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Panel signs off on outsourcing work to foreign countries: ethics opinion may still come before the Board of Governors.

Florida Bar ethical rules do not prevent attorneys from outsourcing paralegal work to India or other foreign countries, but lawyers may have to take extra steps to ensure that confidential client information and privileged materials are not compromised.

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That's part of the conclusion of a controversial ethics opinion given final approval January 18 by the Bar's Professional Ethics Committee during the Bar's Midyear Meeting. The opinion may be appealed to the Bar Board of Governors, which then will have the last say on the issue.

The PEC has been working on the issue for almost a year since an Orlando law firm inquired about giving an Indian company access to its computer files to perform paralegal type work on various cases.

As it had at past committee meetings, the issue sparked a strong debate on whether outsourcing work to another country differed materially from doing so to a domestic provider and whether client confidences and other sensitive information could be adequately protected when sent overseas.

"One of the things that is of complete importance to the people I have talked to is confidentiality. You cannot ensure confidentiality of information that is transferred from here to, in this case, an Indian company," said committee member Pamella Seay. "Outsourcing is one thing - we're going to hire the paralegal down the street or hiring an independent medical reviewer. This is not outsourcing. This is offshoring. We are sending documents and materials to persons outside the United States who do not have the same structure we do, who do not have the same rules we do....

"Once it's outside the United States, there's no jurisdiction, federal or state, if you want to protect it."

She noted one case where confidential information had been sent overseas and wound up being revealed in a related case in a German court. Seay also said some lawyers are now seeking orders to ensure their clients' confidential information is not sent overseas when opposing lawyers use foreign companies for paralegal and other support work. That information, she added, can include Social Security numbers, bank account information, and other such sensitive information.

The proposed opinion lists steps lawyers "should" take to protect clients' information, but those should be given as "musts," Seay argued, including a requirement that clients be informed when information is sent to another country.

But committee member Bill Wagner said much of what Seay wanted goes beyond an ethics opinion and would require a rules change.

"I don't find anything [in Bar rules] to make a distinction between the border from here to Georgia and from here to India or here to Mexico," he said. "It's going on, and if we want to correct that, we're going to have to change the rules.

"Right now we say to the lawyer, 'You've got to protect confidentiality.' If he's stupid enough to stick it in the mail drop to India and something happens, it's his fault."

As for requiring disclosure, committee member Steven Tepler noted the committee looked at that and ran into the problem of what constituted adequate informed consent. Rather than try such a tricky definition, he said it was better to caution lawyers about their ethical duty and leave the final decision to them.

Similarly, Wagner and others said having the ethics opinion say that lawyers "must" do certain things would create the erroneous impression that if lawyers did those things then they would be held blameless if confidential information was leaked.

"At least we can say we put lawyers on notice in this state of the perils and if you think you can manage the perils, do it," Tepler said.

Committee member Joe Centorino said some lawyers would see this as a Bar endorsement of the practice.

"We're really opening the floodgates here. A lot of lawyers are going to take this opinion and run with it, and we don't know where they're going to go. There are a lot of places worse than India," he said. "I'm really troubled with opening up the Bar to serious problems that we don't have control over. This will be cited by a lot of lawyers who say the Bar says it's OK."

Others questioned a lawyer's duty to opposing parties, because the lawyer could receive confidential information from them and then send it overseas where it might be compromised.

The committee voted 17-6 to give final approval to Proposed Advisory Opinion 07-2. Under Bar rules, the opinion becomes final unless someone who filed comments with the PEC seeks an appeal to the Bar Board of Governors. Because of the controversial nature of the opinion, an appeal to the board is expected.

The approved opinion notes the inquiring attorney asked about sending work to an overseas company that does not employ Florida Bar members (although some people doing the work are licensed lawyers in India). The work would include document preparation, the creation of business entities, business closings, and immigration work. The Indian outsourcing company would have access to the firm's computers and might contact clients directly to obtain information.

While the inquiry raises special considerations, including that a lawyer may not assist in the unlicensed practice of law, the opinion said, "It is the committee's opinion that there is no ethical distinction when hiring an overseas provider of such services versus a local provider, and that contracting for such services does not constitute aiding the unlicensed practice of law, provided that there is adequate supervision by the law firm."

But the lawyer must still follow UPL guidelines laid out by the Florida Supreme Court and must supervise the nonlawyers, which may require extra steps because of the remote location of the paralegals. That step also includes ensuring that the paralegal company is free from conflicts of interest and understands and follows Florida practice and ethical rules.

Most information will likely be sent to the paralegal company by electronic means and the law firm must take steps to ensure the information--sent electronically or otherwise--cannot be intercepted or otherwise compromised, the opinion said. It also questioned whether the Indian firm should have direct access to the firm's computerized records.

As for client consent on using the foreign paralegal services, the opinion said, "The committee believes that the law firm should obtain prior client consent to disclose information that the firm reasonably believes is necessary to serve the client's interests. ... In determining whether a client should be informed of the participation of the overseas provider, an attorney should bear in mind factors such as whether a client would reasonably expect the lawyer or law firm to personally handle the matter and whether the nonlawyers will have more than limited role in the provision of the services."

On paying for the services, the opinion held, "The law firm may charge a client the actual cost of the overseas provider, unless the charge would normally be covered as overhead. However, in a contingent fee case, it would be improper to charge separately for work that is usually otherwise accomplished by a client's own attorney and incorporated into the standard fee paid to the attorney, even if that cost is paid to a third party provider."

The complete text of the opinion appeared in the October 1, 2007, Bar News, and can be found in the News section of the Bar's Web site, www.floridabar.org.

By Gary Blankenship

Senior Editor
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Author:Blankenship, Gary
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Date:Feb 15, 2008
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