Can an Ohio lawyer outsource legal or support services to lawyers or nonlawyers, domestically or abroad, and what does the lawyer owe the client?

Plain-English summary

The Board addressed whether an Ohio lawyer or law firm may outsource legal services (such as document review, legal research, and drafting of briefs and pleadings) or support services (such as transcribing and copying), either directly to lawyers or nonlawyers or through an independent service provider, domestically or abroad. The Board concluded the rules do not prohibit outsourcing but impose several ethical requirements. It expressly did not address the economic or public-policy merits of outsourcing or whether a given service involves the unauthorized practice of law.

On disclosure, the Board concluded that Prof. Cond. Rules 1.4(a)(2) and 1.2(a) require a lawyer to consult with the client about the means of accomplishing the client's objectives, and that Rule 1.6(a) requires the client's informed consent before revealing information relating to the representation by outsourcing. Because outsourcing reveals client information, the Board advised that disclosure, consultation, and informed consent are required before outsourcing. It identified one narrow exception: when a nonlawyer temporarily works inside the firm under the close supervision and control of a firm lawyer (for example, a sudden replacement for an ill employee), disclosure and consent are not necessary.

On supervision, the Board applied Prof. Cond. Rules 5.1(c)(1), 5.3(a), and 5.3(c)(1): a lawyer is responsible for another lawyer's or a nonlawyer's violation if the lawyer orders or, with knowledge of the specific conduct, ratifies it, and a managing lawyer must make reasonable efforts to ensure a nonlawyer's conduct is compatible with the lawyer's obligations. The Board described the extent of supervision as a matter of professional judgment requiring due diligence as to the qualifications and reputation of those doing the work and as to competence (Rules 1.1 and 1.3), confidentiality (Rule 1.6), and conflicts (Rules 1.7, 1.9, and 1.10).

On fees, the Board applied Prof. Cond. Rules 1.5(a) and 1.5(b): fees and expenses must be reasonable and not excessive, and the basis or rate must be communicated to the client, preferably in writing. The Board concluded that whether to bill outsourced services as part of the fee or as an expense is left to the lawyer's professional judgment, but any amount added beyond cost (such as for supervision) must be reasonable, and the lawyer must not duplicate charges as both a fee and an expense.

In practice

The opinion holds that, under the Ohio Rules of Professional Conduct as they stood at the time of the opinion, outsourcing legal or support services is permitted, conditioned on disclosure to the client and the client's informed consent before outsourcing (subject to the narrow in-firm-supervision exception), on supervision sufficient to satisfy Rules 5.1 and 5.3 and the lawyer's competence, confidentiality, and conflicts duties, and on a reasonable fee or expense whose basis is communicated to the client. Per the opinion, the lawyer may choose to bill the outsourced work as a fee or as an expense, but may not add an unreasonable mark-up or charge for the same work twice.

Common questions

Q: Does an Ohio lawyer have to tell the client before outsourcing legal work overseas?

A: Yes. The opinion concluded that, under Rules 1.4(a)(2), 1.2(a), and 1.6(a), disclosure, consultation, and the client's informed consent are required before outsourcing legal or support services, because outsourcing reveals information relating to the representation.

Q: Is there any situation where consent is not needed?

A: The opinion identified one narrow exception: when a nonlawyer temporarily works inside the firm on a matter under the close supervision and control of a firm lawyer, such as a sudden temporary replacement for an ill employee, disclosure and consent are not necessary.

Q: Can the lawyer mark up the cost of outsourced services?

A: The opinion concluded that whether to bill as a fee or an expense is a matter of professional judgment, but any amount beyond cost must be reasonable (for example, to cover supervision), the total must comply with Rule 1.5, and the lawyer must not duplicate charges.

Q: Who is responsible if the outsourced lawyer or nonlawyer does something improper?

A: The opinion concluded that under Rules 5.1(c)(1), 5.3(a), and 5.3(c)(1) the outsourcing lawyer is responsible if the lawyer orders or, with knowledge of the specific conduct, ratifies it, and a managing lawyer must make reasonable efforts to ensure the nonlawyer's conduct is compatible with the lawyer's obligations.

Background and rules framework

The opinion interprets Ohio Prof. Cond. R. 1.4(a)(2) and 1.2(a) (consultation about means), R. 1.6 (confidentiality), R. 5.1 and 5.3 (responsibility for lawyers and nonlawyers), and R. 1.5 (fees and expenses), with reference to R. 1.1 and 1.3 (competence and diligence) and R. 1.7, 1.9, and 1.10 (conflicts) (Model Rules 1.2, 1.4, 1.6, 5.1, 5.3, 1.5, 1.1, 1.3, 1.7, 1.9, 1.10). The Board also noted that former DR 5-107(A)(1) is now superseded by Prof. Cond. R. 1.8(f) (compensation from a person other than the client).

