Risk Update

Conflicts and More — DQ Motion Defeated, Judge’s Ethics Issue Escalates, California Lawyer Treason Law Signed

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Paul Weiss Stays on Google Suit After Surviving Yelp Motion” —

  • “The law firm Paul Weiss Rifkind Wharton & Garrison can continue representing Alphabet Inc.‘s Google in the Justice Department’s advertising technology monopoly case against the company, a federal judge ruled.”
  • “In a Friday bench ruling in the US District Court for the Eastern District of Virginia, Judge Leonie M. Brinkema denied a motion by Yelp Inc. and the News/Media Alliance trade group to disqualify the firm over previous work it did for the two groups. The motion—based on allegations that Paul Weiss was conflicted between its current work representing Google and prior work for Yelp and NMA—fails to show any real risk of prejudice, Brinkema said.”
  • “Friday’s ruling shows the high bar for alleging ethics violations for lawyers from the same firm who may represent opposing sides in similar cases.”
  • “‘Under this approach most large law firms would be disqualified from similar matters,’ Brinkema noted on Friday. As a result, there can’t be a finding of prejudice against either Yelp or NMA, she said.”
  • “Most states’ ethics rules for lawyers bar them from switching sides in a case without permission from their prior clients. But the situation in the Google case is less straightforward. Paul Weiss had presented Yelp and the News/Media Alliance—a trade group for 200 newspapers in the US and Canada—in prior antitrust work involving the tech giant.”
  • “It’s not enough for parties to be ‘potentially’ affected by the outcome of the ad tech case to show that they’re adverse to Google—an important hurdle in the ethics claim, Brinkema said.”
  • “Google may not submit any evidence pertaining to the two groups going forward, however. And an attorney who previously represented NMA and Yelp for Paul Weiss and has advised on the Google case can’t be involved in the future, Brinkema said. If any details from the firm’s previous work for NMA and Yelp ‘leak over’ to the attorneys working for Google, the leak must stop immediately and be reported to the court, she said.”

Houston bankruptcy judge David Jones resigns after misconduct complaint regarding his relationship with an attorney” —

  • “A prominent Houston bankruptcy judge resigned Monday amidst allegations he did not disclose a years-long romantic relationship with an attorney whose law firm regularly appeared in his court, even after he was asked to recuse himself from a case over the relationship.”
  • “The New Orleans-based appellate court is investigating the allegations and filed a formal misconduct complaint against Jones on Friday, citing multiple potential violations of the code of conduct for federal judges.”
    “The allegations against Jones surfaced in a federal civil rights lawsuit filed against him earlier this month, by a shareholder for a company that had a bankruptcy case in Jones’ court, and stem from his relationship with a former attorney for Jackson Walker LLP. The Texas law firm said in a statement that the attorney in question joined the firm as a partner in 2018 and left in December of last year.”
  • “Richman wrote in the formal complaint that the lawyer began living with Jones before 2018 and, although she did not personally appear in Jones’ court after that point or serve as the attorney of record for any cases in his court, she worked on some of those cases and was paid accordingly, with Jones approving those attorney fees. Richman wrote that the fees in question were ‘substantial.'”
  • “She also wrote that Jones’ relationship with the attorney was the subject of a motion to recuse the judge from a case involving Jackson Walker, but Jones allegedly did not disclose the relationship to two other judges who subsequently denied the motion for recusal. Jones ended up presiding over the case and approved Jackson Walker’s attorney fees, Richman wrote.”
  • “‘There is a reasonable probability that if Judge Jones had disclosed the facts concerning his relationship … the motion to recuse would have been granted,’ Richman wrote.”
  • “Jim Wilkinson, a spokesperson for Jackson Walker, said it learned of the attorney’s ‘potential relationship’ with Jones in March 2021 and subsequently instructed her to “stop working and billing on any case that had been assigned to Judge Jones.” Wilkinson said the law firm also sought guidance about the matter from outside ethics counsel. ‘We are confident that we acted responsibly,’ Wilkinson said.”

