Balancing Opportunity with Due Diligence

Hiring an experienced, mid-career attorney may bring advantages to your firm such as a book of business, limited training time, and complementary practice areas. But doing so also brings risk that must be managed. In this week’s post, we offer some recommendations to mitigate the risks that come with hiring a lateral attorney.

Conflict Checking

The hiring firm and the prospective lateral attorney both have a duty to resolve conflicts of interest before an offer is extended. Conflicts of interest can jeopardize the firm’s existing client relationships, expose the firm to malpractice liability, and damage the firm’s reputation. A conflict check should include the names of the prospective hire’s current and former clients, and any adverse parties, co-counsel, witnesses, experts, and third-party beneficiaries. The firm should also review the prospective hire’s engagement letters, fee agreements, and waivers to ensure that there are no contractual or ethical barriers to the representation of the firm’s clients. The Ohio Ethics Guide: Switching Firms provides guidance for this process.

The lateral attorney should also obtain the consent of the clients to transfer their files to the new firm, and comply with the ethical rules regarding the termination of the attorney-client relationship with the old firm. The Ohio Ethics Guide: Switching Firms contains a sample Joint Letter of Departure and Request for Transfer for the current files of the lateral hire attorney. 

History of Sanctions

As part of conducting due diligence on prospective lateral hires, a firm should investigate factors that can affect the credibility, reputation, and trustworthiness of the attorney and the firm, as well as the quality of legal services provided to the clients. The hiring firm should investigate history of sanctions and discipline, inquiring about any past or pending sanctions or discipline imposed by courts, bar associations, or regulatory agencies on the prospective hire, and request copies of relevant documents; allegations or complaints of workplace misconduct, such as harassment, discrimination, or retaliation, and how they were resolved; and criminal history by conducting a background check on the prospective hire. A firm should weigh the results of these investigations carefully and decide whether they pose any risks or conflicts for the firm and its clients.

Consistency of LPL Coverage, History of Malpractice Claims or Incidents

Also to consider are the prospective hire’s history of malpractice claims or incidents and whether they have had uninterrupted and adequate lawyers’ professional liability insurance (LPL) to cover any potential liabilities. A firm should ask the attorney to disclose any past or pending malpractice claims or incidents and may consider requesting the attorney’s LPL declarations pages for at least the prior 4 years. A firm should evaluate the nature, frequency, and severity of the claims or incidents, and how they were handled by the attorney. A firm should also consider whether the claims or incidents indicate any patterns of negligence, incompetence, or unethical conduct by the attorney that raise any red flags for the firm and its clients. A firm should conduct a thorough and honest assessment of the risks and benefits of hiring the attorney and decide whether they meet the firm’s standards of quality and professionalism.

Verifying Reputation and Credentials of Prospective Hires and Firms

Verifying references is a mutual process. Both parties should conduct due diligence on each other’s reputation and credentials, as well as assess the compatibility of practice styles, values, and goals. A culture fit is important for the satisfaction and retention of the lateral attorney and for the quality of service and representation they provide to their clients.

Firms hiring a lateral attorney should vet the purported credentials and speak with personal references. Consider obtaining the prospective hire’s law school transcript and checking with local bar associations and attorneys with whom the prospective hire has opposed or co-counseled.

Balance the Equation for Successful Lateral Hiring

For attorneys considering becoming a lateral hire, carefully read the Ohio Ethics Guide: Switching Firms for full consideration of applicable Ohio Rules of Professional Conduct and review the Checklist for Leaving a Law Firm.

A successful firm addition can bring new opportunities, expertise, and clients to a practice. However, it can also entail significant risks, such as malpractice claims, ethical violations, or client dissatisfaction. Due diligence with a thoughtful and client-centered approach will help ensure success.

For more on this subject, see:

OBLIC News: Best Practices for Lateral Hires September 14, 2021

Lateral Attorney Risk: An Essential Guide for Firms by Jeff Cunningham, Esq., July 26, 2023

Questions? Don’t forget the Loss Prevention Hotline to discuss this topic and others, as well as to request an ethics consult available to policyholders.

This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.