By Matt Hassett, Jim Hassett, and Mike Egnatchik
The oversight of outsourcers can be complex.
We will illustrate this with an example from eDiscovery, which includes
outsourcing to a software team. Consider the eDiscovery technique of predictive
coding. Unlike simpler forms of eDiscovery—such as keyword search, concept
searching, and looking for clusters of similar document groups—in predictive
coding attorneys train software algorithms to find the most relevant documents
by using samples of documents called training sets. According to Predictive Coding for Dummies:
Training the predictive coding system is an iterative
process that requires attorneys and their legal teams to evaluate the accuracy
of the computer’s document prediction scores. If the accuracy of the
computer-generated predictions is insufficient, additional training set
documents are selected from the document population being considered. Multiple training
sets are reviewed and coded until the required performance levels are achieved.
Once the desired performance levels are achieved, decisions can be made about
which documents to produce.
The great advantage of this approach is that attorneys will be
able to explain the decisions made by the computer, since they worked to train
the computer algorithms. This can satisfy the obligation of competent
representation, so long as things are properly done. But there is always the
danger that things will not be properly done. Predictive Coding for Dummies goes on to say:
Understanding how to use predictive coding tools properly
is critical for several reasons. First, predictive coding is relatively new to
the legal field and introduces additional complexity to the eDiscovery process.
Second, many different predictive coding solutions are available on the market
that vary in quality and approach. Third, even though predictive coding
solutions can be difficult to use, clear instructions and training are often
lacking, which can increase the risk of error. These and other factors have
combined to create confusion about the proper methodology for using predictive
The message is clear: A firm that uses predictive coding cannot
rely on it as a black box that gives right answers at all times. Not all
providers are equal. There must be a procurement process that evaluates and
selects the best provider.
Competent representation includes understanding and monitoring
the provider’s work. If that does not happen, the law firm may be at risk.
Due to the growth in outsourcing, in 2008 the ABA Standing
Committee on Ethics and Professional Responsibility issued an opinion to
provide ethical guidance to lawyers about how to outsource in a manner that is
consistent with the profession’s core values. State and local bar associations have also offered guidance in this area.
In August 2012, the ABA Commission on Ethics 20/20 concluded
that outsourcing did not require changes to the Model Rules of Professional
it did propose new Comments to identify the factors that lawyers need to
consider when retaining outside lawyers (Model Rule 1.1) and non-lawyers (Model
Rule 5.3) to assist on a client’s matter. The Commission also proposed a new
sentence (for Comment 1 on Model Rule 5.5) to clarify that lawyers cannot
engage in outsourcing if it would facilitate the unauthorized practice of law.
Like many obligations described in the Model Rules, these
proposals were intended to be “rules of reason” and were not intended to
preclude consideration of broader legal concerns, such as malpractice and tort
liability. But they did reflect the fact that new trends in outsourcing place
new demands on the supervising lawyers. A recent lawsuit has highlighted some
of the potential risks of failing to manage outsourcers properly.
According to a report in the Wall Street Journal:
An increasingly contentious lawsuit by a former client
against law firm McDermott Will & Emery LLP is putting a spotlight on the
legal industry’s widespread use of itinerant “contract” attorneys who review
documents for lower hourly wages… The case “may well be a harbinger,” said
Jonathan M. Redgrave… There could be more disputes between clients and law
firms over work performed by contract attorneys and outside vendors as they are
used more in the pre-trial discovery process.
The Wall Street Journal also alluded to the underlying
economics that are driving the move to outsourcing: “McDermott’s own attorneys
billed J-M at ‘rates as high as $925 an hour’ [and paid]… $61 an hour to
staffing firm Hudson Legal.” Hudson, in turn, hired the lawyers who did the
work for even less.
According to Mark Ross’s description of this suit:
J-M Manufacturing alleges that McDermott failed to
adequately supervise contract review attorneys who inadvertently produced
privileged documents to the government. The documents were subsequently handed
over to a third party who refused to destroy the documents, arguing that J-M
waived attorney-client privilege when it produced them to the government.
McDermott has vigorously defended itself against these
allegations. According to a firm spokesperson quoted in the Wall Street Journal article, “J-M keeps
changing its story.”
Ultimately, the case may be decided for McDermott or against
them. From our perspective, the way this particular lawsuit turns out is far less
important than the simple fact that a client has sued its law firm for failing
to adequately manage its outsourcers. As Ross summed it up, “While this may be
the first e-discovery malpractice lawsuit specifically dealing with the issue
of lack of supervision of contract lawyers, it surely won’t be the last.”
Firms that decide to use outsourcers will therefore need to
develop effective management processes, policies, and techniques for this type
This post was adapted
from the forthcoming third edition of the Legal Project Management Quick
Reference Guide, which will be published on May 20.