SC Lawyer, March 2012, #5. Ethics of Virtual Law Practice.

• Author: By Stephanie Kimbro and Courtney Kennaday

South Carolina BAR Journal

2012.

SC Lawyer, March 2012, #5.

Ethics of Virtual Law Practice

South Carolina LawyerMarch 2012Ethics of Virtual Law PracticeBy Stephanie Kimbro and Courtney KennadayMore law firms are beginning to deliver legal services to clients over the Internet through secure client portals. Using different web-based technologies, such as document automation and assembly, lawyers can collaborate with their clients and co-workers. Known as a "virtual" law practice, it can be structured in different ways depending on the firm's practice area and client base.

In a virtual practice, the client registers for a unique username and password to gain access to a secure client portal. Through that portal, the lawyer and client communicate-from the establishment of the attorney/client relationship to the rendering of legal services and online payment to the lawyer.

The technology that creates a virtual law office is called software as a service (SaaS) and is one form of so-called cloud computing. There are many different legal SaaS products on the market, but regardless of the technology chosen, the key component of a virtual law practice is a secure, encrypted client portal.

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Examples of Virtual Law Firms in South Carolina

Frame Legal, www.framelegal.com

The Darby Law Office, PA, www.darbylawoffice.com

Travis Newton, PA, www.laptoplawfirm.com

Turner Vaught, www.turnervaughtlaw.com

Engaging in virtual law practice is no different than other forms of traditional legal service delivery when it comes to complying with rules of professional conduct. The lawyer must be careful to comply with S.C. Rules of Professional Conduct Rule 1.6 to protect the confidentiality of the client's data. Comment 18 of Rule 1.6 states a lawyer must take "reasonable precautions" when transmitting a communication that includes information relating to the representation of a client to prevent the information from coming into the hands of unintended recipients.

There are two ethical components of a virtual law practice: 1) the lawyer must conduct due diligence in researching both the technology vendor and the technology solution, and 2) after implementing the technology, the lawyer must establish daily best practices for the use of the technology in his/her law practice.

First, to conduct due diligence, the lawyer should thoroughly scrutinize the service level agreement (SLA) or user agreement provided by the technology vendor. The lawyer should ascertain the method by which the vendor will keep the lawyer's data confidential. Provisions to look for in the agreement include the vendor's confidentiality policy or practices, such as the extent of employee access to the data and under which circumstances the data would be accessed, if ever. The lawyer can also request to see a copy of the vendor's employee confidentiality agreement. In addition, the lawyer should ask about the vendor's policy regarding search and seizure actions. Is there a policy in place to notify the lawyer prior to handing over the data to law enforcement? Does the vendor carry insurance that covers data breaches? Will the lawyer be notified if there is ever a breach of the vendor's security system?

Second, lawyers should understand the process of transferring law office data from the lawyer to the technology provider, and then to the data center where the data is stored. Most legal technology vendors will have a separate agreement with a company that owns a data center and will lease a server that is housed in that data center. Accordingly, the existence of this relationship may affect the confidentiality of and access to the law office data. Try to ascertain from the vendor the terms of its agreement with the hosting company.

A good data host will have geo-redundancy of servers. This means that the technology provider has the law office data stored at two or more different geographic locations. Should something happen to one data center, the law office data would be safely stored in another location. Also, make sure the data center the company uses is a Tier4, the highest industry standard.

Lastly, the lawyer needs to have assurances that if something happens to the vendor, the law firm will be able to obtain its data. Not only do the data return and retention policies need to be clear, but the data must be transferrable from the existing system into another system. The format must be compatible with other systems. Look for data that will be returned in a standard file format. Some vendors will offer export features or offline versions of the software so that the lawyer may be able to back up the data from the system in-house or to another online backup method if the lawyer feels he or she needs that additional protection.

The attorney has a duty to safeguard client property throughout the legal representation, and for at least six years following the completion of the client's legal matter. Safekeeping Property, Rule 1.15, S.C. Rules of Professional Conduct. The attorney needs to understand how the vendor complies with these recordkeeping requirements.

