One of biggest nightmare scenario’s any law firm can face is where one of their own engages in criminal or malicious acts while representing a client in a legal matter.
Take for example the recent, deeply complicated and high-profile lawsuit between U.S. law firm Dechert and Wall Street Journal reporter Jay Solomon. The suit alleges Dechert and two of the firm’s former partner’s Neil Gerrard and David Graham Hughes, worked with hackers in India to steal and release email correspondence between Solomon and Farhad Azima, an Iranian-American executive.
Solomon’s reporting ultimately caused harm to the business interests of Sheikh Saud bin Saqr al-Qasimi, ruler of emirate Ras Al Khaimah in the United Arab Emirates. Among the activities exposed by Solomons reporting, with Azima as a source, was money laundering and evading Iranian sanctions. The Sheikh was also a client of Dechert. Solomon lost his job because of the exposure of the emails between him and Azima, and Solomon sued Dechert as a result.
If the case ultimately demonstrates that Dechert acted maliciously and with criminal intent, the penalties to be paid out by Dechert will not be covered by their lawyers’ professional liability insurance (LPLI) – a potentially devastating financial blow for the two attorneys, and possibly the firm itself. According to data from a 2021 survey published in The American Lawyer, “the last several years have been the worst on record” regarding malpractice lawsuits and costs.
To avoid becoming one among many statistics regarding malpractice claims, there are several preventative steps firms can take to better protect themselves:
- Accuracy: Establishing a review process that is both thorough and multi-layered can reduce the risk of mistakes and errors. Firms should require extra time for a multi-step review process of checks and balances for all client work. This process establishes a known, multi-touch system that better enables law firm management to identify suspected or actual inappropriate behavior and possibly discourage it entirely.
- Transparency: Firms should have strong, established procedures to document and report any accusations of impropriety or wrongdoing. Employees should understand that anonymous reports can be filed with staff who have been trained to intake the information properly, to ensure another level of propriety in the process.
- Vetting: As mentioned in a previous article, law firms should undertake an extensive and extremely thorough vetting process of all new hires, whether they’re associates or partners. Firms should develop a comprehensive list of questions and processes that they would want to have at the center of their screening efforts. Google-searches, social media screenings, state bar records and speaking with colleagues are all ways to discovery potential red-flags in an attorney’s history.
- Ethics: The trends of lawyer behavior are good overall, with data from the 2020 American Bar Association (ABA) Profile of the Legal Profession showing that less than one percent of lawyers are disciplined each year. However, firms should avoid becoming complacent and consider regular ethics trainings or refreshers.
We will link to “vetting new partners” piece, when live.