Citations and references

Rules of Professional Conduct:

• Ohio Prof. Cond. R. 1.2(a), 1.4(a)(2) (consultation about means) (Model Rules 1.2, 1.4)
• Ohio Prof. Cond. R. 1.6(a) (confidentiality) (Model Rule 1.6)
• Ohio Prof. Cond. R. 5.1(c)(1), 5.3(a), 5.3(c)(1) (responsibility for lawyers and nonlawyers) (Model Rules 5.1, 5.3)
• Ohio Prof. Cond. R. 1.5(a), 1.5(b) (reasonable fees; communication of fee basis) (Model Rule 1.5)
• Ohio Prof. Cond. R. 1.8(f) (compensation from one other than the client) (Model Rule 1.8)

Cases:

• Columbus Bar Assn. v. Mills, 109 Ohio St.3d 245, 2006-Ohio-2290, excessive billing for administrative activities
• Columbus Bar Assn. v. Brooks (1999), 87 Ohio St.3d 344, charging secretarial and law-clerk costs against a contingent fee

Other opinions cited:

• ABA Formal Op. 08-451 (2008): outsourcing legal and nonlegal support services
• ABA Formal Op. 00-420 (2000) and ABA Formal Op. 93-379 (1993): billing for contract lawyers and for disbursements
• Ohio BPC Op. 90-23 (1990): use of temporary placement services
• Florida Bar Op. 07-2 (2008); North Carolina State Bar Formal Op. 12 (2007); LACBA Op. 518 (2006); San Diego County Bar Assn. Op. 2007-1; Assn. of the Bar of the City of New York Formal Op. 2006-3 (2006): outsourcing disclosure and billing

See also

• Ohio BPC Op. 2009-009: Outsourcing Health Care Lien Resolution and the Contingent Fee
• Ohio BPC Op. 2009-005: "General Counsel" Designation on a Client's Letterhead

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_09-006.pdf

Original opinion text

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

The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
(614) 387-9370 (888) 664-8345 FAX: (614) 387-9379
www.supremecourt.ohio.gov

                                OFFICE OF SECRETARY



                              OPINION 2009-6
                            Issued August 14, 2009

[Note the erratum on page 8, line 5, where the word county should be country.]

SYLLABUS: The Ohio Rules of Professional Conduct do not prohibit an Ohio
lawyer or law firm from outsourcing legal or support services domestically or
abroad, either directly to lawyers or nonlawyers or indirectly through an
independent service provider, but applicable rules do impose significant ethical
requirements.

Pursuant to Prof. Cond. Rules 1.4(a)(2), 1.2(a), and 1.6(a), a lawyer is required to
disclose and consult with a client and obtain informed consent before
outsourcing legal or support services to lawyers or nonlawyers. Disclosure,
consultation, and informed consent is not necessary in the narrow circumstance
where a lawyer or law firm temporarily engages the services of a nonlawyer to
work inside the law firm on a legal matter under the close supervision and control
of a lawyer in the firm, such as when a sudden illness of an employee requires a
temporary replacement who functions as an employee of the law firm. Outside
this narrow circumstance, disclosure, consultation, and consent are the required
ethical practice.

Pursuant to Prof. Cond. Rules 5.1(c)(1), 5.3(a), and 5.3(c)(1), a lawyer who
outsources legal or support services has responsibility for another lawyer’s
violation of professional obligations if the outsourcing lawyer orders, or with
specific knowledge of the conduct, ratifies the conduct involved; has
responsibility to make reasonable efforts to ensure that a nonlawyer’s conduct is
compatible with the professional obligations of the lawyer; and is responsible for
a nonlawyer’s conduct if the outsourcing lawyer orders or, with knowledge of the
specific conduct, ratifies the conduct involved. The extent of supervision for
outsourced services is a matter of professional judgment for an Ohio lawyer, but
requires due diligence as to the qualifications and reputation of those to whom
services are outsourced and as to whether the requested outsourced services will
be provided with competence and diligence as required by Prof. Cond. Rules 1.1
and 1.3, confidences will be protected as required by Prof. Cond. Rule 1.6, and
conflicts of interest will be avoided as required by Prof. Cond. Rules 1.7, 1.9, and
1.10.
Op. 2009-6 2

Pursuant to Prof. Cond. Rules 1.5(a) and 1.5(b), a lawyer is required to establish
fees and expenses that are reasonable, not excessive, and to communicate to the
client the basis or rate of the fee and expenses; these requirements apply to legal
and support services outsourced domestically or abroad. The decision as to
whether to bill a client for outsourced services as part of the legal fee or as an
expense is left to a lawyer’s exercise of professional judgment, but in either
instance, if any amount beyond cost is added, it must be reasonable, such as a
reasonable amount to cover a lawyer’s supervision of the outsourced services. The
decision must be communicated to the client preferably in writing, before or
within a reasonable time after commencing the representation, unless the lawyer
will charge a client whom the lawyer has regularly represented on the same basis
as previously charged.

