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

42 Pages Posted: 26 Feb 2014  

David Kershaw

London School of Economics - Law Department

Richard Moorhead

Centre for Ethics and Law, Faculty of Laws, UCL London

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Date Written: January 2, 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 Moorhead, Richard, Consequential Responsibility for Client Wrongs: Lehman Brothers and the Regulation of the Legal Profession (January 2, 2013). HLS Program on the Legal Profession Research Paper No. 2014-13. Available at SSRN: https://ssrn.com/abstract=2401010

David Kershaw

London School of Economics - Law Department ( email )

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

Richard Lewis Moorhead (Contact Author)

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

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

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