California lawyers must report ‘treason’ under newly-signed law” —

  • “California Gov. Gavin Newsom has signed into law a bill requiring attorneys to inform the state bar if they suspect other lawyers of treason. Newsom signed Senate Bill 40 into law on Tuesday [October 11]. A spokesperson for the governor said his ‘signature speaks for itself.'”
  • “The new rule requires lawyers to inform the bar if they know of attorneys in the state who engaged or conspired to engage in seditious conspiracy, treason, rebellion or insurrection, as defined by federal law.”
  • “The rule would not apply to information protected by attorney-client privilege, and it would be considered professional misconduct for a lawyer to use the provision to harass others.”
  • “Senate Bill 40 also places more legislative oversight on the State Bar. The California Senate will now have to sign off on the appointment of the State Bar of California’s executive director and general counsel.”
  • “In August the California Supreme Court began requiring lawyers to report fraud, misappropriation of funds and other criminal acts or conduct that raise ‘a substantial question’ about another lawyer’s ‘honesty, trustworthiness, or fitness as a lawyer.'”




Risk Update

Financial Risk, Compliance & AML Updates — SRA on Holding Client Funds, Australian AML Review, New US Business AML Rules Taking Effect

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Holding Client Money Could Face Increased Regulatory Scrutiny” —

  • “Law firms holding client money could come under increased scrutiny from U.K. regulator the Solicitors Regulation Authority given the cash that could now be earned from higher interest rates, one lawyer has warned.”
  • “With the base interest rate in the U.K. rising from 0.1% in 2021 to 5.25% as of August 2023, law firms handling any client money could be set to earn substantial sums of interest. If they don’t account for that to clients in a ‘fair manner’, they could be likely to face increased scrutiny from the SRA, according to RPC partner Graham Reid.”
  • “As it stands, firms are bound by the SRA to pay a ‘fair’ sum of interest on client funds, meaning that they don’t have to pay the full value of interest earned. But, with some law firms paying out less than 1% of interest on client accounts, the extra may be significantly boosting profits, says Reid.”
  • “Reid continued: ‘With new enhanced powers to fine firms and a vigorous approach to rule enforcement, the SRA can be expected to take a very dim view of those that do not pay fair interest and thereby cause client detriment. The key messages are: Is it fair? Is it properly explained? Can you fully justify your decision-making to the regulator?'”
  • “In recent years, handling client payments has become rarer and rarer for law firms. Last year, Travers Smith managing partner Edmund Reed explained that the service had been ‘going out of fashion’ for many years, with the pandemic accelerating the move away from client accounts.”

Legal profession proactively mitigating money laundering risks” —

  • “A new report released today shows the Australian legal profession is proactively working to mitigate the risk of being a party to money laundering and that where vulnerabilities exist, those not already being addressed can be addressed through augmentation of existing controls to which the profession is already subject.”
  • “‘The Government is currently considering how best to achieve the existing anti money laundering and terrorism financing (AML/CTF) regime objectives in relation to the legal profession,’ Law Council of Australia President, Mr Luke Murphy said.”
  • “‘The Law Council has always believed that due to the strict rules and regulations under which the Australian profession operates, the potential for lawyers being used to facilitate AML/CTF is small. To test the validity of that belief, we engaged Russ + Associates to undertake an independent review of the profession’s vulnerability to being an unwitting party to money laundering and terrorism financing. Russ + Associates is a specialist tax and AML law practice who are recognised experts in AML/CTF advice.'”
  • “‘To our knowledge, the examination of vulnerabilities Russ + Associates were engaged to undertake is a world first. We believe this highlights the commitment the Australian legal profession brings to understanding and minimising AML/CTF risks and provides a strong evidence base upon which effective decisions and changes can be made.'”
  • “‘What the report found is that beyond the regulations and professional requirements lawyers are subject to, they have taken additional steps to reduce risks. These include limited receipt of cash, particularly when it comes to funds from overseas, not holding assets for clients, and ensuring they meet all reporting obligations.'”
  • “‘That is not to say that no vulnerabilities exist, and we thank the firms who participated in this study for being frank about the risks they have identified in their practices.'”
  • “Vulnerabilities identified included lawyers not routinely making enquiries about a client’s source of wealth and difficulty in confirming the provenance of funds, with differences in risk between jurisdictions.”
  • “‘The report highlights the positive attitudes and behaviours among the legal profession towards integrity, risk awareness and aversion, and to fulfilling statutory and professional obligations. It shows vulnerabilities are present, but they can be managed through augmentation of existing controls.'”

