October 22, 2021
Why Your Law Firm Needs a Lawyer
For many law firm partners, even those who run and manage law firms large and small, the idea that a law firm needs its own lawyers to manage legal ethics issues and related law firm governance matters may seem like overkill. After all, law firms are full of lawyers — hopefully, smart and skilled lawyers, some of whom even act as general counsel or have experience in risk management — so why would a firm full of lawyers need its own counsel? Lots of reasons, it turns out.
A Fool for a Client. One of the most important reasons a law firm needs independent counsel to advise on legal ethics issues is also perhaps one of the most obvious: perspective. As lawyers, we routinely advise our clients on legal issues and analyze their most difficult legal problems. The most useful aspect of that legal advice is the ability to be detached from the legal problem and to analyze the problem objectively and dispassionately. Identifying potential legal solutions is just the first step for resolving complex legal issues. The critical next step is to have and to apply the perspective to choose among the possible solutions, applying practical experience about what to do and why.
That part, the really valuable, critical part, is only possible when you are reasonably detached from the problem you are solving. It’s also more likely when you have the perspective of having seen many firms solve similar problems, some more successfully than others.
Solutions You May Not See. Outside legal ethics counsel doesn’t just say no to things you may want to do at a law firm to make money. Instead, legal ethics counsel can advise you about solutions to the problem that you may not see, including solutions that can significantly lower the risks of a potential legal ethics issue and may clear the road to serve clients in the ways you choose. Many legal ethics issues can be managed if identified early, properly analyzed and disclosed to interested parties, and resolved upfront. Most of the really hot water that law firms get themselves into results from the natural partner instinct to avoid or to deny potential legal ethics issues at the outset and hope for the best. It’s a bit like deciding not to treat a disease at first diagnosis. Yes, it may get better over time, but chances are it will get much, much, worse. Identifying those legal ethics issues upfront doesn’t always mean having to say no; rather, if properly analyzed, it frequently means you have many options to solve the problem before it becomes an existential threat.
The Only Constant is Change. Perhaps the most practical reason for California lawyers to seek outside ethics counsel is that the past two years have ushered in an era of unprecedented change in the way law firms operate. Navigating remote practices and changing workplace values, massive law firm transitions and departures, and technological tools and the use of third-party service providers have transformed the way law firms communicate with clients, handle their data, and deliver legal services. Even an in-house law firm general counsel who keeps up with these ever-evolving issues may have difficulty dedicating the resources necessary to analyze and implement the appropriate changes in the firm to comply with the legal ethics rules and risk management and business objectives.
Do Your Kids Have Shoes? Thoughtfully developed law firm partnership agreements, and other organizing documents and policies, are the foundation of any well-run law firm. Unfortunately, many California lawyers don’t have any governing documents for their firms, or their agreements are not updated and do not serve their current needs or practice plans. These agreements are a lot like estate planning documents for individuals, nobody really wants to think about it, but we recognize it as a practical necessity. Here, failing to deal with your firm’s governing agreements means your practice might not comply with legal ethics rules or California law, and your firm’s assets may not be as protected as you think. It also means it will likely be more difficult to avoid disputes among partners – on issues such as departures, retirement, succession planning, compensation, management, to name a few – and may be more difficult to resolve them when they do arise.
Is Everything Privileged? Law firms tend to have the instinct to handle sensitive legal ethics issues internally to preserve the confidentiality of the issues and to avoid publicizing their most sensitive business risks to anyone. That is the right instinct, but without more, it can limit the firm’s ability in some circumstances to protect the privilege of sensitive internal investigations, especially if you don’t have a dedicated internal ethics counsel or if there is any question about the independence of the lawyers investigating. In the first instance, outside legal ethics counsel can advise on how best to conduct the internal review of sensitive topics to maintain privilege, as well as under what circumstances, and how, such analysis must be disclosed to clients. More generally, having outside counsel handle the issues in coordination with the firm’s partners or internal ethics counsel is more likely to preserve the privilege. And that’s a really important privilege if the worst happens. It may also ensure the most protection for clients’ interests.
Taking all of these risks together means you may not want to get out of bed in the morning. But the good news is that all these issues can be addressed in a systematic way over time. And, with the proper advice and counsel, your firm can minimize or eliminate unnecessary risks, solve legal ethics issues before they become disasters, better protect your firm and your practice, and preserve your most sensitive and confidential law firm business information.
Dena M. Roche
O’Rielly & Roche LLP