OPINION: This opinion addresses a question regarding the ethical propriety of
outsourcing legal and support services.

   Is it proper for an Ohio lawyer or law firm to outsource legal or
   support services domestically or abroad, either directly to lawyers
   or nonlawyers or indirectly through an independent service
   provider?

The outsourcing of legal and support services by lawyers and law firms is not an
entirely new phenomenon. In 1990, the Board considered the ethical propriety of
a proposed business venture that would provide lawyers, law firms, sole
practitioners, and corporate legal departments with the placement and use of
temporary lawyers, advising that it is ethical so long as the business venture
operates within certain narrow, ethical guidelines.1 In 2009, the Board now
considers the ethical propriety of a lawyer or law firm outsourcing legal and
support services abroad as well as domestically.

The providers of legal outsourcing services attractively market to lawyers and law
firms the availability of a large variety of services. Preparation of trial or
appellate briefs, drafting of pleadings or motions, document review, legal
research, and deposition or trial summaries are examples of services offered.

The Ohio Rules of Professional Conduct do not address economic or public policy
implications of outsourcing legal services, neither does this advisory opinion.
The pros and cons of outsourcing are subject to discussion by the bar and others2

1 Ohio SupCt, Bd Comm’rs on Grievances & Discipline, Op. 90-23 (1990).

2 See e.g. Bruce A. Campbell, Harold and Kumar PLUNGE Into Legal Waters, Columbus Bar

Lawyers Quarterly 6 (Spring 2009); K. William Gibson, Outsourcing Legal Services Abroad, 34
No. 5 Law Prac. 47 (2008); Nira J. Sheth & Nathan Koppel, With Times Tight, Even Lawyers Get
Outsourced, Wall St. J. (Nov. 26, 2008); Suzanne Barlyn, Call My Lawyer . . . in India, Time,
Apr. 3, 2008; Laura D’Allaird, ‘The Indian Lawyer’: Legal Education in India and Protecting the
Duty of Confidentiality While Outsourcing, 18 No. 3 Prof.Law. 1 (2007); Keith Woffinden,
Surfing the Next Wave of Outsourcing: The Ethics of Sending Domestic Legal Work to
Foreign Countries Under New York City Opinion 2006-3, BYU L. Rev. 483 (2007); Vijay V.
Op. 2009-6 3

but are not under consideration in this advisory opinion. Discussion as to
whether a particular outsourcing service involves the unauthorized practice of
law is also not under consideration in this opinion.

For purposes of this opinion, legal services include but are not limited to
document review, legal research and writing, and preparation of briefs,
pleadings, legal documents. Support services include, but are not limited to
ministerial services such as transcribing, compiling, collating, and copying.

Applicable rules

The Ohio Rules of Professional Conduct do not prohibit a lawyer or law firm from
obtaining legal and support services from lawyers or nonlawyers outside the law
firm, but applicable rules do place significant ethical requirements upon
outsourcing services, whether domestically or abroad. Disclosure of an
outsourcing relationship is subject to Prof. Cond. Rules 1.4(a)(2) and 1.2(a).
Protection of client confidences is governed by Prof. Cond. Rule 1.6. Supervision
of outsourced services is governed by Prof. Cond. Rules 5.1 and 5.3. Fees for
outsourced legal and nonlegal support services are governed by Prof. Cond. Rule
1.5. The implication of these rules is discussed below.

Disclosure, consultation, and informed consent

Prof. Cond. Rules 1.4(a)(2) and 1.2(a) provide the ethical basis for requiring
disclosure to a client before outsourcing legal services to lawyers outside the law
firm. Prof. Cond. Rule 1.4(a)(2) requires a lawyer to “reasonably consult with the
client about the means by which the client’s objectives are to be accomplished.”
Prof. Cond. Rule 1.0(i) states “‘[r]easonable’ or ‘reasonably’ when used in relation
to conduct by a lawyer denotes the conduct of a reasonably prudent and
competent lawyer.” Prof. Cond. Rule 1.2(a) requires, with exceptions not
applicable herein, that “a lawyer shall abide by a client’s decisions concerning the
objectives of representation and, as required by Rule 1.4, shall consult with the
client as to the means by which they are to be pursued.”