Cautionary tale: Defrauded law firm loses insurance suit” —

  • “A Boston law firm’s business policy did not cover losses stemming from its processing of a fake cashier’s check that it received from a “new client” who had retained the firm under a false identity, a U.S. District Court judge has ruled in dismissing a lawsuit against the insurance carrier.”
  • “Wells Fargo notified Brooks & DeRensis on Nov. 4, 2021, that the bank had dishonored a cashier’s check for nearly $90,000 that the law firm had deposited into its IOLTA account just days earlier.”
  • “The firm had accepted the check as settlement of an employment matter brought by a new client claiming to be ‘Brian Rodriguez.’ The firm promptly wired $88,385 of the deposited amount to the bank account of the client, but it turned out later that the ‘client’ was using a false identity.”
  • “‘Taking the factual allegations in the complaint as true, B&D received a forged cashier’s check from a third-party purporting to be Rodriguez’s employer,’ Casper wrote. ‘As a cashier’s check, it was purportedly made or drawn by and drawn upon Wells Fargo, N.A. B&D was the payee or the bearer in this circumstance, not the maker, drawer or drawee.'”
  • “While Casper found coverage existed under an endorsement providing ‘Counterfeit Currency and Money Orders Coverage,’ the judge went on to conclude the insurance contract’s ‘false pretenses’ exclusion applied. ‘This exclusion addresses a scenario where the insured willingly transfers funds to a third-party based on some false representation or receipt of a false check,’ Casper wrote.”
  • “Nina E. Kallen, an insurance coverage litigator in Roslindale, said she has had colleagues who have been taken in by similar scams. That includes lawyers who thought they were taking adequate precautions.”

Many Businesses Blindsided by New Anti-Money-Laundering Law” —

  • “A new law aimed at ending the United States’ notorious reputation as a haven for ‘shell’ companies created to obscure crimes will require tens of millions of businesses to report ownership information for the first time, starting Jan. 1.”
  • “But there’s a big problem, according to a newly released survey: Awareness among businesses that will have to comply, and even advisers such as certified public accountants and lawyers, is extremely low, raising the specter that business owners will be hammered with hefty fines, potentially even prison time.”
  • “The information services company Wolters Kluwer surveyed 700 business, half of which will have to comply with the law. Of that half, 74% were oblivious to it.”
  • “The requirements will apply to 32.6 million businesses, including the vast majority of private businesses and many small businesses. Generally excluded are heavily regulated businesses and large operating companies. (Find details on who must comply here.)”
  • “Aronowitz said many businesses may not be able to count on their professional advisers to assist. In the Wolters Kluwers survey, just 54% of law firms and CPAs were aware of the CTA.”

The ABA notes: “The Corporate Transparency Act: Deniers Beware” —

  • “The Corporate Transparency Act (“CTA”), effective January 1, 2024, requires certain businesses to report certain information to the Financial Crimes Enforcement Network for persons with “substantial control” over the business or 25 percent or more of the equity in the business.”
  • “The CTA’s intent is to end the position of the U.S. as a haven for “shell” companies used in the commission of certain crimes. There are steep, escalating fines and possible jail time for noncompliance with the CTA’s requirements.”
  • “Many people are CTA deniers, saying they’ve never heard of it, it doesn’t apply to small businesses, their lobby wouldn’t allow it, it can’t be constitutional, they won’t report, they’ll just pay the fine, or fiduciary duties are not implicated.”
  • “Whether you like it, hate it, or are indifferent, the CTA has been thoroughly vetted and is here to stay. Compliance is both mandatory and advisable.”
  • “The CTA marks a seismic shift in the legal landscape for businesses operating in the United States. Prior to the CTA, entity beneficial owner disclosure was solely (if at all) the purview of state or tribal law. Now it is a focus and purview of federal law enforcement agencies.”
  • “Many professional advisers and business professionals have been caught off guard by this fundamental change in business entity law, now taking on a federal facet for the first time. Those that are aware have, by and large, taken a wait-and-see approach to either advising their clients and business associates or evaluating their own compliance profile. This is because much of the mechanics of compliance remains elusive. The ability for businesses to begin directly interfacing with FinCEN on filing and compliance continues to be in the future, giving those persons “in the know” little to offer as current action items—causing many to defer sounding the alarm bell until more is known from FinCEN. However, the wait must end, as there is limited and dwindling time remaining to take action before the window of opportunity closes at the end of 2023.”
Risk Update

