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Lateral attorney hiring: a law firm’s opportunities and risks

A law firm’s managers and senior partners are often understandably excited over the prospect of securing new talent through the lateral hiring of seasoned attorneys who are already successful in other firms. In doing so, they can shore up select practice areas and, importantly, expand their client list.

Lateral hiring — especially if it is a recurring and large-scale practice within a firm — does not always exclusively spell upside-related opportunity for a hiring entity, though. As many law firms subsequently learn in the wake of lateral hires, there can also be a downside.

And that is centrally marked by this: problems engendered by new client representation that is sullied through work a lateral has previously done at one or additional firms.

In legal parlance, that spells the dreaded “conflict of interest” that is feared in every law firm and — at least in the case of careful company principals — closely guarded against through sound and proactive strategies.

Obviously, not all firms are equally vigilant in identifying potential conflicts and avoiding them.

And when they aren’t, it can cost them.

Most importantly, of course, a lateral hire’s conflicts can result in material injury to clients previously represented. Imagine a matter, for example, where a new and former client have opposing interests in the same or a similar transaction. Information gleaned from the first client could be used against it in a current case.

There are many variations on that theme, all spelling the need for a lateral-hiring firm to have an exacting screening process in place to identify and guard against client-related problems.

If that process lacks, it is quite likely that conflict-of-interest issues will arise and that a careless law firm will find itself in court as a named defendant in a legal malpractice case.