Prof. Cond. Rule 1.6 provides the ethical basis for requiring a client’s informed
consent to be obtained before revealing information relating to the
representation by outsourcing services. Prof. Cond. Rule 1.6(a) requires: “A
lawyer shall not reveal information relating to the representation of a client,
including information protected by the attorney-client privilege under applicable
law, unless the client gives informed consent, the disclosure is impliedly
authorized in order to carry out the representation, or the disclosure is permitted
by division (b) or required by division (c) of this rule.” [Neither the disclosure

Bondada & Ram Vasudevan, Erasing the Hurdles: Offshore Outsourcing of Litigation Services,
Mealey’s Litigation Report: Discovery, Vol. 3, #6 (Mar. 2006).
Op. 2009-6 4

permitted by division (b) nor required by division (c) of this rule are at issue in
this opinion and are not addressed further herein.]

By application of these rules, disclosure and consultation with a client and
informed consent by a client is required before outsourcing legal and support
services.

Pursuant to Prof. Cond. Rules 1.4(a)(2) and 1.2(a), the means by which a client’s
objectives are to be accomplished encompass a lawyer’s or law firm’s decision to
use the assistance of lawyers and nonlawyers outside the law firm to provide legal
and support services in a representation. For some clients, a lawyer’s or law
firm’s decision to outsource legal or nonlegal support services may be a deciding
factor in whether or not to engage the services of the lawyer or the law firm.

In consultation with a client regarding whether legal and support services will be
outsourced to lawyers or nonlawyers, the lawyer or law firm must be clear to the
client about the arrangement, including providing disclosure as to whether the
outsourcing will be direct to a lawyer or nonlawyer or through an independent
service provider. Upon consulting with the client, a client’s decision as to
outsourcing should be respected by the lawyer or law firm. Further, consultation
should include discussion of the measures a law firm has taken or will take to
inform those providing the outsourced support services of the necessary
requirements of confidentiality.

Pursuant to Prof. Cond. Rule 1.6(a), a client’s consent is required before revealing
information relating to a representation. Whenever Ohio lawyers or law firms
outsource legal or support services domestically or abroad, either directly to
lawyers or nonlawyers or indirectly through an independent service provider,
information is revealed. Exposure of information relating to a representation
may be more likely when legal services, rather than support services, are
outsourced; but, like the outsourcing of legal services, the outsourcing of support
services, such as photocopying, poses a risk of revealing information relating to a
client’s representation.

Although one might contend that revelation of information through outsourcing
of services is impliedly authorized to carry out a representation, such contention
fails to pass ethical muster. Client confidentiality is a hallmark of the attorney
client relationship. When a client engages the services of a law firm there is
justifiable expectation that confidences remain within the law firm. The client
has selected the law firm to be the protector of the information related to the
representation. Thus, a client’s informed consent is required before information
related to the representation is revealed by outsourcing to lawyers and
nonlawyers outside the law firm.

As a practical matter, the ethical requirement of disclosure, consultation, and
informed consent is not necessary when a lawyer or law firm temporarily engages
the services of a nonlawyer to work on a legal matter within the law firm under
Op. 2009-6 5

the close supervision and control of a lawyer in the firm. For example, when a
nonlawyer employee of the law firm is ill and must be replaced suddenly on a
temporary basis within the firm. Under such circumstances, the nonlawyer
functions as an employee within the law firm under the same conditions of
supervision as an employee. Outside this narrow circumstance, disclosure, and
informed consent is the required ethical practice.

As advised by the American Bar Association, Standing Committee on Ethics and
Professional Responsibility “appropriate disclosures should be made to the client
regarding the use of lawyers or nonlawyers outside of the lawyer’s firm, and client
consent should be obtained if those lawyers or nonlawyers will be receiving
information protected by Rule 1.6.”3

Ethic committees in several states have advised on the ethical obligation of
disclosing outsourcing. A North Carolina State Bar ethics committee advised that
“the lawyer has an ethical obligation to disclose the use of foreign, or other,
assistants and to obtain the client’s written informed consent to the outsourcing.
In the absence of a specific understanding between the lawyer and client to the
contrary, the reasonable expectation of the client is that the lawyer retained by
the client, using the resources with the lawyer’s firm, will perform the requested
legal services.”4

