Legal process outsourcing (LPO) has become a commercially successful model in the present international business scenario. In the process of outsourcing some activities of a business enterprise which would normally have been done in-house are executed at the back end by an external agency. Generally and typically the customers or the clients of the business enterprise do not become aware that a portion of the business enterprise activities has been executed by the business enterprise itself but by an external agency.
When the portion of the outsourced activity relates to personal activities of the enterprise such as, for example, taxation, accounts, HRD management, asset management rarely any ethical considerations arise. However, when outsourcing involves, the transfer of data such as patient data or information which is confidential and which the business enterprise is required to protect for ethical reasons, several issues need to be considered. For instance, in cases of medical transcription or hospital records, sensitive information may be provided to the outsourced agency and this has in fact, caused serious legal problems.
When it comes to legal business enterprise such as attorney firms, ethical problems also arise because of the fundamental nature of the legal profession. For instance, a lawyer is a lawyer in a particular territory only, i.e. a lawyer in the United States is not entitled to practice in India and Korea and vice versa. Again a lawyer outside the United States cannot be considered a lawyer for the purposes of law in the United States. The principle of confidentiality of the client’s data and information which is the very basis of a legal practice would not apply to a lawyer or a person outside the jurisdiction. Therefore, the ethical consideration arises if sensitive data and information is transmitted by a lawyer in one jurisdiction to either a lawyer or a non-lawyer in another jurisdiction for processing the data and information.
There are two possible reasons for legal processes to be outsourced. The principle reason is cost. Generally, client information and data is transmitted to a country where legal work is inexpensive and therefore the legal processing would be executed at a significantly lower cost. A subordinate reason for outsourcing may occur if the outsourcing legal entity is hard pressed for time. In such case the outsourcing may happen to another legal entity within the same jurisdiction and probably ethical considerations may not ensue.
When cost is the only consideration, a distinct possibility is that the outsourcing legal entity may not inform its client about the outsourcing event and may actually charge fees according to the outsourcing business practice.
The first question to ask is whether such a practice will be unethical? The second question that arises is that confidential information of the client will be shared by an external agency? It is true that the outsourcing agency may enter into a confidentiality agreement with the entity to let outsource professional work. But the question remains whether such an agreement has any binding effect between the original client and the agency to whom the work has been outsourced.
In my opinion, if an informed consent is taken of the client who consents to the outsourcing activity and a portion of the fees are commensurately reduced to the client, ethical considerations may be mitigated.