Consequential Responsibility for Client Wrongs: Lehman Brothers and the Regulation of the Legal Profession

36 Pages Posted: 4 Jan 2013

See all articles by David Kershaw

David Kershaw

LSE Law School and ECGI; European Corporate Governance Institute (ECGI)

Richard Moorhead

Centre for Ethics and Law, Faculty of Laws, UCL London; Exeter Law School

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Date Written: January 2013

Abstract

Should transactional lawyers bear responsibility when their competent actions facilitate unlawful activity by their client? Or is a lawyer's only concern to act in the client's interest by providing her with the advice and support she seeks? The high profile failure of Lehman Brothers provides a unique opportunity to explore these questions in the context of the provision of a legal opinion by a magic circle law firm. A legal opinion which, although as a matter of law was accurate, was a necessary precursor to an accounting treatment by Lehman Brothers which was described by the Lehman's Bankruptcy Examiner as ‘balance sheet manipulation’. The article argues that the law's existing understanding of when consequential responsibility should be imposed on those who assist another's wrongdoing provides a theory and a tool‐kit whose application can be justifiably extended to the professional regulation of transactional lawyers.

Suggested Citation

Kershaw, David and Kershaw, David and Moorhead, Richard Lewis and Moorhead, Richard Lewis, Consequential Responsibility for Client Wrongs: Lehman Brothers and the Regulation of the Legal Profession (January 2013). The Modern Law Review, Vol. 76, Issue 1, pp. 26-61, 2013, Available at SSRN: https://ssrn.com/abstract=2196306 or http://dx.doi.org/10.1111/1468-2230.12001

David Kershaw

LSE Law School and ECGI

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Richard Lewis Moorhead

Centre for Ethics and Law, Faculty of Laws, UCL London ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

Exeter Law School ( email )

University of Exeter
Exeter, Devon EX4 4RJ
United Kingdom

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