A Los Angeles County Bar Association ethics committee, addressing whether an
attorney in a civil case may contract with an out-of-state legal research and brief
drafting company to draft a brief, advised that an “attorney may be required to
inform the client of the nature and scope of the contract between attorney and
out-of-state company if the brief provided is a significant development in the
representation or if the work is a cost which must be disclosed to the client under
California law.”5

A San Diego County Bar Association ethics committee stated its belief that “in the
absence of a specific understanding between the attorney and client to the
contrary, the ‘reasonable expectation’ of the client is that the attorney retained by
the client, using the resources within the attorney’s firm, will perform the work
required to develop the legal theories and arguments to be presented to the trial
court, and that the attorney will have a significant role in preparing
correspondence and court filings. (Footnote omitted).”6

A Florida Bar ethics committee, in addressing the propriety of a lawyer engaging
the services of an overseas provider to provide paralegal assistance advised that
“the law firm should obtain prior client consent to disclose information that the
firm reasonably believes is necessary to serve the client’s interests.”7

3 ABA, Formal Op. 08-451 (2008).
4 North Carolina State Bar, Formal Op. 12 (2007).
5 Los Angeles County Bar Assn., Op. 518 (2006).
6 San Diego Cty Bar Assn. Op. 2007-1 (undated).
7 Florida Bar, Op. 07-2 (2008).
Op. 2009-6 6

An ethics committee of the Association of the Bar of the City of New York,
addressing a question regarding outsourcing of legal support services overseas to
a foreign lawyer or a lay person, stated that “[n]on-lawyers often play more
limited roles in matters than contract or temporary lawyers do. Thus, there is
little purpose in requiring a lawyer to reflexively inform a client every time that
the lawyer intends to outsource legal support services overseas to a non-lawyer.
But the presence of one or more additional considerations may alter the analysis:
for example, if (a) non-lawyers will play a significant role in the matter, e.g.,
several non-lawyers are being hired to do an important document review; (b)
client confidences and secrets must be shared with the non-lawyer, in which case
informed advance consent should be secured from the client; (c) the client
expects that only personnel employed by the law firm will handle the matter; or
(d) non-lawyers are to be billed to the client on a basis other than cost, in which
case the client’s informed advance consent is needed.”8

In 1990, when this Board considered the use of temporary lawyers, the Board
viewed disclosure as an ethical requirement under DR 5-107(A)(1), a rule stating
that “[e]xcept with the consent of his client after full disclosure, a lawyer shall
not: [a]ccept compensation for his legal services from one other than his client.”9
DR 5-107(A)(1) is now superseded by Prof. Cond. Rule 1.8(f) which states in
pertinent part “[a] lawyer shall not accept compensation for representing a client
from someone other than the client unless divisions (f)(1) to (3) and, if applicable
division (f)(4) apply: (1) the client gives informed consent; (2) there is no
interference with the lawyer’s independence of professional judgment or with the
client-lawyer relationship; (3) information relating to representation of a client is
protected as required by Rule 1.6; (4) (omitted).” Prof. Cond. Rule. 1.8(f), like DR
5-107(A)(1), addresses an ethical duty of a lawyer who receives compensation
from one other than his or her client.

Now, this Board’s advice is that pursuant to Prof. Cond. Rules 1.4(a)(2), 1.2(a),
and 1.6(a), a lawyer is required to disclose and consult with a client and obtain
informed consent before outsourcing legal or support services to lawyers or
nonlawyers. Disclosure, consultation, and informed consent is not necessary in
the narrow circumstance where a lawyer or law firm temporarily engages the
services of a nonlawyer to work inside the law firm on a legal matter under the
close supervision and control of a lawyer in the firm, such as when a sudden
illness of an employee requires a temporary replacement who functions as an
employee of the law firm. Outside this narrow circumstance, disclosure,
consultation, and consent are the required ethical practice.

Responsibility for the conduct of persons providing outsourced services

8 Assn. Bar of City of New York, Formal Op. 2006-3 (2006).
9 Ohio SupCt, Bd Comm’rs on Grievances & Discipline, Op. 90-23 (1990).
Op. 2009-6 7

Prof. Cond. Rules 5.1 and 5.3 place responsibilities upon Ohio lawyers as to the
professional conduct of other lawyers and as to the conduct of nonlawyers.

In pertinent part, Prof. Cond. Rule 5.1(c)(1) requires that “[a] lawyer shall be
responsible for another lawyer’s violation of the Ohio Rules of Professional
Conduct if . . . the lawyer orders or, with knowledge of the specific conduct,
ratifies the conduct involved.”

