Law Firms Accused: A 2019 Roundup of Controversies

Dec. 27, 2019, 9:50 AM

A lot of law firms were in legal trouble in 2019. They faced claims, including gender pay inequality, sexual harassment, abetting Ponzi schemes, disregarding conflicts of interest, and overbilling.

“Frequency and severity of claims in the legal and professional malpractice marketplace is skyrocketing,” said Dan Donnelly, who oversees claims at legal professional liability insurer ALAS Ltd.

Here is a look back at some of the biggest stories in 2019 about law firms finding themselves on the wrong side of a claim.

Gender Bias

Jones Day was sued in April by a group of female associates who alleged the firm’s “black box” payment structure, combined with the “nearly absolute control” exercised by managing partner Steve Brogan, results in a biased system against women. Jones Day denied the allegations, won arguments to unveil the identities of the plaintiffs, and has argued they should face sanctions for bringing the case without investigating their claims.

Morrison Foerster continued to defend itself against a pregnancy bias suit brought in 2018 that alleged the “mommy track is a dead end” at the law firm. At least five of the plaintiffs in that case appear to have settled, while the two women continuing to pursue class-action claims against the firm revealed their identities in December. MoFo has claimed a “long and proven track record” supporting and promoting those who take maternity leave.

LeClairRyan’s joint venture with UnitedLex, ULX Partners, settled a claim with a former marketing coordinator, Marci Keatts, who alleged she received “significantly less” compensation than a male subordinate. LeClairRyan had filed for bankruptcy by the time the settlement was reached in November.

Jones Day was also the target of another high profile bias suit. This complaint was filed in August by a husband and wife who formerly worked at Jones Day and said the firm’s parental leave policy discriminated based on sex by offering less leave to fathers than mothers. Jones Day has called the lawsuit “an insubstantial quibble that fails even on its own terms.”

Gender pay discrimination cases are becoming harder for law firms to defend in some jurisdictions, said Aimee Delaney, a partner who represents law firms in Hinshaw & Culbertson’s Lawyers for the Profession practice. States are passing laws that make it easier for employees to compare their salaries across a broader swath of colleagues, she said. The suits have led to an increased interest among law firms in conducting pay audits.

“You have to be prepared to fix a problem if you find one,” Delaney said.

Sex Harassment

DLA Piper lawyer Vanina Guerrero accused Silicon Valley rainmaker Louis Lehot in October of sexual assault, leading to his departure from the firm and, subsequently, her placement on leave. Lehot said he did not assault or harass Guerrero and released emails that he said supported his claims that their relationship was consensual.

DLA Piper said in a letter to the Equal Employment Opportunity Commission through its attorneys from Gibson Dunn & Crutcher that Guerrero orchestrated a “flirtation” with Lehot to advance her career. Guerrero’s lawyer at Wigdor LLP responded by calling DLA Piper’s behavior in the matter “a new low.”

Since Guerrero’s accusation, two other women have come forward with allegations of workplace bullying against Lehot, which the firm contests.

Freshfields Bruckhaus Deringer proposed a response to its own scandal over sexual misconduct allegations involving a partner and a subordinate: Hit misbehaving partners with a fine. That came after a U.K. tribunal levied a fine against a London-based partner at the firm it found to have engaged in sexual activity with a 20-year-old colleague who was intoxicated.

Baker McKenzie allegedly mishandled an investigation into claims that Gary Senior, a former high-ranking partner in the U.K., sought to initiate intimate activity with a female subordinate in 2012. During a 15-day hearing in December at the Solicitors Disciplinary Tribunal, a former Baker McKenzie partner involved in the early stages of the investigation said “it didn’t occur” to the firm that the incident would be of interest to U.K. lawyer regulators.

Investment Fraud

Sidley Austin joined with accounting giant Deloitte and others in a $234 million settlement with investors in Aequitas Securities, which unraveled in early 2016 after U.S. securities regulators said the investment management firm was operating in a “Ponzi-like” fashion.

Butler Snow and Baker Donelson continued defending a lawsuit brought in late 2018 by a court-appointed receiver pursuing recoveries related to a Ponzi scheme run by Mississippi businessman Arthur Lamar Adams. Butler Snow in September failed in a bid to send the claims to arbitration. Adams was sentenced to nearly 20 years in prison.

Jon Darrell Seawright, a Baker Donelson partner named in the Adams Ponzi scheme litigation, filed for bankruptcy as a result. He listed nearly $1.3 million in assets and more than $165 million in liabilities, resulting in part from claims he faces in the litigation. He has said in court filings that he was not aware of the scheme.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com

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