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Legal outsourcing warning

Briefs

Cite as: April 2012 86 (04) LIJ, p.12

The LIV has warned members to consider the risks surrounding international legal process outsourcing (LPO) support services.

While the practice of sending work offshore is relatively new for Australian law firms, those in other jurisdictions have been outsourcing work to outside providers for several years.

Outsourced work can include contract drafting, review and management, compliance assistance, e-discovery and litigation and patent support.

Those providing LPO services are generally third-party providers staffed by lawyers trained in the host jurisdiction.

The LIV Ethics Committee is in the formative stages of considering the myriad of issues associated with LPO.

Initially, however, the committee believes that the issue is wider than just Victoria and, as state regulators cannot regulate beyond their own borders, a national approach is needed.

LIV president Michael Holcroft said key issues for LIV investigation are those surrounding ethics, security and privacy and he warned local firms to consider the risks before building LPO into their business models.

“We have to remember we are a profession, not an industry. And while LPO can be efficient and cheap, sometimes cheap labour does not necessarily mean they have the same skills and protections. I urge all members to be cautious,” he said.

Legal Services Commissioner Michael McGarvie said while the Legal Profession Act 2004 did not specifically refer to LPO, locally based lawyers or law firms who outsource remain responsible for the work through the usual client-lawyer relationship and the obligations that flow from that relationship. He said that while there was no legal obligation to disclose outsourcing of work, “it would be prudent to advise clients of the intention”.

“Legal regulators intend to consider this issue from a consumer protection and education perspective,” he said.

Mr Holcroft said firms outsourcing legal work overseas should ask several questions before proceeding. “Do you know how to identify where the work is actually being performed? Is the person performing the work is qualified to perform the work?

“Do you know if the material is being kept private, or if it is being used or viewed by third parties?

“You also must think about laws in operation in other countries as the legal privilege you receive here you may not receive elsewhere.”

Ethical issues already identified include maintaining confidentiality, the extent that professional indemnity insurance will cover the Australian firm where there is little or no supervision of the work by an Australian lawyer, legal work being performed by people whose qualifications are not recognised under Victorian law and the need for Australian lawyers to ensure the outsourcing provider has safeguards in place to prevent a conflict arising.

The Ethics Committee is also reviewing guidelines published by other jurisdictions – such as those by the Law Society of England and Wales. To view the Law Society of England and Wales Law Society LPO document, visit http://tinyurl.com/7kzwk5s.

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