In pertinent part, Prof. Cond. Rule 5.3(a) requires “with respect to a nonlawyer
employed by, retained by, or associated with a lawyer, . . . a lawyer who
individually or together with other lawyers possesses managerial authority in a
law firm . . . shall make reasonable efforts to ensure that the firm . . . has in effect
measures giving reasonable assurance that the person’s conduct is compatible
with the professional obligations of the lawyer.”

In pertinent part, Prof. Cond. Rule 5.3(c)(1) requires that “[w]ith respect to a
nonlawyer employed by, retained by, or associated with a lawyer, . . . a lawyer
shall be responsible for conduct of such a person that would be a violation of the
Ohio Rules of Professional Conduct if engaged in by a lawyer if . . . the lawyer
orders or, with the knowledge of the specific conduct, ratifies the conduct
involved.”

Thus, pursuant to Prof. Cond. Rules 5.1(c)(1), 5.3(a), and 5.3(c)(1), a lawyer who
outsources legal or support services has responsibility for another lawyer’s
violation of professional obligations if the outsourcing lawyer orders, or with
knowledge of the specific conduct, ratifies the conduct involved; has
responsibility to make reasonable efforts to ensure that a nonlawyer’s conduct is
compatible with the professional obligations of the lawyer; and is responsible for
a nonlawyer’s conduct if the outsourcing lawyer orders or, with knowledge of the
specific conduct, ratifies the conduct involved.

The ABA, Standing Committee on Ethics and Professional Responsibility,
acknowledged that an outsourcing lawyer has a responsibility of supervision. The
ABA committee advised: “A lawyer may outsource legal or nonlegal support
services provided the lawyer remains ultimately responsible for rendering
competent legal services to the client under Model Rule 1.1. In complying with
her Rule 1.1 obligations, a lawyer who engages lawyers or nonlawyers to provide
outsourced legal or nonlegal services is required to comply with Rules 5.1 and 5.3.
She should make reasonable efforts to ensure that the conduct of the lawyers or
nonlawyers to whom tasks are outsourced is compatible with her own
professional obligations as a lawyer with ‘direct supervisory authority’ over
them.”10

The ABA opinion provided rigorous, if not onerous, suggestions for lawyers to
meet the challenges of ensuring tasks are delegated to competent individuals and

10 ABA, Formal Op. 08-451 (2008).
Op. 2009-6 8

overseeing appropriately the execution of the projects. Examples include:
conducting reference checks; investigating the background of a lawyer or
nonlawyer and any nonlawyer intermediary; investigating the security of the
provider’s premises, the computer network, the recycling and refuse disposal
procedures, and in some instances visiting the premises; assessing the system of
legal education under which the lawyers’ were trained; evaluating the
professional regulatory system; giving consideration to the legal landscape of the
nation; and evaluating the judicial system of the county in question.11

It is the Board’s view that pursuant to Prof. Cond. Rules 5.1(c)(1), 5.3(a) and
5.3(c)(1), a lawyer who outsources legal or support services has responsibility for
another lawyer’s violation of professional obligations if the outsourcing lawyer
orders, or with specific knowledge of the conduct, ratifies the conduct involved;
has responsibility to make reasonable efforts to ensure that a nonlawyer’s
conduct is compatible with the professional obligations of the lawyer; and is
responsible for a nonlawyer’s conduct if the outsourcing lawyer orders or, with
knowledge of the specific conduct, ratifies the conduct involved. The extent of
supervision for outsourced services is a matter of professional judgment for an
Ohio lawyer, but requires due diligence as to the qualifications and reputation of
those to whom services are outsourced and as to whether the requested
outsourced services will be provided with competence and diligence as required
by Prof. Cond. Rules 1.1 and 1.3, confidences will be protected as required by Prof.
Cond. Rule 1.6, and conflicts of interest will be avoided as required by Prof. Cond.
Rules 1.7, 1.9, and 1.10.

Fees for outsourced legal and nonlegal support services

Prof. Cond. Rule 1.5 governs fees and expenses.

Prof. Cond. Rule 1.5(a) requires, in pertinent part, “[a] lawyer shall not make an
agreement for, charge, or collect an illegal or clearly excessive fee. A fee is clearly
excessive when, after a review of the facts, a lawyer of ordinary prudence would
be left with a definite and firm conviction that the fee is in excess of a reasonable
fee.”

Prof. Cond. Rule 1.5(b) requires that “[t]he nature and scope of the
representation and the basis or rate of the fee and expenses for which the client
will be responsible shall be communicated to the client, preferably in writing,
before or within a reasonable time after commencing the representation, unless
the lawyer will charge a client whom the lawyer has regularly represented on the
same basis as previously charged. Any change in the basis or rate of the fee or
expenses is subject to division (a) of this rule and shall promptly be
communicated to the client, preferably in writing.”