Risk News — Alleged Side-switching Conflict Fight Unfolds, New Judicial Stock Ownership Insight Website Slow to Stick

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Law firm Paul Weiss fights to remain on Google’s ad tech antitrust defense” —

  • “Law firm Paul, Weiss, Rifkind, Wharton & Garrison has asked a U.S. judge to deny a bid from Yelp (YELP.N) and another former client to bar the law firm from representing Alphabet’s Google (GOOGL.O) in litigation over its digital advertising business practices.”
  • “Attorneys for Paul Weiss in a filing in Alexandria, Virginia, federal court accused Yelp and News/Media Alliance on Friday of ‘gamesmanship’ in their effort to disqualify the firm from serving as Google’s lead defense counsel.”
  • “The U.S. Justice Department and a group of states sued Google in January. Yelp and the news media coalition are not parties, but they claimed in a filing that Paul Weiss was ‘switching sides’ to represent Google on matters that the firm had once counseled them on.”
  • “Paul Weiss’s lawyers at Wilmer Cutler Pickering Hale and Dorr denied that the Justice Department’s case was ‘substantially related’ to any of the work that the firm provided to Yelp and the news alliance.”
  • “In its filing, Paul Weiss said it has provided no legal work to Yelp or the news alliance since late 2020. The two clients left the firm then when their former Paul Weiss attorneys, Jonathan Kanter and Brandon Kressin, departed and opened a boutique law firm.”
  • “The disqualification of Paul Weiss ‘at this late date would cause severe prejudice to Google,’ WilmerHale attorneys told the court. Paul Weiss said it has spent more than 10,000 hours so far on Google’s defense.”
  • “Google tried unsuccessfully in September to force Kanter off the ad tech case, based on his prior work in private practice for critics of Google.”

New Disclosure Site Slow to Post Judicial Stock Trading Reports” —

  • “Delays in posting stock transactions and other financial disclosures by US judges to a new database are limiting the utility of a tool designed to improve public transparency of the court system, watchdogs said.”
  • “The most recent mandatory securities transaction report available was submitted by a judge in April, according to an analysis by the nonpartisan judicial watchdog Fix the Court and a review of postings through Oct. 9 by Bloomberg Law.”
  • “Annual disclosures are due to be published within 90 days of submission, while interim reports must be filed within 45 days of the transaction, under a law that took effect last year.”
  • “The information is coming in, but the judiciary’s administrative arm tasked with operating the searchable database has struggled to process and post the annual and periodic disclosures by an estimated 2,500 judges. Things are moving far more slowly than a similar database maintained by Congress.”
  • “A backlogged database ‘defeats the purpose of transparency’ as financial interest information ‘loses relevance’ the more time has passed, said Kedric Payne, senior director of ethics at the Campaign Legal Center and former deputy chief counsel of the Office of Congressional Ethics.”
  • “The Courthouse Ethics and Transparency Act (P.L. 117-125), signed into law in May 2022, required the judiciary to establish an online database of publicly accessible financial disclosures submitted by life-tenured judges, including Supreme Court justices, as well as bankruptcy and magistrate judges. The law also made those judges subject to a 2012 law requiring federal officials to disclose periodic securities transactions worth more than $1,000 (PL-112-105).”
  • “Sen. John Cornyn (R-Texas), a member of the Judiciary Committee and sponsor of the bill, said after passage that the measure ‘will help bring potential conflicts of interest to light and bolster public trust in our judicial system.'”
Risk Update

AML Again — More Detail and Commentary on ABA Anti-money Laundering Push, Real Estate Rules On the Horizon

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Hat tip to the reader who sent in this WSJ piece containing additional detail commentary on last week’s update: “American Bar Association Votes to Amend Rule on Client Due Diligence” —

