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May 3, 2011 6:20 PM

Vetting Controversial Clients: How Am Law 200 Firms Do It

Posted by Drew Combs

When King & Spalding chairman Robert Hays announced last week that his firm would no longer defend the constitutionality of the Defense of Marriage Act (DOMA) for the House of Representatives, his statement also described the firm's process of vetting the matter as "inadequate."

However, that characterization is in contrast to descriptions of the firm's new matter intake process, according to former King & Spalding partners who detailed a rather rigorous review scheme to The Blog of Legal Times, a sibling blog.

Whatever procedures were in place, it is clear that King & Spalding was caught off guard by the backlash. The firm withdrew from the case only a week after its engagement by congressional leaders became public.

King & Spalding's situation highlights new matter and new client intake processes at Am Law 200 firms, especially with regards to potentially controversial matters. In deciding on new matters and clients, the firms must consider and juggle the interests and reactions of several constituents, including attorneys in offices around the world, and clients that can number into the thousands. And, increasingly, on high-profile matters, there are public relations and press concerns.

The picture presented by more than a half-dozen interviews with firm leaders and legal industry consultants is one in which most large and midsize firms have graduated from intake procedures that are composed solely of conflict and credit checks. But firms approach the process in an almost academic manner that is less about clearly defined policies and more about ensuring a thorough discussion about risks and benefits.

Some legal industry watchers say firms should do more. "I don't think law firms are serious enough about their client intake process," says Bruce MacEwen, a New York-based legal industry consultant. He adds, "It should be approached in the same strategic manner as attorney recruitment, but in my experience very few firms view it that way." According to MacEwen, law firms should put in place standing procedures and committees that allow them to analyze some new matters as thoroughly as firms review potential lateral additions.

King & Spalding declined to comment for this article about its vetting process for new matters and clients. "Our policy is that we don’t discuss our internal operations," says firm spokesman Les Zuke. 

But other firms were willing to discuss their new matter vetting process, and the specific challenges presented by potentially controversial and high-profile matters.

McDermott, Will & Emery partner William Schuman, who heads the firm's professional responsibility committee, says that the process for vetting new clients at his firm includes conflict checks as well as reviews of all publicly available information. "We, like most big firms, have become more cautious [when considering a new client] and want to be careful about not taking on bad risk," Schuman says. "It doesn't mean we don't defend clients that need defense, but having said that, the principle can have limits."

Schuman adds that one example of a limit is a matter that is likely to have a major personal impact on the firm's clients, partners, and employees. He says, "You have to ask yourself: Is this going to demoralize people at the firm?"

While Schuman's 40-attorney professional responsibility committee handles all ethical issues confronted by the firm and its lawyers that might arise with a new matter, the firm doesn't adhere to a rigid procedure for dealing with matters that have been "red flagged." Decisions about whether to take on matters that may be controversial or present some other complications are usually made by the firm's leadership.

Gibson Dunn & Crutcher is familiar with controversial matters and the complications that arise from them. The firm has teamed up with Boies, Schiller & Flexner to challenge in federal court California's Proposition 8, which restricts the state from authorizing gay marriages. The litigation was detailed in the March issue of The American Lawyer magazine.

Gibson Dunn's process for vetting new clients includes both conflict and background checks, which must be reviewed by a "concurring partner." In addition to direct conflicts, the firm is also keen to avoid matters that could be perceived as adverse to the interests of current clients.

But there is no specific committee or procedure for handling matters that might pose additional challenges. According to Gibson Dunn managing partner Kenneth Doran, the firm depends on partners to flag potential controversial clients and matters.

"We don't hesitate to take on controversial matters," Doran says, "but to the extent something might give rise to controversy, we expect our partners to exercise good judgment and bring the issue to a broader group of people." He adds, "Having more people think through all the issues involved is a helpful exercise. Ultimately, the decision to take on a matter that has been flagged rests with the firm's management committee, which includes Gibson’s general counsel."

Quinn Emanuel Urquhart & Sullivan partners pride themselves on the dearth of committees at the firm, so it's not surprising that the firm reviews new matters in a rigorous but somewhat unstructured manner.

According to name partner Bill Urquhart, in addition to a conflict check, the firm considers new clients and matters in a process he describes as a "second analysis."

During this process, a new matter and or client is reviewed with respect to the firm's standing policies regarding the firm practice. For instance, the firm does not represent financial giants so that it can sue them, and the firm is prohibited from representing some clients based on the terms of engagements with current clients.

"As you might imagine if you have a law firm that doesn’t have a bunch of committees, you have to bring some order to the chaos," says Urquhart.

And at Quinn Emanuel, order comes in a process that consists of conflict memos detailing new clients and new matters, which are sent to the entire partnership. "Every single one of the partners reads the conflict memos that go around," says Urquhart, "and if they believe there is any kind of issue then they will flag it."

The firm has declined to take on matters that lawyers objected to for religious reasons as well as matters that were too emotionally difficult for partners to deal with.

At Hogan Lovells, the process for considering clients and matters that may be controversial is a bit more formulaic. The firm's general counsel, practice group leaders, and sometimes even the management committee play active roles.

But according to co-CEO Warren Gorrell, the aim isn't to reach a point where someone makes a decision. He says, "The goal, of course, is to reach a consensus about what's in the best interest of the firm."

 

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Regardless of whether the K&S decision on undertaking the DOMA defense was appropriate when initially made or defensible when the firm decided to disengage itself from the matter, the firm was inadequately prepared to handle the media storm that followed. Every law firm needs to have in place a crisis communication plan when the day comes that it is under media attack.

What was the hourly rate to be charged by King & Spalding to defend DOMA? Was it a regular, enhanced or discounted rate?

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