Ethics 20/20 and Outsourcing

Carolyn Elefant has offered some thoughts (here) about the Commission on Ethics 20/20's outsourcing proposals.  She suggests that the Commission's proposals would unduly hinder lawyers' use of cloud computing generally and online legal research services specifically.  Here is the reply that I posted on her blog:

As the chief reporter to the  ABA Commission on Ethics 20/20, I write to correct your misinterpretation of the Commission’s outsourcing proposals, particularly as they apply to lawyers’ use of online legal research tools.  Quite simply, the Commission’s proposals would not in any way impede lawyers’ use of these tools.   

Your suggestion that the Commission’s proposed new Comment to Rule 5.3 would hinder lawyers’ use of Lexis and Westlaw ignores the plain language of the proposal.  The proposed new Comment to Rule 5.3, which you quote in part, says the following:

[3] A lawyer may use nonlawyers outside the firm to assist the lawyer in rendering legal services to the client.  Examples include the retention of an investigative or paraprofessional service, hiring a document management company to create and maintain a database for complex litigation, sending client documents to a third party for printing or scanning, and using an Internet-based service to store client information.  When using such services outside the firm, a lawyer must make reasonable efforts to ensure that the services are provided in a manner that is compatible with the lawyer’s professional obligations.  The extent of this obligation will depend upon the circumstances, including the education, experience and reputation of the nonlawyer; the nature of the services involved; the terms of any arrangements concerning the protection of client information; and the legal and ethical environments of the jurisdictions in which the services will be performed, particularly with regard to confidentiality. See also Rules 1.1 (competence), 1.2 (allocation of authority), 1.4 (communication with client), 1.6 (confidentiality), 5.4(a) (professional independence of the lawyer), and 5.5(a) (unauthorized practice of law).  When retaining or directing a nonlawyer outside the firm, a lawyer should communicate directions appropriate under the circumstances to give reasonable assurance that the nonlawyer's conduct is compatible with the professional obligations of the lawyer.

Lexis and Westlaw have outstanding reputations, and there is no reason to think that the information that is generated on those services is somehow erroneous or incomplete or that the research conducted there would be any less complete than if the lawyer performed the research the old-fashioned way.  So your position that, under the Commission’s proposal, a lawyer might be obligated to assess the qualifications of the employees who write Westlaw’s headnotes is simply inconsistent with what the Commission’s proposal actually says. 

It is also important to note that the Commission is merely articulating a longstanding view – in cases, ethics opinions, and commentary – that lawyers have an ethical obligation to ensure that they use reliable sources.  That is why lawyers have long used books to Shepardize cases and to confirm that statutes have not been repealed or amended.  Lawyers have an ethical obligation to ensure that they are relying on accurate and up-to-date sources.  Nothing the Commission has proposed would change this obligation just because research is now conducted online.  

You also suggest (without any supporting documentation) that Lexis and Westlaw might use lawyers’ search information and sell it to the highest bidder.  This is a fanciful hypothetical, and it is directly contradicted by the privacy policies that Lexis and Westlaw make readily available on their websites.   (See here and here.)

Finally, without any supporting evidence, you say that the Commission has zealously sought to “frustrate lawyers’ ability to use cloud computing by imposing the same supervisory obligations that apply to, say, a contract attorney.”  Ironically, the second sentence of the Comment explicitly identifies cloud computing as the type of service that lawyers can use, so it is difficult to see how you could conclude that the Commission has “zeal” for frustrating the use of cloud computing.  The Commission’s proposal merely gives lawyers a set of factors to consider when using cloud computing services, and none of those factors suggest that lawyers will be unduly hindered or limited in their ability to use those services.  In fact, numerous ethics opinions around the country (including an ABA Formal Opinion) have reached a similar conclusion in this very same context, and there have been no reports of lawyers feeling frustrated that they cannot use cloud computing.

