Risk Update

Client Selection Risk — PR Risk, Ethics and Client Screening, Firm Governance & Culture

We noted this story when the news first broke. Now come additional developments and expanding industry commentary. First, extensive analysis and third party commentary: “Turning Down a Client on Ethical Grounds a Difficult Decision for Law Firms” —

  • “An email by an Australian law firm leader apologising to staff after a senior partner had agreed to represent a politician accused of an historic rape has cast light on the question of how often law firms ever turn down clients on ethical or moral grounds.”
  • “Firms rarely publicly discuss or acknowledge the issue, and generally do not disclose what policies, if any, they have regarding the ethics of a clients’ action.”
  • “Law firm leaders and observers say that for the most part firms don’t turn down clients for reasons other than conflict of interest or concerns about their solvency, but it might become more of an issue as firms seek to protect their reputation in the broader community.”
  • “Annette Kimmitt lost her job as chief executive of top-tier Australian corporate firm MinterEllison this week after she emailed staff to ‘apologize for the pain you may be experiencing’ because defamation specialist Peter Bartlett had agreed to represent Commonwealth Attorney General Christian Porter over allegations he raped a 16 year old girl in the 1988. Porter denies the allegations.”
  • “The email caused uproar at the firm, according to local reports, and on Monday the firm’s board sacked Kimmitt, an accountant who joined the firm from EY in 2018.”
  • “Choosing whether or not to represent a client is a business decision, Tim Corcoran, a legal management consultant with offices in New York, Charlottesville, and Sydney, said in a LinkedIn post. ‘This is a business decision, like Jones Day representing Trump and McKinsey on the opioids thing,” he wrote. “As owners of the business, you know there are consequences, even if there isn’t a $100 million fine like McKinsey had, or you might have some partners leave Jones Day because they dealt with Trump and their clients didn’t like it.'”
  • “Corcoran, who also spoke on a call, says Kimmitt was “dead on” for complaining Bartlett didn’t consult the wider firm on the decision to represent Porter. “If you are going to take on an investigation and potentially offend clients of the firm, you need to have a discussion on whether we are prepared for that and talk internally about it. The fact that it didn’t happen here, that was a poor decision,” he argues.”
  • “This is the approach at Melbourne and Sydney firm Arnold Bloch Leibler, where a conflicts notice is sent to every member of staff before the firm takes on a new client to give anybody a chance to raise an issue if they would ‘feel uncomfortable about the firm acting on a particular matter.’
  • “An issue very rarely arises, says senior partner Mark Leibler, but if one does, the firm’s 35 partners discuss it informally and come to an agreement.”
  • “They have never had a vote on a client, but a decade ago the firm stopped acting for arts organisation RedBubble after it started producing ‘Hipster Hitler’ T-shirts. ‘We really didn’t have to think about it,’ recalls Leibler, who adds that the goings on at MinterEllison have caused him to consider how the firm decides on clients.”
  • “The managing partner of a large national Australian firm, who declined to be named, says the firm decided some years ago not to represent the tobacco sector after being approached by a potential client. The firm has a policy of declining to reject whole industry sectors rather than particular businesses or clients. ‘It’s uniform; we can say to everyone that it’s a policy position,’ he says.”
  • “Despite the risk to their reputation, commercial law firms rarely refuse to act for clients on ethical grounds or ESG (environmental, social and governance) considerations, says Professor Simon Rice of the University of Sydney Law School.”
  • “They are balancing two competing reputational considerations when they agree to take on a client. ‘One is their reputation in the market as being available to commercial clients as a good lawyer, against whatever reputational risk they fear might attach to being a lawyer for a client who attracts opprobrium in public. And the former far outweighs the latter,’ he says.”

See also interesting public commentary in response to a prompt by the Editor-in-Chief of ALM on LinkedIn:

  • Law firm management advisor Timothy Corcoran: “A number of people, here, in Aussie op-eds, Twitter, etc., have raised the “everyone deserves quality legal representation” point. It’s a fair point. But it’s not that simple. Clients aren’t required to ponder that when they see a preferred panel law firm represent someone, or something, they find contrary to their values. And law firms, as businesses, need to weigh these considerations before leaping into new engagements that benefit one group but disadvantage others. This could be a lively discussion… The partner’s initial action, and the Board’s subsequent action, have sent a loud message to the firm’s lawyers, employees, clients, and to the public, whether intentional or not, that the shareholders value publicity and fees more than they value their reputation. Rather than see this engagement as going against the firm’s stated values, I see it as an endorsement of their actual values. Jones Day doesn’t care. McKinsey partners don’t care. Apparently neither does Minters.”
  • PR and Crisis Communications Advisor Gina Furia Rubel: “As an attorney, I believe everyone has the right representation, however, firm culture and values should come into play when deciding who to represent. As a business leader, I advocate for following process and procedures. On the surface, it appears that they did not do that here. As a public relations advisor to law firms internationally, much of this could’ve been avoided if the firm prescribed to open communications. The email, in my opinion, is akin to letting people know that something they’re about to see, read, or learn about can trigger painful and emotional responses. She obviously has emotional intelligence and cares about the behavioral health of her colleagues. Sad and true, this is the classic, “rainmaker does no wrong” approach to law firm decision making.”
  • Clark Hill Law Director of Marketing Roy Sexton: “I do wonder if this is a bit of the guild punishing her and if she had been an attorney they would have taken different action. Or no action. That is of course just my own prejudiced conjecture. But I think by this action, the firm has taken a bad situation and made it infinitely worse from a cultural perspective and from a PR one.”
  • Crisis and Risk Communications Consultant Aidan M. Ryan: “Very interesting. Two industry trends intersecting here: 1. Heightened expectations that client representations will align with stated firm values, and 2. Culture clashes as nonlawyers take leadership positions. We saw something like this with the backlash against U.S. firms participating in election litigation – the profession’s ancient traditions around the right to representation (at least in the civil sphere) are very much under siege.”