Large Law Firm Lateral Hire Conflicts Checking: Professional Duty Meets Actual Practice
Southwestern Law School
August 11, 2010
Lateral lawyer movement between private law firms has become an accepted practice. More than one-half of the lawyers who became partners at AM LAW 100 firms began their professional careers at another firm. Yet, lateral lawyers carry potential risks to their new firms in the form of conflicts of interests that may prevent the firm from representing one of its existing clients. To identify and quantify this risk, firms require that laterals disclose information that enables the firm to conflicts check the lateral.
While conflicts checking of laterals is accepted practice by firms, it raises a question whether laterals in complying with firm reporting requirements are disclosing confidential client information. While no court has ruled on this point, it has been the subject of numerous ethics opinions and several recent academic papers. The opinions and papers have, however, looked at the process in the abstract. This paper reports on a study of the lateral hire conflicts checking practices of 22 AM LAW 100 and AM LAW 200 firms. The study examined how information was obtained from laterals, how it was processed by firms, and how potential conflicts were addressed by the lateral and the firm.
The study concludes that disclosures associated with lateral hiring are minimal and raise no realistic prospect of harm to an affected client.
Number of Pages in PDF File: 71
Keywords: Conflict of Interest, Imputation, Due Diligence, Law Firm Practice, Lateral Hiring
JEL Classification: J21, J44, K23, L22
Date posted: August 13, 2010