In sum, the Commission’s proposals are designed to give more specific guidance to longstanding obligations so that lawyers can better navigate the changed legal practice landscape.  Your assertion that the Commission’s proposals are “a radical departure” in this regard is, with all due respect, without foundation, as is your suggestion that the proposal would impede lawyers’ ability to use reliable services like Lexis and Westlaw or cloud computing services more generally.  You and your readers can read the full details of the Commission’s proposals and others’ comments here.

Comments

[Carolyn Elefant]

Thank you for your comments. I agreed with the Commission's approach to cloud computing in its proposal regarding technology and confidentiality. What I don't agree with however are the amendments to Model Rule 5.3 which would classify "cloud computing" as outsourcing and impose on lawyers an ongoing duty to monitor. We all recognize that when lawyers hire people outside the law firm - be they freelance attorneys, paralegals or document management, we have both a duty to act prudently when hiring the service, but also to engage in continued oversight and monitoring.

The same obligation DOES NOT apply to passive, commodity services like banking/IOLTA, phone service - or legal research services. In those cases, we are, of course, expected to be prudent in our selection of the service and act responsibly in our use of the service. For example, if we receive IOLTA statements showing money being stolen from trust accounts, we can't simply ignore that. But we're also not required to question bank personnel every month or constantly evaluate the stability of our bank.

That's why the changes to Rule 5.3 are so dangerous. By classifying cloud computing as traditional outsourcing, the rules impose an ongoing obligation of oversight which is not applicable to phone service, IOLTA or legal research -- or at least has never been before. My point here is that it is inherently hypocritical - and a double standard - to call cloud computing traditional outsourcing when none of these other services have been similarly categorized as such. And if we do include passive services in the meaning of "nonlawyer assistance," then aren't we opening the door to including LEXIS, phone service in the definition as well?

By the way, the point that other bars are treating cloud computing as outsourcing should be irrelevant to the Commission's determination. I thought that the whole point of the Commission was to lead the way on ethics rules - to set the gold standard that states would follow, and not to simply parrot the parochial decisions written by other bars.

[Andrew Perlman]

Thanks for the reply. I think our disagreement centers on the following concern that you raise: "By classifying cloud computing as traditional outsourcing, the rules impose an ongoing obligation of oversight which is not applicable to phone service, IOLTA or legal research -- or at least has never been before."

I agree with you that the proposed Comment would classify cloud computing as a type of outsourcing, but I don't see how the Comment would "impose an ongoing obligation of oversight" regarding every outsourcing service that the lawyer uses. The proposed Comment says that lawyers have to ensure that the outsourced "services are provided in a manner that is compatible with the lawyer’s professional obligations." Critically, the proposed Comment then says that "THE EXTENT OF THIS OBLIGATION" depends on a number of factors, "including the education, experience and reputation of the nonlawyer; the nature of the services involved; the terms of any arrangements concerning the protection of client information; and the legal and ethical environments of the jurisdictions in which the services will be performed, particularly with regard to confidentiality."

The Comment, therefore, makes clear that a lawyer's obligations are not the same for every kind of outsourcing. Rather, the obligations differ depending on the type of outsourcing that is being used. For example, the Comment would tell lawyers that they need to be considerably more careful and engage in more oversight when using an unproven private investigative service than when using an established bank to maintain an IOLTA account. Of course, as you note, even in the latter case, the lawyer must still exercise some minimal oversight to ensure that the bank is not making mistakes, etc., but the nature of that oversight will be entirely different. The proposed Comment is written in such a way as to allow for these distinctions and to ensure that there is no "one size fits all" approach to outsourcing. In sum, the Commission agrees with you that there can't be a single approach to every kind of outsourcing, and this is precisely why the proposed Comment is written the way that it is.

As for your last point, I think you misunderstood why I cited other states' opinions in this area. I was trying to point out that states have taken an approach to cloud computing that is similar to the Commission's, and the sky has not fallen. Lawyers have not stopped using Westlaw and Lexis; no disciplinary actions have been initiated for using phone services, etc.

Thanks again for your comments.