  • “Supporters of the change hope the move will help ward off more stringent regulation from lawmakers concerned about the use of lawyers to facilitate financial crimes.”
  • “U.S. lawyers on Tuesday voted to adopt a revised rule that imposes a more explicit obligation to vet potential clients, as part of an effort to quell concerns about the use of lawyers to facilitate money laundering and other financial crimes.”
  • “In a speech ahead of Tuesday’s vote, Kevin Shepherd, the ABA’s Treasurer, said that the U.S. Treasury Department recently had informed him that a failure to pass the resolution would cause the agency to take immediate regulatory action as well as to lobby for legislation imposing additional obligations on lawyers. ‘It’s simple political reality, and we ignore it at our peril,” Shepherd said.'”
  • “The ABA last year lobbied against a bill in the U.S. Congress that would have extended anti-money-laundering regulations for the financial sector to lawyers, accountants and other professional-service providers involved in company formation and money transfer.”
  • “Lawyers who aid criminals can be criminally prosecuted, but critics have argued that a lack of enforceable regulation enables some lawyers to continue working for potentially problematic clients while ignoring red flags.”
  • “Although the amendments approved Tuesday are only a slight change to the ABA’s existing rules, they proved controversial, with a number of the group’s most prominent members giving speeches both for and against the proposal. The group’s two largest sections, representing business and litigation attorneys, voted before the annual meeting to oppose the resolution. Critics argued that the amendments were vague and exposed lawyers to discipline.”
  • “‘The proposed rule opens every lawyer up to potential liability,’ Paul “Chip” Lion, a delegate for the ABA’s Business Law Section, said during a speech before the vote. ‘The presumption will be that the lawyer should have known that the lawyer’s services were being used to commit a crime, had the lawyer just delved a little deeper into the facts and circumstances.'”
  • “It isn’t clear how far the new rules will go in convincing the industry’s critics that further regulation is unnecessary. Scott Greytak, the advocacy director for Transparency International U.S., which seeks to fight corruption, called the new rules ‘window dressing,’ saying they would have little effect.”
  • “The rules don’t spell out specific steps that lawyers should take in vetting a client, and several observers pointed out that they don’t appear to create a definitive obligation to determine the true identity of a client, such as the beneficial owner of a corporation or limited liability company that seeks a lawyer’s services.”
  • “Instead, the amendments add guidance advising lawyers that their due diligence should vary based on the perceived level of risk represented by a client. Under the new guidance, a lawyer’s familiarity with a client might be one factor that gives assurance that less due diligence is needed.”

Same subject, different context, like worth tracking for real estate practices: “US set to unveil long-awaited crackdown on real estate money laundering” —

  • “The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains.”
  • “The long-awaited rule is expected to require that real estate professionals such as title insurers report the identities of the beneficial owners of companies buying real estate in cash to the Treasury’s Financial Crimes Enforcement Network (FinCEN).”
  • “While banks have long been required to understand the source of customer funds and report suspicious transactions, no such rules exist nationwide for the real estate industry.”
  • “Instead, FinCEN has operated real estate purchase disclosure rules, known as geographic targeting orders (GTOs), in just a handful of cities including New York, Miami and Los Angeles. The new rule is expected to effectively expand GTOs nationwide.”
  • “Transparency advocates pushing for a nationwide rule point to the example of Guo Wengui, an exiled Chinese businessman who, according to prosecutors, used an anonymous shell company to channel illicit profit from a fraud scheme into the $26 million purchase of a 50,000-square-foot New Jersey mansion in December 2021.”
  • “Had Guo brought property across the Hudson River in Manhattan, it would have been subject to a GTO and likely flagged immediately to law enforcement.”
  • “Guo, a onetime business partner of former Donald Trump adviser Steve Bannon, has pleaded not guilty to fraud charges. His lawyers did not respond to a request for comment.”
Risk Update

BRB Law Firm Risk Staffing Compensation Survey (2023 Edition) — Now Open!

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I’m pleased to invite our law firm risk readers to participate in the 2023 Risk Staffing Compensation Survey!

Last year’s exercise proved to be a great success. We saw participation from 80+ individuals, who contributed data on 375+ individual risk staff positions. (Let’s see if we can’t top that figure this year, shall we?) The final report came in at 14 pages and certainly proved popular.

I also received many encouraging notes of feedback and input from risk staff, risk managers, and firm leaders.

  • Kudos to those managers using this industry data to advocate for and ensure that their team’s compensation is kept in line with industry averages.
  • It was great to see several firms using the data to inform their staff recruiting and offer processes
  • And it was particularly nice to hear from several individuals who were able to use the data to self benchmark and support their personal career efforts and growth.

