise lawyers and their critics alike.  When compared to the general population, lawyers tend to be more “big picture” people and less focused on small details.  To the extent lawyers do focus on details, it is often because of their Aesthetics score, which tends to push them toward providing good work product.

    While a lifetime of hearing lawyer jokes may predispose you to believe that lawyers have few good traits, the reality is more nuanced than that.  Their self-selection over time tends to concentrate particular traits within the profession, but those traits have been viewed as necessary for survival until now. That said, lawyers at the top of their game are highly functioning individuals who have accomplished a great deal of good in the world.  Nonetheless, from a purely self-referential perspective, I do find this research troubling. What is clear is that the personality traits of many lawyers make them less amenable to general law firm knowledge management efforts. When reinforced by an “eat what you kill” compensation system, they apparently have little incentive to share, cooperate or collaborate.

    However, the problem goes far beyond law firm KM. In fact, this discussion left me wondering if the people who had been so successful in a profession that traditionally emphasized independent, adversarial action might now be ill-equipped for the new style of lawyering involving project management, focused teamwork, effective knowledge management and transparency.  Obviously, firms will need to change their training practices.  Will they also have to change their hiring practices?

    [Photo Credit: slgckgc]


    The Secret to Productivity? Money and Smiles

    My To Do List: The Functional Tattoo

    Optimal productivity is something we may strive for, but too few of us attain.  Consequently, many feel buried alive under the weight of an unruly, constantly growing To Do list.  The technovores among us may attempt to alleviate the pain by using the latest software that claims to be able to organize your life.  And yet, reality often falls short of these promises.

    Part of the problem is that we’ve forgotten that productivity doesn’t necessarily mean getting everything done.  Rather, productivity means getting the right things done right. Because of this memory lapse, we may find ourselves racing to stay ahead of the urgent or we may numb ourselves by dealing with those mindless tasks that seem easy to complete, but don’t have much lasting value.  The net result is diminished productivity and a creeping sense of impending disaster.

    Into this sorry mess steps Mike Michalowicz with a recommendation that we adopt a back-to-basics approach to productivity:

    • Take a legal pad and draw two columns — one labeled Task and the other labeled Type.
    • Handwrite in the first column all the tasks you think you have to accomplish.
    • In the second column draw a dollar sign ($) next to every task that is reasonably likely to generate revenue for you in the next 30 days. Then, draw a smiley face next to every task that is reasonably likely to make your clients happy.
    • Systematically work through the items marked with $ or .
    • Ignore the rest — unless you have a ton of extra time on your hands.

    That’s it.

    Unless you’re an emergency room doctor, ignore the urgent and simply focus on what Michalowicz says is most important — money and smiles.  As far as Michalowicz is concerned, this is the most effective productivity strategy he has ever followed.  Here’s how he sums it up: “If cash is flowing and the customers are happy, who cares if I never get around to the other tasks?”

    [Photo Credit: Rob and Stephanie Levy]


    Investing in Knowledge

    Does your firm invest in knowledge?  Does it have an effective knowledge development strategy? Or is it simply paying lip service to the notion of being in “the knowledge business”?  Even if you believe that your firm has a strong commitment to investing in its knowledge, I’d invite you to keep reading.

    Yesterday I had the good fortune to receive from Oz Benamram an interesting Harvard Business School case study entitled, McKinsey & Company: Managing Knowledge and Learning.  The case study recounts McKinsey’s journey from 1926 to 1996, viewed through the lens of McKinsey’s growing understanding of the value of investing in the knowledge of the firm. McKinsey is famous for its emphasis on internal training and knowledge sharing.  In fact, Rajat Gupta (the managing director of the firm at the time the case study was written) has been quoted as saying that “knowledge is the lifeblood of McKinsey.” This case study gives us a glimpse of how much consistent effort has been required on the part of members of the firm at all levels to create and sustain this reputation for knowledge investment and excellence. The case study portrays a firm that seems to be seeking constantly to improve the ways in which it helps its people grow professionally. It’s also clearly committed to maintaining its position as a thought leader. In reading the study, I was struck by several things:

