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.]

NOTES:

  • 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.
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The State of Law Firm KM 2010

The Knowledge Management Peer Group of the International Legal Technology Association (ILTA) is once again sponsoring a survey to determine the current state of law firm knowledge management. Given the upheavals in the legal industry of the last few years, it will be interesting to see what if any changes emerge from the survey data.

Here’s the request from ILTA:

The KM Peer Group is conducting its biennial knowledge management survey to probe the trends, hot topics and development of KM in the legal industry. Results of the survey will be published in the KM White Paper scheduled for publication in June.  Please take five to ten minutes to complete the survey or forward it to the appropriate KM person in your organization (we only want one response per organization). As an incentive to participate, we will draw three names from our pool of respondents –– two winners will receive $500, and a third will receive his/her choice of $500 or a waived registration fee for ILTA 2010, the annual conference (a $1,025 value).

And, here’s the link to the survey, which will remain open until March 26www.zoomerang.com/Survey/WEB22ABG2QSZN4,

ILTA requests that you submit only one response per firm.  Thank you for participating and Good Luck!

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Do Generational Differences Matter? (ILTA09)

Jason Ryan Dorsey has mastered the art of “edutainment.” Over the course of a rollicking keynote address and subsequent 90-minute presentation he shook us out of our complacency about the impact of generational differences in the workplace. (A cautionary note: As I was tweeting his 90-minute session, several readers asked what data he had to back up his assertions. I’ve cited some resources below, but encourage all of you to satisfy yourselves by doing further research.)

While there has been lots of conversation about the impact of new Gen Y employees in the workplace, Dorsey believes that the biggest challenge most companies are facing is the enormous span between the oldest and youngest workers.  In many offices, you can find members of the following demographic groups attempting to work together:

  • Matures/Traditionalists – Born before 1946; while some have retired, finances have forced others back into the workplace
  • Baby Boomers – Born between 1946 – 1964; while they should be on  the verge of retiring, finances are keeping them on the job
  • Generation X – Born between 1965 – 1976; they should be moving into upper management, but are stymied by Boomers who won’t leave
  • Generation Y/Millennials – Born between 1977-1995; they have perfected “adult-olescence” and value lifestyle and relationships over work

As Dorsey pointed out, each of these groups was shaped by distinctly different experiences and, as a result, has a distinctly different outlook on life.  For example, Gen Y (which, according to Dorsey,  was raised by their parents to prize personal fulfillment over duty) seeks instant gratification while the Matures (formed by the Great Depression and World War II) have confidence in their ability to survive and thrive, and believe strongly in delayed gratification. Or contrast Baby Boomers whose approach to work is defined by paying one’s dues a certain number of hours per week  (hello face time!) with Gen Y, which prizes time flexibility and whose approach to work is to blur the lines between work time and personal time.

Perhaps the starkest difference among the groups was summarized by Dorsey as follows:  Boomers define themselves by what they accomplish at work.  Gen X and Gen Y define themselves by what they do after work. According to Dorsey’s calculations, Gen X and Gen Y combined now exceed 50% of the workforce and will redefine how we think about work.

Because of these conflicting approaches to work, Dorsey believes it take a skillful manager to find a way to engage each generation effectively based on their workplace preferences and priorities.    Here are some strategies he recommends to managers:

  • Generation Y: Since this group often lacks work experience and key workplace skills, they cannot always interpret your instructions properly.  Therefore, provide explicit examples of the performance you expect — don’t just state goals.  This group needs to feel that they are in touch with you, so deliver continuous feedback in short bursts rather than waiting for the annual review to let them know how they are doing.  Give Gen Y a wide range of challenges with clear outcomes and then when they succeed reward them with time.   This group values recognition, so provide reviews and rewards that they can show their family and friends.
  • Generation X: This group is inherently skeptical and wants you to prove what you’re saying.  Therefore, be prepared to explain why you have chosen  a particular strategy and what your backup plan is.  This group values reliability (they don’t like to be surprised) so be sure to keep the promises you make with them or give them plenty of warning if things aren’t going to work out as expected.
  • Baby Boomers: Acknowledge their contributions and how hard they work (they really want to know that you have noticed).  Because of their time focus, try to accommodate their schedules by arriving early and leaving on time.
  • Matures/Traditionalists: Show respect by listening to them and asking questions based on their experience.  They are unlikely to brag (or to respect braggarts) and prefer to fit in rather than stand out.  Therefore, find ways to assure them that they are part of the group.