This year’s exercise incorporates some lessons learned from 2022.

So if you’re an individual contribution looking to understand how your comp compares to your peers, or you’re a risk manager looking to keep your team (and potential new hires) on par with changing market standards, you don’t want to miss out.


  • Participation open to law firm risk professionals only
  • All responses will be treated confidentially
  • Manager participants sharing data on their/their team’s roles and compensation will receive a report summarizing key findings and analysis
    • (The report may be shared internally within your firm, but not redistributed externally. So if you want the results, your best path is to participate!)
  • Individual contributor participants sharing personal compensation data will be receive a personal benchmark compensation summary relevant to their specific role and firm demographics.

The survey will be open for the next month or so and can be accessed here: 2023 Risk Staffing Compensation Survey.

Feel free to share the link with law firm peers and colleagues.

And if anyone has questions, please do reach out to me directly. (Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)

Let’s see what we learn this round!

Risk Update

Client Due Diligence — Perspectives on Risk, Costs and Concerns Tied to Law Firm New Business Intake and CDD

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Due Diligence Missteps Are Costly, and Smaller Firms Are Often Less Prepared” —

  • “Skimping on due diligence when it comes to working with new clients can bear heavy consequences for law firms, such as Eckert Seamans Cherin & Mellot, which is in the midst of negotiating a $45 million settlement to make up for a former attorney’s alleged role in helping a merchant cash loan business and an investment services firm defraud investors of nearly $500 million.”
  • “The law firm and former partner John Pauciulo are in hot water for their representation of an investment firm that solicited investors for Par Funding, a Philadelphia lending outfit whose owners are now subject to a raft of criminal charges. In the process of going after Par and investment firm A Better Financial Plan, the Securities and Exchange Commission censured Pauciulo for omitting details of risks in materials he prepared for potential investors.”
  • “Meanwhile, the owner of the investment firm says in a malpractice suit that Eckert Seamans was negligent in its oversight of Pauciulo, who himself was allegedly negligent in either knowing and not disclosing or else not knowing about the criminal history and shady business practices of the owner of Par.”
  • “However, not every firm has the same resources available to conduct proper and thorough due diligence when it comes to clients or affiliated businesses; according to law firm leaders and consultants, smaller firms have fewer resources to dedicate to diligence efforts, often resulting in added risk for the firm. Eckert Seamans, ranked No. 187 in the most recent Am Law 200 rankings, declined to comment on its own due diligence approach for this report.”
  • “The firm is also fighting a long-running breach-of-fiduciary-duties lawsuit brought by a former gaming client in Pennsylvania federal court, which alleges it also represented a competitor in matters where the two had adverse commercial interests.”
  • “Conversations with consultants and law firm leaders indicated that there is no set industry standard when it comes to law firms conducting due diligence.”
  • “Even with fewer resources, there are several warning signs early on in an interaction with a client that might flag future problems for the firm, including one’s ‘Spidey sense’ about a client and its legal needs.”
  • “Eileen Garczynski, senior vice president and equity partner at business insurance and risk management firm Ames & Gough, added that she felt ‘firms should be using checklists’ to make sure they address all concerns with a client.”
  • “Her checklist of red flags included lack of information about an organization or client, a client having inexplicable revenue growth, a client’s refusal to provide information, stalling tactics, including rescheduling meetings early on, and having an advisory board full of people who don’t actually play a real role in the business.”
  • “Garczynski also said that a client having frequent changes in professional relationships, such as switching counsel on a regular basis, might be an indicator of an issue.”
  • “Even when attorneys are well-versed in spotting these red flags, however, things might still be missed when firms conduct due diligence. Garczynski pointed to a desire for speed as a possible reason behind neglecting or skipping thorough intake procedures.”
  • “‘[There’s] a lot of motivated reasoning that can prevent the lawyer from seeing the warning signs,’ she said. But even larger firms are subject to missteps too. Levin pointed to the stress of the ‘eat-what-you-kill model,’ flagging it as a reason why attorneys may look the other way when red flags pop up.”
  • “‘The problem with intake is it’s always so early… there may be a rush to it, so you might not get as much information as you really need,’ [University of Connecticut School of Law professor Leslie] Levin said. ‘Every firm in this country, big, little, no exceptions, has been unpleasantly surprised by a client engaging in fraudulent activity.'”