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The Price of Being Big: Law Firm Hiring Hits Conflicts Snag (1)

Aug. 9, 2022, 9:30 AMUpdated: Aug. 9, 2022, 9:48 PM

Major law firms’ checks of potential hires for conflicts of interest are becoming so extensive that they often slow the recruiting process and sometimes sink employment deals altogether.

Running the checks is often “the single most difficult job” law firms have, said Jeffrey Lowe, a legal recruiter for Major, Lindsey & Africa in Washington. “You have to get it exactly right, not mostly right,” he said.

Firms often review a wide range of information in checking for conflicts, including client representations, stock holdings and criminal records. They look largely for factors that could pose a conflict with the firm’s client base.

The growing challenges are part of a new reality for some of the largest firms in the world. Firms are increasingly sprawling, global operations with a vast web of clients, which require expanded conflicts checks for new recruits.

Getting it wrong can have huge consequences. Dentons, which bills itself as “the world’s largest law firm,” is currently appealing a $32 million malpractice judgment over an alleged client conflict issue in a patent case. RevoLaze, a former client, argued that the firm was conflicted because lawyers for a Dentons affiliate represented a company that RevoLaze had sued for patent infringement.

The process at Holland & Hart, a Denver-based firm with some 400 lawyers and annual gross revenue of about $300 million, has slowed and become more involved in recent years, according to firm chair Chris Balch. That’s mostly because the firm has grown in lawyers and clients—and the attorneys the firm seeks often have a large book of business, Balch said in a written statement.

"(T)here is no room for error in this process,” said Balch. “No lateral partner wants to end up in limbo and you certainly don’t want to end up jeopardizing a client relationship because someone missed a conflict.”

The issue has taken on a special relevance as law firm leaders have repeatedly said in recent years that hiring the right lateral partners, associates and groups is one of their most important priorities.

Of eight Big Law firms contacted for this story, Winston & Strawn and White & Case declined comment and others such as Troutman Pepper Hamilton Sanders and Paul, Weiss, Rifkind, Wharton & Garrison did not respond to questions.

‘Cut to the Chase’

Checks that were once made at the end of a hiring process now often happen much earlier, said Sharon Mahn, New York-based legal recruiter and managing director with ZRG Partners.

“Kind of like Tinder versus eharmony—let’s cut to the chase,” she said.

Firms rely on lateral partner questionnaires, known in the legal recruiting business as LPQs, to vet candidates for potential conflicts, Mahn said. The ever-bulkier questionnaires, she said, can slow the hiring process for firms looking to snatch up certain lawyers with big books of business before competitors do it first.

A typical LPQ, she said, usually includes questions about the lawyer’s clients and whether they have been open to repeat business; how much the clients have been billed versus how much they’ve actually paid the firm; and whether the lateral candidate is the lead attorney for a particular client.

Leaving out pertinent information puts the lawyer and recruiters like Mahn at risk that the deal will later fall through.

Dominant Force

Checks can leave both firms and candidates in untenable situations, Lowe said. By the time a check flags a potential hire as too conflicted, in some cases the partner being recruited has already given notice to what they view as their former firm, effectively leaving them jobless, he said.

Hiring firms risk candidates overstating their books of business..

“I think every firm has been burned,” he said.

Law firm conflict check departments, once back-office functions, have come to be a dominant force in the hiring process, recruiters say.

Ten to 20 people now typically staff the departments, with some topping out at 30 or more at the largest international firms. Non-lawyers, including paralegals, mostly staff them, though attorneys handle the most complicated work.

Mary Beth Robinson, a senior vice president with the Attorneys’ Liability Assurance Society, which provides legal practice insurance to firms, said that even if conflicts checks take a long time and slow the hiring process, they are worth it.

“We advise firms to take their time and do this work correctly,” Robinson said. “It’s top of mind for us.”

(New quote from law firm recruiter Jeffrey Lowe added in the sixteenth paragraph.)

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com