Generational differences are going to push managers to the limit over the next few years as they find ways to identify and deploy the skills of each group in a constructive way.  Failure to meet this challenge could well result in miscommunication, underperformance and conflict at the office.  As far as Jason Ryan Dorsey is concerned, you’ve now been warned.

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If you’re interested in indulging your skeptical inner Gen Xer and checking Jason Dorsey’s facts and assertions, you might start with the following resources:

[Photo Credit: Brian Fitzpatrick]

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Help Law Firms Deliver Value (ILTA09)

Shift happens — even in law firms. Are you ready? That’s the question that kept surfacing at the ILTA09 conference last week.

You’d have to be living under a rock not to have noticed the impact of the economy on law firms and their clients alike.  Thankfully, ILTA09 didn’t just remind us of the bad news all around.  The conference did something more helpful — it provided information and real examples of how lawyers and technologists around the world are rising to the challenges of the shifting landscape.

While I’ve provided some fairly detailed reporting of several ILTA09 sessions during the course of the past week,  I want now to take a step back and try to convey some general themes that emerged across sessions.  My first focus is on delivering value.  This theme was launched officially with a keynote address by Richard Susskind entitled, “The End of Lawyering?”.  Over the course of his keynote address and panel presentation, he made the following points:

  • If law firms are serious about addressing client concerns regarding the rising cost of legal services, those firms will have to increase efficiency radically.  In order to manage costs, clients are going to have to consider collaboration with other clients and thereby share costs.
  • The best way to reduce costs intelligently is to start by analyzing your current costs of delivering services.  Once firms break down service into its component parts and price those parts, firms can then experiment with finding cheaper ways to provide those components.  This may mean sub-contracting the work or moving it offshore, for example.
  • One way to reduce costs is to standardize services (e.g., creating model or standard form documents). Going further, you can systematize or automate those services (e.g., by using document assembly tools).  Once automation is complete, a firm can then package these services and make them available online to clients, who can use the packaged services as and when needed.  The example Susskind cited was Wilson Sonsini’s contract generator for start ups.  He described packaged services like this as a means for firms to “make money while you sleep.”
  • Central to rethinking how we deliver services more efficiently is disrupting the current business model and deploying disruptive technologies in our firms.  However, while these disruptive technologies will give a firm competitive advantage, Susskind believes that most firms don’t seek this.  In his experience, firms are more concerned about suffering a competitive DISadvantage rather than having a competitive advantage.  In other words, they are more worried about being left behind than blazing a new trail.
  • Here are the top 10 disruptive technologies  Richard Susskind identified:
    • Automated document assembly.
    • Relentless Connectivity.  (Clients expect 24/7 availability, so lawyers need to use online tools to provide a continuous online presence.)
    • Electronic legal marketplace.  (Like on ebay, clients will have better pricing information and will be able to auction/bid for legal services.)
    • e-Learning.  (Laws schools are beginning to use online simulation tools train students for modern legal practice circa 2009 not 1980.)
    • Online Legal Service. (There are many English public sector websites that offer online legal guidance, so you don’t have to hire a lawyer.)
    • Legal Open-Sourcing. (Some legal resources are now gathered and offered free of charge.  This trend will grow like wikipedia.)
    • Closed Legal Communities. (More clients will form online communities to collect and share legal know-how.)
    • Workflow & Project Management. (Automation and enhanced project management can improve margins on high volume, low value work.)
    • Embedded Legal Knowledge. (More systems will embed compliance requirements, thus removing the need for separate legal advice.)
    • Online Dispute Resolution. (Moving dispute resolution online eliminates the expense of having to meet in a physical location.)

At a later session, Fred Krebs (President  of the Association of Corporate Counsel in Washington, D.C.) spoke about the ACC’s Value Challenge, which is based on the premise that it is the clients that define what constitutes “value” in legal services.  He started by pointing out that while overall costs to corporations have increased by 20% during the past 10 years, their legal costs have risen by 75%.  In order to address this imbalance, the members of the ACC have issued the Value Challenge to counteract what they describe as the “perverse incentives of the billable hour.” The Value Challenge aims to help corporate counsel manage costs by increasing transparency in the process for setting prices for law firm services.  Their hope is that this will bring about more efficiency and cost predictability.

