These companies are generally large, publicly-held companies that offer a variety of services in diverse industries such as economic analysis, forensic accounting, legal staffing, health care consulting, and other information/technology areas. As part of newly acquired or developed “E-Discovery” or “Document Review” practice areas, these companies now employ attorneys and data processing specialists to offer “one stop shopping” for clients who are looking to pay less for the legal services.
Many of these vendors offer cutting edge “document review centers” which they claim to “combine technology with efficient processes all in a secure environment.” The result, they say “is an integrated review process that is substantially faster, more accurate and less expensive than more traditional review services.” Some of these centers are so large that they offer individual workstations that number in the thousands.
In employing attorneys and marketing their legal skill and credentials, these companies claim to “provide comprehensive attorney review and document management solutions for legal matters to both corporate clients and law firms across a diverse group of industries.”
Indeed, these firms are not just offering contract attorney staffing; some of them boldly promise to “run every aspect of discovery management and document review with as much or as little involvement as you require.” They offer to assume responsibility for “comprehensive project planning,” “on-site review team instruction and management,” “ ongoing, thorough quality checks,” and "privilege log preparation.” They offer “seasoned attorneys” with “applied expertise in complex litigation, discovery management, and e-discovery…” Essentially, these companies are offering to handle both the legal and non-legal aspects of the review.
Yet, these companies are not law firms.
So, the question must be asked: Is there any rule prohibiting lay corporations from providing legal services to clients?
The simple answer is “Yes.” There is a longstanding ethical restriction on non-legal entities providing legal services to clients. It is rooted in the “Fee Sharing” prohibition adopted in practically all jurisdictions and articulated in the ABA Model Rules of Professional Conduct Rule 5.4, which states in relevant part:
A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice for a profit, if (1) a non-lawyer owns any interest therein…(2) a non-lawyer is a corporate director or office thereof…, or a nonlawyer has the right to direct or control the professional judgment of the lawyer
The comments to these rules explain their purpose: “These limitation are to protect the lawyer’s professional independence of judgment… [and] also expresses tradition limitations on permitting a third party to direct or regulate the lawyer’s professional judgment in rendering legal services to another.”
In other words, the rule prohibits corporate employees from providing legal services to clients because of the fear that their nonlawyer bosses would interfere with their independent legal judgments. Remember, lawyers have a fiduciary relationship with their clients that are governed by bar rules and legal ethics established by their licensing jurisdiction. Nonlawyer shareholders, directors, and managers have no fiduciary responsibility to their customers, no standardized professional obligations, and no explicit duty to serve the best interests of their customers. Their only duty is to maximize profits.
In the case of document review performed by all-in-one vendors, these issues are not mere theoretical exercises-- the specific concerns raised by the fee sharing rules are decidedly at issue here. Ownership of the profit-driven vendor will be trying to maximize margins wherever it can. This may manifest itself in the form of pressure to aggressively increase revenue or cut overhead. If the all-in-one vendor is using an hourly billing model, the nonlawyer owner/manager may be pushing to collect too many documents, over-code the documents, set-up overly redundant systems, etc. If the all-in-one vendor is billing on a per-unit basis (per page, per GB, etc) it may be pushing its attorneys to review too quickly, skimp on quality checking, etc. Admittedly, law firms may be subject to the same temptations, but at least they have the ethical rules and bar governance in place to monitor and enforce their fiduciary duties.
Yet, given the financial pressure to cut costs, it is entirely understandable why many companies may be tempted by the fancy facilities and aggressive pricing of all-in-one document review vendors. However, the client needs to be fully aware that the legal work being performed by these vendors is not being done with the independence of judgment and fiduciary relationship that the client should expect from its attorneys, and in fact, may be being performed in violation of long established ethical rules.