After conducting due diligence in researching the technology provider, the lawyer engaging in virtual law practice needs to be aware of the ethics issues that may arise in his/her daily use of that technology. The following is an overview of some of these issues.

Unauthorized practice of law

One of the most frequent concerns related to virtual practice is the risk of the lawyer committing the unauthorized practice of law (UPL). To avoid claims of UPL in other jurisdictions, the law firm website and any advertising or online presence for the virtual law office should be careful to clearly provide notice to the public about the jurisdiction(s) where the lawyers are able to practice law. In particular, S.C. Rules of Professional Conduct Rule 7.2(d) requires all advertising to have the name and office address of at least one lawyer responsible for its content, and Rule 7.2(h) requires that all advertisements disclose the geographic location, by city or town, of the office in which the lawyer or lawyers who will actually perform the services advertised principally practice law. If the office location is outside a city or town, the county in which the office is located must be disclosed. If the lawyer is licensed in additional states, there may be other residency requirements or bona fide office rules that require a different level of contact information to be provided to prospective clients on the firm's virtual law office website and in any advertising.

Marketing and advertising rules and regulations of each jurisdiction in which the virtual law office provides legal services must be carefully studied, and the virtual law firm should avoid publishing anything that is misleading to the public about the nature of the services to be provided online. Additionally, rules covering new online methods of marketing are emerging. See S.C. Bar Ethics Advisory Committee, Op. 11-05 (2011), http://tinyurl.com/3gpgzbc (discussing a lawyer's use of daily deal websites). One way to minimize the risk of UPL is for the law firm to implement a jurisdiction check that provides extra notice to both the prospective client who registers on the online client portal and the law firm of any potential jurisdictional issues. Several legal software as a service providers have added a jurisdiction check to their software to address this concern. If the software does not have a system in place, it is the responsibility of the law firm to add that step in its process of working with clients online.

Conflicts of interest

Virtual practitioners must be careful to run a thorough conflict of interest check covering both in-person and online clients. Some technology solutions will allow a firm to import existing clients and information into an online case management system which will run a conflicts check after a new prospective client has registered online.

Competency

The lawyer delivering services online must determine on a case-by-case basis whether a prospective client's legal matter may be adequately handled online, or whether that matter requires an in-person meeting. It may be possible to meet in-person once and conduct the rest of the work online after the initial meeting. This will depend on the practice areas and type of clients that the firm has and the methods of communication that work best.

Technology may streamline the legal workflow, but it should never compromise the quality of legal services delivered to clients or affect the lawyer's zealous representation in a legal matter. Lawyers who offer unbundled or limited scope representation services through a virtual law practice should be aware of the separate ethics issues and best practices for unbundling. Clients should be referred elsewhere if the lawyer cannot competently represent them through the virtual law practice.

Authentication of the online client's identity

It is possible to conduct online verification to ensure that the prospective client is who he or she claims to be. However, it is not the lawyer's duty to prevent fraud. He or she must be able to rely on the engagement agreement and information the prospective client provides to the firm. This process is no different than it is in-person and in a traditional law firm. Digital methods, such as web conferencing, may be used as part of this process. Clickwrap (or clickthrough) agreements on a website are used as online contracts to establish the attorney/client relationship and define the scope of services to be delivered online.

As in the case of determining competency of a client, it is the lawyer's responsibility to refer the prospective online client to a full-service law firm if the lawyer suspects that fraud is being committed or believes the online methods used to authenticate the client's identity are inadequate.

Scope of online representation

It is important that clients working with the law firm online understand the scope and nature of the legal representation being offered through the virtual law office. Clients must provide informed consent to this representation. Defining the scope of representation will depend upon the structure of virtual law practice that the firm has chosen and whether the clients will be using the client portal in conjunction with full-service representation at a traditional law firm office or whether the firm will provide completely web-based, unbundled legal services to the client.