11 ABA, Formal Op. 08-451 (2008) at 3-4.
Op. 2009-6 9

Comment [2] to Prof. Cond. Rule 1.5 explains: “Unless the situation involves a
regularly represented client, the lawyer should furnish the client with at least a
simple memorandum or copy of the lawyer’s customary fee arrangements that
states the general nature of the legal services to be provided, the basis, rate, or
total amount of the fee, and whether and to what extent the client will be
responsible for any costs, expenses, or disbursements in the course of the
representation. So long as the client agrees in advance, a lawyer may seek
reimbursement for the reasonable costs of services performed in house, such as
copying.”

In short, Rule 1.5 requires that a fee be reasonable, not excessive, and that the
basis or rate of the fee and expenses be communicated to a client, preferably in
writing.

The rules and commentary do not specifically answer whether an outsourced
legal or support service should be billed to the client as a legal fee or as an
expense and whether the addition of an amount beyond the cost of the
outsourced services is appropriate in either instance.

In Formal Op. 08-451, the ABA Standing Committee on Ethics and Professional
Responsibility advised that in outsourcing legal or nonlegal support services
“[t]he fees charged must be reasonable and otherwise in compliance with Rule
1.5” but, left to a lawyer’s professional judgment the decision as to whether to bill
for outsourced legal or support services as a legal fee or an expense.”12

In Formal Op. 08-451, the ABA Standing Committee on Ethics and Professional
Responsibility also addressed the issue of adding a surcharge to the actual costs
of the outsourced services. The committee applied to outsourcing, the advice it
offered in Formal Op. 00-420 as to temporary lawyers as well as the advice
offered in Formal Op. 93-379 as to billing for professional fees, disbursements
and other expenses. “[A] law firm that engaged a contract lawyer could add a
surcharge to the cost paid by the billing lawyer provided the total charge
represented a reasonable fee for the services provided to the client. . . . If the
firm decides to pass those costs through to the client as a disbursement, however,
no mark-up is permitted. In the absence of an agreement with the client
authorizing a greater charge, the lawyer may bill the client only its actual cost
plus a reasonable allocation of associated overhead, such as the amount the
lawyer spent on any office space, support staff, equipment, and supplies for the
individuals under contract. (Footnote omitted). The analysis is no different for
other outsourced legal services, except that the overhead costs associated with the
provision of such services may be minimal or nonexistent if and to the extent that
the outsourced work is performed off-site without the need for infrastructural
support. If that is true, the outsourced services should be billed at cost, plus a

12 ABA, Formal Op. 08-451 (2008).
Op. 2009-6 10

reasonable allocation of the cost of supervising those services if not otherwise
covered by the fees being charged for legal services.”13

A Florida ethics committee, addressing paralegal assistance through an overseas
provider, relied on its previous advice offered in Consolidated Opinions 76-33
and 76-38 as to billing for nonlawyer personnel. The Florida ethics committee
stated: “[T]he lawyer should not in fact or effect duplicate charges for services of
nonlawyer personnel, and if those charges are separately itemized, the salaries of
such personnel employed by the lawyer should in some reasonable fashion be
excluded from consideration as an overhead element in fixing the lawyer’s own
fee. If that exclusion cannot, as a practical matter, be accomplished in some
rational and reasonably accurate fashion, then the charges for nonlawyer time
should be credited against the lawyer’s own fee.”14

A New York ethics committee expressed the view that “[b]y definition, the non-
lawyer performing legal support services overseas is not performing legal
services. It is thus inappropriate for the New York lawyer to include the cost of
outsourcing in his or her legal fees. See DR 3-102. Absent a specific agreement
with the client to the contrary, the lawyer should charge the client no more than
the direct cost associated with outsourcing, plus a reasonable allocation of
overhead expenses directly associated with providing that service. ABA Formal
Opinion 93-379 (1993).”15

In 1990, this Board, addressed ethical issues regarding the use of a temporary
placement service, but did not address whether it was proper to bill a client for
the services as an expense or as part of the fee.16 In Op. 90-23, the Board noted
that the placement agency intended to receive compensation directly from the
law firm as a fee based upon a percentage of the lawyer’s compensation. The
Board’s view in Op. 90-23, citing Formal Op. 1989-2 of the Association of the Bar
of the City of New York, was that because the agency provides services in locating,
recruiting, screening, and placing lawyers those services are not a legal fee and
that such a fee agreement to an agency does not constitute impermissible sharing
of fees with nonlawyers. However, the issue of a placement agency receiving a
percentage of a lawyer’s legal fee is not before the Board now and the Board does
not address that issue herein.