Moving from theory to action, we then heard from some firms that were taking concrete steps to address the new economic realities.  One firm that has moved significantly down this path is Bryan Cave.  As John Alber and Connie Hoffman told us over the course of two sessions, they have spent significant time analyzing their services and business processes and now believe they know what it really costs to deliver services to clients.  With this data in hand, Bryan Cave can model the impact on price by changing the components of service (e.g., what happens if you change the staffing?).  Along the way, they created an online tool to help with this analysis and then licensed that tool to Redwood Analytics, who now provides it to other firms.  (This is another example of what Susskind calls “making money while you sleep.”)  Bryan Cave has also rethought how to conduct a due diligence review and created an online tool that streamlines the due diligence process.  They have been able to push due diligence work down to less expensive personnel while ensuring quality through a training component embedded in the tool.  In addition, they are providing transparency by allowing clients to obtain reports on demand regarding the process and cost of the due diligence effort.

On the subject of transparency, Mallesons in Australia has blazed a new trail with Mallesons Connect.  As described by Gerard Neiditsch, this new extranet application gives clients real-time information regarding lawyer activity, progress against project goals, and fees incurred.   It also provides information on billing history and outstanding invoices.  In the process, Mallesons learned that this transparency can have unexpected benefits.  Besides keeping everyone accountable, Mallesons discovered that once their law department clients saw the invoice information, they were able to expedite payments.

If your firm would like to rethink how it delivers value to its clients, the panelists advise you to start by analyzing your business processes.  Using a simple Gantt chart,  identify the components and dependencies of your process.  Once you really understand the workflow, introduce simple technology to help automate parts of the process.  If it works, extend it.  If it doesn’t work, learn from it.  Throughout this process, however, don’t forget the advice of Steven Levy, as quoted by one of the panelists:  “Technology cannot replace thinking. Automating broken processes won’t make us smarter; it can make us stupider faster.”

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For more information on delivering value to clients, see the following resources:

My post on a prior talk given by Richard Susskind and its implications for law firm knowledge management.

David Hobbie’s Caselines posts on Richard Susskind’s keynote address and the related panel presentation.

Andrew McLennan-Murray’s summary of Richard Susskind’s keynote and panel presentation.

Susan Jacobsen’s post on the the ACC Value Challenge session at ILTA09.

ACC’s resources on Leveraging Knowledge, including specific measures taken by various law firms.

[Photo Credit:  dasmart]

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Where Is KM Now and Where Is It Going?

Do current economic conditions have you concerned about the viability of law firm knowledge management? Would it be helpful to your thinking to hear from law firm KM experts on the current state of KM and where they think it’s headed? If so, consider tuning into the webinar offered by the Knowledge Management Peer Group of the International Legal Technology Association. The speakers in this moderated discussion will be

  • Stuart Kay (Director, Global Business Systems, for Baker & McKenzie, based in Chicago)
  • John Gillies (Director of Practice Support at Cassels Brock & Blackwell in Toronto)
  • Wendy Small (Head of Knowledge Management for Eversheds LLP)

The webinar will take place on Monday, June 8, 2009 at 12:00 p.m. Eastern / 11:00 a.m. Central / 10:00 a.m. Mountain / 9:00 a.m. Pacific.

To find additional information on the webinar (including fees) and to register, please go to the ILTA website.

[Photo Credit:  Just Us 3]

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The State of Law Firm KM

The International Legal Technology Association (ILTA) is assessing the current state of law firm knowledge management and would like your assistance. Their first step is to gather data on what’s happening on the ground. To participate, please complete their brief online survey, which focuses on the number and types of people who work in KM within law firms. The results will be reported by Ron Friedmann on an aggregate, anonymous basis in an ILTA Knowledge Management White Paper to be published in June.

If you need something other than community spirit to encourage you to complete the survey, please note that the names of all participants will be entered into a drawing. The prize? Waived conference fees so that you can attend the ILTA conference this summer without destroying your KM budget.

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