Establishing the attorney/client relationship online

Virtual lawyers should be careful not to create an unintended lawyer/client relationship online. Multiple clickwrap agreements on the virtual law office website and communications with prospective clients online help to minimize this risk.

Securing client confidences

The client portal for a virtual law office should provide secure data transmission and be encrypted. The website that links to this portal should feature a Secure Socket Layer (SSL) certificate. The lawyer engaging in virtual law practice must thoroughly research and understand the risks and benefits of using cloud computing and keep up to date on security risks associated with the technology he/she has chosen. This includes the hardware, such as iPads and smartphones, used to practice law online. The law firm engaging in virtual law practice may want to create a law firm policy for the use of the technology to deliver services to clients online. This might include a social media policy for employees and a cloud computing policy prescribing how firm members are expected to represent the firm in online situations. This policy can include how to engage with clients both inside the secure client portal and in public, non-secure Internet applications.

Online payments and trust accounting compliance

When a virtual law firm is collecting online payments from clients, it needs to ensure that the funds are transferred to the correct account in compliance with S.C. Appellate Court Rule 417 regarding financial recordkeeping.

There may be other ethics issues and concerns that come up with the use of cloud computing in general that cannot be covered in this article. However, even the most traditional law firms are now dependent upon cloud computing in some form. A law firm may not be ready to use a secure client portal for online delivery, but it is most likely already using voice mail, email and online research services, such as Casemaker and Westlaw, all of which are powered by SaaS and cloud computing. Accordingly, ethics risks associated with a virtual law practice are not that different from the ethics risks that a traditional law firm operating today must be aware of. As more firms offer online services to their clients, we may find that "virtual" law practice becomes simply another practice management method-one which all lawyers must learn to handle responsibly.

Stephanie Kimbro, Esq., MA, JD has operated a web-based virtual law office in North Carolina since 2006 and delivers unbundled estate planning to clients online. Courtney Kennaday is the director of the Bar's Practice Management Assistance Program.

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Additional Resources

Sample Questions to Ask Online Storage Vendors, by Courtney Kennaday (2006) www.scbar.org/public/files/docs/PMAP/Questionstoaskonlinestoragevendors.pdf

Suggested Minimum Requirements for Law Firms Delivering Legal Services Online, ABA eLawyering Task Force

http://tinyurl.com/34kauof

Pennsylvania Bar Association Formal Ethics Opinion 2010-200 (Related blog post) http://virtuallawpractice.org/2010/10/pa-ethics-opinion-on-virtual-law-offices/

N.C. Bar 2005 Formal Ethics Opinion 10, "Virtual Law Practice and Unbundled Legal Services" (January 20, 2006)

www.ncbar.com/ethics/ethics.asp

State Bar of California Draft Formal Ethics Opinion No. 10-0003 (Regarding use of a "virtual law office practice" by attorney) (November 2011)

http://virtuallawpractice.org/2011/12/proposed-ca-ethics-opinion-on-virtual-law-offices/

The Law Society of British Columbia's Cloud Computing Working Group Report (July 15, 2011) www.lawsociety.bc.ca/docs/publications/reports/CloudComputing.pdf

International Legal Technology Standards Organization Standards (April 2011) www.iltso.org/iltso/Welcome.html

S.C. Appellate Court Rule 417 Financial Recordkeeping www. sccourts .org/courtReg/index.cfm

A Guide to Trust Accounting and Financial Recordkeeping in South Carolina, Barbara M. Seymour (April 2011) http://tinyurl.com/86vwhcu

Please visit www.scbar.org/ethics for the following ethics opinions on this matter.

S.C. Bar Ethics Advisory Opinion 09-10 (2009)

S.C. Bar Ethics Advisory Opinion 04-06 (2004)

S.C. Bar Ethics Advisory Opinion 97-08 (1997)

Frequently Asked Questions: How long must a lawyer keep client files?