Now, the Board’s focus is on the appropriate way for a lawyer or law firm to bill a
client when legal or nonlegal work is outsourced.

The most straightforward approach, particularly when nonlegal support services
as opposed to legal services are outsourced, may be for a lawyer or law firm to bill
the client for the outsourced services as an expense based upon the actual cost of

13 Id.
14 Florida Bar, Op. 07-2 (2008).
15 Assn. Bar of City of New York 2006-3 (2006).
16 Ohio SupCt., Bd Comm’rs on Grievances & Discipline, Op. 90-23 (1990).
Op. 2009-6 11

the service to the law firm, with an adjustment if necessary to cover a lawyer or
law firm’s costs of supervision of the outsourced services.

But, the Board concludes that neither the rules nor the comments to the rules
direct that the billing be one way or the other; thus, the decision as to whether to
bill a client for outsourced services as part of the legal fee or as an expense is left
to a lawyer’s exercise of professional judgment.

Either method of billing must be in keeping with the general requirements of
Rule 1.5(a) that the fee be reasonable and not excessive and Rule 1.5(b) that “the
basis or rate of the fee and expenses for which the client will be responsible shall
be communicated to the client, preferably in writing, before or within a
reasonable time after commencing the representation, unless the lawyer will
charge a client whom the lawyer has regularly represented on the same basis as
previously charged.”

To meet the requirement of Rule 1.5(a) that the fee not be excessive, a lawyer
must not duplicate charges as both a fee and an expense. To meet the
requirement of Rule 1.5(a) that the basis or rate of the fee and expense be
communicated to the client, a lawyer will need to address with the client in the
fee agreement how he or she will be charged for the outsourced service.

Two disciplinary cases involving billing for nonlawyer employees of a law firm are
reminders to lawyers that excessive billing is unethical. In Columbus Bar Assn.
v. Mills, the Supreme Court of Ohio found, among other misconduct that Mills’
conduct of excessive billing and collection practices which included aggressively
billing for secretarial, clerical, and other “administrative activities” violated DR 1-
102(A)(6) (prohibiting a lawyer from engaging in conduct that adversely reflects
on the lawyer’s fitness to practice law) and DR 2-106(A) (prohibiting a lawyer
from agreeing to charge or collecting an illegal or clearly excessive fee).17

In Columbus Bar Assn. v. Brooks, the court found, among other misconduct, that
by collecting for secretarial and law clerk expenses in addition to filing fees,
deposition fees, and his thirty three percent of a settlement, Brooks did not
adhere to his fee contract and thereby charged an excessive fee violating DR 2-
106(A).18 The court noted that “[c]osts of litigation generally do not include
secretarial charges or fees of paraprofessionals. Those costs are considered to be
normal overhead subsumed in the percentage fee. In cases where legal services
are contracted for at an hourly rate, an attorney’s secretarial costs, except in
unusual circumstances and then only when clearly agreed to, are part of overhead
and should be reflected in the hourly rate. If an attorney charges separately for a
legal assistant, the legal assistant’s hourly charges should be stated and agreed to
in writing.”19

17 Columbus Bar Assn. v. Mills, 109 Ohio St.3d 245, 249, 2006-Ohio-2290.
18 Columbus Bar Assn. v. Brooks (1999), 87 Ohio St.3d 344, 346.
19 Id. at 345-46.
Op. 2009-6 12

Thus, it is the Board’s view that pursuant to Prof. Cond. Rules 1.5(a) and 1.5(b), a
lawyer is required to establish fees and expenses that are reasonable, not
excessive, and to communicate to the client the basis or rate of the fee and
expenses; these requirements apply to legal and support services outsourced
domestically or abroad. The decision as to whether to bill a client for outsourced
services as part of the legal fee or as an expense is left to a lawyer’s exercise of
professional judgment, but in either instance, if any amount beyond cost is
added, it must be reasonable, such as a reasonable amount to cover a lawyer’s
supervision of the outsourced services. The decision must be communicated to
the client preferably in writing, before or within a reasonable time after
commencing the representation, unless the lawyer will charge a client whom the
lawyer has regularly represented on the same basis as previously charged.

Advisory Opinions of the Board of Commissioners on Grievances and
Discipline are informal, nonbinding opinions in response to
prospective or hypothetical questions regarding the application of the
Supreme Court Rules for the Government of the Bar of Ohio, the
Supreme Court Rules for the Government of the Judiciary, the Ohio
Rules of Professional Conduct, the Ohio Code of Judicial Conduct,
and the Attorney’s Oath of Office.