Risk Update

Client Selection Risk — Firm Fights “Smell” Allegation, Political Lines Creating Client Intake and Evaluation Complexity?

Gibson Dunn withdrawal from Qatar hacking case ‘doesn’t smell good,’ judge says” —

  • “A U.S. judge said on Tuesday she would weigh accusations that one of Gibson Dunn’s lawyers had a conflict of interest in the defense of a man accused in a civil lawsuit of hacking emails on behalf of Qatar, noting that the firm’s withdrawal from the case ‘doesn’t smell good.'”
  • “The firm, which denies any conflict of interest, withdrew on Aug. 1 from the defense of former CIA officer Kevin Chalker and his company Global Risk Advisors (GRA) in a 2019 lawsuit brought in Manhattan federal court by Elliott Broidy, a onetime fundraiser for former President Donald Trump.”
  • “Broidy, an outspoken critic of Qatar’s government, said in the lawsuit that the Middle Eastern country’s government hired GRA to hack his emails, some of which were leaked to the media. Qatar has denied any involvement in the hacks.”
  • “‘It doesn’t smell good from your firm’s point of view and you’re not really giving explanation for why after two years of back and forth … your firm all of a sudden decides to step aside,’ [Judge] Vyskocil said in court.’
  • “Brian Ascher, a partner at Gibson Dunn, said at the hearing the firm withdrew because its client decided to bring in new counsel, not because of an alleged conflict. The law firm Hughes Hubbard & Reed took over the defense for Chalker and GRA.”
  • “Vyskocil said she would delay a ruling on Broidy’s request to subpoena Gibson Dunn and depose Ahmad until she considers a motion to dismiss filed by Chalker and GRA.”
  • “Broidy wants the discovery to learn ‘all confidential government information that Ms. Ahmad conveyed’ to Gibson Dunn, court papers show.”
  • “Broidy in October 2020 pleaded guilty to a charge that he illegally lobbied Trump to drop an investigation into a Malaysian embezzlement scandal. Trump pardoned Broidy before leaving office in 2021.”

Law Firms Are Getting Pushed Into ‘Red’ or ‘Blue’ Corners” —

  • “Sidley Austin was sent a threatening letter by the GOP Texas Freedom Caucus over its employee policy to cover abortion costs after the U.S. Supreme Court overturned Roe v. Wade. Kirkland & Ellis decided not to take Second Amendment cases any longer, losing a prominent partner in the process.”
  • “As political discourse becomes more heated and as society raises expectations about large organizations taking stands on social and political issues, law firms face a dilemma around who they represent and what, if any, actions they take related to large social issues.”
  • “The increasing polarization of today’s environment is making it more difficult to stay neutral on a variety of these issues. But any wrong move could affect the firm’s market perception, client roster, as well as their recruiting and retention of talent, experts say.”
  • “‘Today, with the increased likelihood of political blowback and client retaliation, there is the chance that your partners will be disturbed by the representation,’ Cadwalader, Wickersham & Taft’s Nick Gravante recently told Law.com. He agreed that ‘we may be headed in that direction’ of firms compelled to choose sides. ‘It is as divided and politically charged as it has ever been.'”
  • “It isn’t likely that Jones Day will be picking up work from Planned Parenthood or the Biden family any time soon. Just like it is unlikely that Paul, Weiss, Rifkind, Wharton & Garrison will be representing the National Rifle Association in the near future.”
  • “Firms have always had “leanings” toward what they will and won’t do, but for the most part, those leanings were slight and, mostly, didn’t interfere with the business. But things have changed, some legal industry observers said.”
  • “Borgal Shunk said how firms choose to handle taking political and social positions will likely dictate whether they can recruit new attorneys and retain their existing ones. ‘That is where I see the greatest risk to law firms: How do they keep talent happy and have a healthy dialogue without conflict undermining people and their perspectives,’ she said.”
  • “Borgal Shunk referenced the litigation around tobacco and oil spills and how firms that represented them had a ‘stigma’ associated with them for incoming talent. But client-related stigmas are ‘more prevalent today’ as the issues at hand, such as guns and abortion, have a ‘strong emotional tie’ for many, she said.”
  • “Besides market perception and attorney recruitment, a larger, existential issue also lingers when law firms refuse to represent controversial or political clients. ‘I believe there are benefits to having what I would call hard-edged clients repped by mainstream firms,’ Dimitrief said. ‘They bring mainstream sensitivity to issues and prevent extreme positions from being taken.'”
  • “He noted the legal circus that has surrounded Trump as an example of how things can go sideways if more reputable and mainstream firms forgo working with clients such as Trump.”
  • “Several legal industry observers said Big Law will likely not devolve into ‘red’ and ‘blue’factions, with one side forsaking all business from the other. But they did agree that politics and social causes are now more a part of the calculus for firms than they used to be, and firms would be good to keep their eyes open.”