As legal outsourcing (LPO) industry hitting double-digit growth rates, regulators & representative bodies can no longer ignore this dynamic new market. In the main LPO markets the United States, United Kingdom & India there is the potential for rule changes which could place outsourcing agreements under increased scrutiny or even have a material impact on the ability of law firms & companies to send legal work to outside providers. The regulation is going to be the single most important issue in LPO this year. it is not expected that there will be any revolutionary changes however it is intended to regulate the legal outsourcing industry in more effective.
The American Bar Association (ABA) has set up a working group to examine the implications of advancing know-how & globalisation for the legal industry that is the ABA Commission on Ethics 20/20. The group has released proposed changes to the ABA model rules & has invited feedback from industry participants. The changes, which include a provision that the law firm outsourcing legal work ought to make definite it is in the best interest of clients, won’t cause a major shift in the regulatory regime. The ABA is due to submit its recommendations to the House of Delegates in August this year. Independent from the ABA, a Connecticut lawmaker recently proposed a bill aimed at curtailing offshore legal outsourcing. While the bill is not expected to go anywhere, it sets off another round of debate regarding the unauthorized practice of law.
The Solicitors Regulation Authority has been slower to answer the burgeoning LPO industry in the United Kingdom, however, it’s indicated that it is likely to over out a thematic review on the subject in 2011. The SRA will study if there need to modify regulatory requirements or increase its supervision of LPO arrangements. The body is already thinking about LPO as part of its consultation in the new Solicitors Handbook. The Law Society, which has delegated regulation to the SRA but which still represents the legal industry, has also hinted that it will address LPO in 2011. The Law Society intend to examine the impact of LPO on, in particular, the development of junior solicitors as more of their work is sent abroad, & the risks for firms in terms of professional indemnity insurance.
India where most outsourced legal work is carried out also has of the most intractable regulatory regimes. Among the recent developments is the Chennai Writ Petition, a legal action brought by local practitioners against 31 international law firms & LPO provider aimed at stopping foreign firms from practicing in India. It is definite that Indian government is unlikely to permit anything which might damage the growing local LPO market. However, the LPO industry ought to keep an eye on the Ministry of Law & Justice designs to tighten overall regulation of the corporate legal sector. This will probably move slowly but is a fascinating statement of intent which could help to clarify the boundaries between the regulated legal sector & legal technique outsourcers & make definite that the LPO industry does not get embroiled again in the foreign lawyer controversy in India.