Does a North Carolina lawyer have to get a client's consent before outsourcing clerical work, like transcription, to a company in another country?

Plain-English summary

A law firm wants to send its transcription and typing to a company in a foreign country, emailing voice files and scanned documents that include client information and work product, after vetting the company's security as extensive. The question is whether the firm must, as under 2007 FEO 12, disclose this outsourcing to clients and obtain informed written consent. The opinion answers yes. It reads 2007 FEO 12 as requiring disclosure and informed written consent for outsourcing support services to an assistant in another country, and as drawing no distinction between administrative and legal support services.

The opinion aligns with ABA Formal Opinion 08-451, which states that where the relationship between the firm and the people performing the services is attenuated, as in a typical outsourcing relationship, no information protected by Rule 1.6 may be revealed without the client's informed consent, and it notes that New York and Ohio reached similar conclusions. It highlights the unique risks of sending client information to a foreign vendor: the law of the destination country, including how susceptible documents may be to seizure despite confidentiality claims, and whether that country's courts provide prompt and effective remedies if a dispute with the vendor arises.

Because protecting client confidences is among a lawyer's most significant responsibilities, and because a foreign jurisdiction may offer less protection than domestic law, the opinion concludes that outsourcing any task to another country that involves disclosing confidential client information requires disclosure and client consent confirmed in writing. Under Rule 1.0(c), consent "confirmed in writing" means consent given in writing or an oral consent the lawyer promptly confirms in a writing transmitted to the client, and the opinion allows the client's consent to the outsourcing to be incorporated into the employment agreement. A footnote distinguishes 2011 FEO 6, which permits transmitting and storing client information on internet servers possibly located abroad without client consent, because outsourcing, unlike storage, discloses client information to third parties.

In practice

Under the North Carolina rules as they stood at the time of the opinion, conduct in which a lawyer sends confidential client information to a foreign vendor for clerical or administrative work is permitted only after the lawyer discloses the outsourcing and obtains the client's informed consent confirmed in writing. Per the opinion, the duty applies regardless of whether the outsourced task is legal or administrative, because the controlling fact is the disclosure of confidential information to an attenuated third party under Rule 1.6.

Per the opinion, the consent may be incorporated into the engagement agreement, and "confirmed in writing" carries the Rule 1.0(c) meaning. The opinion treats this situation as distinct from cloud storage addressed in 2011 FEO 6, where information is stored rather than disclosed to a third party.

Common questions

Q: Does a lawyer need client consent to outsource only typing or transcription, not legal work?

A: Yes. The opinion concludes that 2007 FEO 12 does not distinguish administrative from legal support services, so outsourcing clerical tasks to a foreign vendor that involves confidential client information requires disclosure and the client's informed written consent.

Q: Why does outsourcing abroad get special treatment?

A: Per the opinion and ABA Formal Opinion 08-451, a foreign jurisdiction may provide less protection for confidential information; the opinion points to risks such as documents being subject to seizure despite confidentiality claims and the absence of prompt, effective remedies if a dispute with the vendor arises.

Q: What does "informed consent confirmed in writing" require, and can it go in the engagement letter?

A: Under Rule 1.0(c), it means consent given in writing or an oral consent the lawyer promptly confirms in a writing transmitted to the client. The opinion states the client's consent to the outsourcing may be incorporated into the employment agreement.

Q: Is this the same as using cloud storage on overseas servers?

A: No. A footnote distinguishes 2011 FEO 6, which allows transmitting and storing client information on internet servers that may be abroad without client consent, because outsourcing discloses client information to a third party while storage does not.

Background and rules framework

The opinion applies North Carolina Rule 1.6 (confidentiality of information, the analogue of Model Rule 1.6) and Rule 1.0(c) (the definition of "confirmed in writing," the analogue of Model Rule 1.0). It builds on the prior North Carolina opinion 2007 FEO 12 (outsourcing support services abroad) and distinguishes 2011 FEO 6 (cloud transmission and storage). It relies on ABA Formal Opinion 08-451 and notes parallel conclusions by the New York and Ohio bars.

Citations and references

Rules of Professional Conduct:

• MR 1.6 / NC Rule 1.6 (confidentiality of information)
• MR 1.0 / NC Rule 1.0(c) (definition of "confirmed in writing")

Other opinions cited:

• NC 2007 FEO 12: disclosure and informed written consent for outsourcing support services abroad.
• NC 2011 FEO 6: transmitting and storing client information on internet servers without client consent (distinguished).
• ABA Formal Opinion 08-451 (2008): no Rule 1.6-protected information may be revealed in an outsourcing relationship without the client's informed consent.
• N.Y. State Bar Ass'n Op. 2006-3 (2006); Ohio Ethics Op. 2009-6 (2009): similar conclusions.

See also

• ABA Formal Op. 08-451: Outsourcing Legal and Nonlegal Services
• FL Bar Ethics Op. 07-2: Overseas Legal Outsourcing
• NY State Bar Op. 842: Cloud Storage of Client Data

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2011-formal-ethics-opinion-14/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

Law Firm would like to outsource its transcription and typing needs to a company located in a foreign jurisdiction. Specifically, voice files would be sent via email and some documents would be scanned to the company via email. The communications would, in turn, be transcribed to paper. The files would include information about client matters and work product regarding client matters. Law Firm investigated the security measures the company utilizes and found them to be extensive.

Is Law Firm required to disclose the outsourcing of these clerical tasks to its clients and obtain their informed written consent as contemplated by 2007 FEO 12?

Opinion:

Yes. 2007 FEO 12 provides that a lawyer must disclose the outsourcing of support services to an assistant in another country and obtain the client's informed written consent to the outsourcing. 2007 FEO 12 does not differentiate between the outsourcing of administrative as opposed to legal support services. Similarly, ABA Formal Opinion 08-451 (2008) provides that “where the relationship between the firm and the individuals performing the services is attenuated, as in a typical outsourcing relationship, no information protected by Rule 1.6 may be revealed without the client's informed consent.” (Emphasis added). The bar associations of New York and Ohio have reached similar conclusions. N.Y. State Bar Ass’n. Comm. on Prof’l Ethics, Op. 2006-3 (2006); Ohio Ethics Op. 2009-6 (2009).

The ABA opinion notes the existence of unique risk factors that must be evaluated when client information is outsourced to a foreign vendor. As noted in the ABA opinion:

[c]onsideration . . . should be given to the legal landscape of the nation to which the services are being outsourced, particularly the extent that personal property, including documents, may be susceptible to seizure in judicial or administrative proceedings notwithstanding claims of client confidentiality. Similarly, the judicial system of the countryin question should be evaluated to assess the risk of loss of client information or disruption of the project in the event that a dispute arises between the service provider and the lawyer and the courts do not provide prompt and effective remedies to avert prejudice to the client.

The protection of client confidences is one of the most significant responsibilities imposed on a lawyer. Given the risk that a foreign jurisdiction may provide less protection for confidential client information than that provided domestically, the outsourcing of any task to another country that involves the disclosure of confidential client information requires disclosure and client consent confirmed in writing.1 Consent “confirmed in writing” denotes consent that is given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent. See Rule 1.0(c). The client’s consent to the outsourcing may be incorporated into the employment agreement.

End Notes

• Client consent is not required in 2011 FEO 6 although the opinion allows confidential client information to be transmitted over the internet and stored using servers that may be located in another country. The instant opinion can be distinguished because outsourcing requires disclosure of client information to third parties.