Surfing the Next Wave of Outsourcing: The Ethics of Sending Domestic Legal Work to Foreign Countries under New York City Opinion 2006-3

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I. INTRODUCTION

Outsourcing1 work from American companies to foreign workers is not a new phenomenon in the United States.2 The "first wave" of outsourcing to foreign countries hit the American economy in the late 1980s.3 From 1987 to 1997, outsourcing of manufacturing, industrial, and other "blue-collar" jobs to foreign countries, such as China, South Korea, Malaysia, and Taiwan, rapidly increased.4 As jobs left for off-shore destinations, the American work-force gradually shifted to a service-oriented economy focused on "white-collar" employment.5

However, in recent years, even these white-collar jobs have begun to move overseas in a process known as the "new wave" of outsourcing.6 Increased technology, globalized foreign economies, and access to Internet resources have made service-oriented jobs subject to replacement by less expensive foreign labor.7 In recent years, companies have outsourced a wide variety of services to foreign employers, including software engineering, technical support, tax preparation, and even medical imaging diagnostics.8 As a result, Americans have grown accustomed to calling a technical support center and hearing a foreign receptionist greet them on the line.9 Forrester Research estimates that American companies will outsource over 200,000 service jobs each year, totaling 3.3 million jobs by the year 2015. 10 Other stuthes estimate that revenue utilized for outsourcing from the United States now falls between $100 billion and $200 billion.11

In the latest wave of outsourcing, a new trend has begun to emerge: U.S. companies and law firms have begun outsourcing domestic legal work to foreign attorneys.12 Although in its infancy, the practice of sending legal work abroad is beginning to grow.13 Indeed, outsourcing legal work has the potential to reduce the cost of domestic legal services and provide increased access to the legal system while maintaining a high quality legal product.

However, to this point, the legal community has remained relatively quiet regarding the ethical implications of U.S. attorneys utilizing foreign labor to accomplish their domestic legal work at a discounted price.14 Despite the relative lack of on-point ethics opinions, outsourcing legal work to foreign countries raises a number of important ethical issues regarding a domestic attorney's duties, which include prohibiting the unaudiorized practice of law, supervising the work and ethics of subordinate lawyers and nonlawyers, maintaining client confidentiality, avoiding conflicts of interest, adopting reasonable billing procedures, and consulting reasonably with the client. The question that remains then is, what steps, if any, do domestic attorneys have to take to fulfill these ethical duties when outsourcing legal work to foreign attorneys?15

In August 2006, the New York City Committee on Professional and Judicial Ethics ("the Committee") released a formal ethics opinion specifically addressing the ethical implications of legal outsourcing to foreign attorneys16 - the first concrete ethical guidance that any state or local bar has given practitioners regarding how to etiiically outsource legal work to foreign countries. This Comment analyzes the New York opinion and concludes that although the Committee enumerated solutions to the main ethical concerns of outsourcing legal work, it failed in a few material respects in its analysis and logic. Specifically, this Comment addresses the failures in the areas of the unauthorized practice of law, adequate supervision, client confidentiality, conflicts of interest, billing, and consent. The purpose of this analysis is to assist future bar associations in issuing their own opinions and, thus, aid practicing attorneys in adopting ethical procedures for outsourcing legal work.

Part II of this Comment provides a brief summary of the history of outsourcing legal work, the benefits and drawbacks of outsourcing, and a background of the ethical issues implicated when domestic attorneys use foreign labor to assist in legal work. …