    • When McKinsey created the position of full-time director of training, the person appointed to the position was one of the firm’s most senior and productive partners.  This sent a clear signal that the role was strategically important for the firm.
    • Fred Gluck (another former managing director of the firm) strove to create a more stimulating intellectual environment within the firm.  Accordingly, he “set out to convert his partners to his strongly held beliefs—that knowledge development had to be a core, not a peripheral firm activity; that it needed to be ongoing and institutionalized, not temporary and project based; and that it had to be the responsibility of everyone, not just a few.”
    • Professional development and knowledge management activities were natural outgrowths of each other:  “As the firm’s new emphasis on individual consultant training took hold and the Clientele Sectors and Centers of Competence began to generate new insights, many began to feel the need to capture and leverage the learning.”
    • Even before McKinsey had a formal knowledge management effort, the firm tried to lower internal barriers to knowledge sharing.  One of their first efforts was to encourage consultants to prepare two-page briefings that could be distributed firmwide.  These practice bulletins were used to spread ideas and helped elevate within the firm the reputations of the authors of these briefings.
    • McKinsey’s first formal KM project was  to develop a common database of knowledge gleaned from various client engagements and then developed within specific practice areas (the Practice Development Network).  Interestingly, they also undertook an informal project that initially proved to be much more popular than the electronic database:  a printed index of subject matter experts and core documents critical to each practice area (the Knowledge Resource Directory, aka the McKinsey Yellow Pages). While the case study does not state why this second effort was so popular, its rapid adoption might be due to the fact that the resource was concise, focused and highly portable.
    • Their approach to KM changed as the firm better understood how it needed to use the knowledge it was trying to manage:  “By the early 1990s, too many people were seeing practice development as the creation of experts and the generation of documents in order to build our reputation. But knowledge is only valuable when it is between the ears of consultants and applied to clients’ problems.  Because it is less effectively developed through the disciplined work of a few than through the spontaneous interaction of many,  we had to change the more structured `discover-codify-disseminate‘ model to a looser and more inclusive `engage-explore-apply-share‘ approach.  In other words, we shifted our focus from developing knowledge to building individual and team capability.”
    • KM is not just about size — a bigger database is not necessarily better.  The knowledge has to be managed for some useful purpose. At McKinsey, Fred Gluck “created a Client Impact Committee, and asked it to explore the ways in which the firm could ensure that the expertise it was developing created positive measurable results in each client engagement.”
    • While there has been vigorous debate about the single best knowledge development strategy, Rajat Gupta was of the view that it was better to try a variety of methods rather than spending firm resources simply discussing the issue.  This has led to a continued significant investment in knowledge development.  According to Gupta,  “We have easily doubled our investment in knowledge over these past couple of years.  There are lots more people involved in many more initiatives.  If that means we do 5-10% less client work today, we are willing to pay that price to invest in the future.  Since Marvin Bower, every leadership group has had a commitment to leave the firm stronger than it found it.  It’s a fundamental value of McKinsey to invest for the future of the firm.”

    [emphasis added]

    So now that you’ve learned a bit more about McKinsey’s efforts, let me ask if your firm’s commitment to knowledge and learning is comparable to that of McKinsey?  If not, why not?

    [Photo Credit: Nilram]


    From Resolutions to Reality

    A new year, a new beginning.

    Inevitably, with the change of the calendar comes the almost irresistible urge to make New Year’s resolutions. The problem is that for most of us, they rarely are resolutions that govern the entire year. Rather, they are more along the lines of a little wishful thinking for the first few weeks days of the new year.

    With that reality in mind, it might be prudent for me to refrain from suggesting that we make even one resolution, but the optimist in me persists. So I’ll try again this year.  However, to maximize our chances for success, let’s keep things simple.  Just answer the following question:

    What one action could you take in 2011 that would meaningfully improve your work?

    • Refocus your strategy?
    • Add or remove one particular responsibility?
    • Pull the plug on an underperforming project or work relationship?
    • Be in closer touch with your clients?
    • Rethink your business model?

    To be honest, I’d love to do all the above in 2011.  However, that’s really too big a bite to chew.  Even with the best intentions in the world, tackling all of these at once is likely to result in an undigested mess. Since I want to move from wishful thinking to a better reality, I need a more limited approach. In my case, it comes down to one thing: focus on the true value of my work.  Once I know what generates value, I know where to concentrate my efforts.  If I can do this one thing in 2011, I will radically improve my reality and the reality of my clients.

    So, if you’re committed to moving past paper resolutions and wishful thinking to something concrete, what’s the one thing you can (and will) do in 2011 to improve your reality at work?

    [Photo Credit: Win Lwin]