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This is an interesting point. Obviously these firms don't have much power over their ex-attorneys, but a culture that opposed this sort of thing might be a dis
by Bartweiss 9y ago
This is an interesting point.
Obviously these firms don't have much power over their ex-attorneys, but a culture that opposed this sort of thing might be a disincentive to strike out as a troll (what if you want to go back to respectable practice some day?). And, more dramatically, a firm that wanted to clear its name could easily volunteer some hours to fighting trolls - that's the sort of thing that could make an immediate difference.
- JumpCrisscross 9y agoThere's also the plain-and-simple risk that lawyers at a firm I've handed the keys to know a lot about my company. That they may use this to profit against me, in a personal capacity, is all kinds of wrong. It's akin to an investment firm, doing confidential diligence on Company X, having an employee, who may or may not have been on the diligence team, run out and start a hedge fund that shorts Company X. It's not, by itself, necessarily unethical. But it smells fishy and deserves to be dug into.
- zbobet2012 9y agoThe scenario you described involving diligence and shorting would almost automatically merit an investigation from the SEC. I think it might actually merit an automatic "fine" under short swing profit rules.
- JumpCrisscross 9y agoIt would, from the SEC. There is no analog for lawyers.
- phonon 9y agoYou would definitely be disbarred.
- JumpCrisscross 9y agoThe Bar's disciplinary proceedings are not a public process. "Definitely" is definitely too strong.
- raleighm 9y agoI think you can find disciplinary records/proceedings online in most states. If former associates of a firm you engaged are bringing suit against you, then yes, that can raise professional responsibility issues and it's a good idea to contact the firm as you did and ask about the firm's internal knowledge management system and what information about your business those associates might have had access to.
- logicallee 9y ago>It's not, by itself, necessarily unethical. can you explain this line? I was shocked to read it after your first paragraph and I can't imagine why you wrote it.
- Bartweiss 9y agoI believe that's about "who may or may not have been on the diligence team". It's not inherently unethical, because the investment firm employee starting the hedge fund may not actually have any secret knowledge. But it's deeply alarming, because it's very possible (and hard to confirm) that they do have secret knowledge, so that practice is generally illegal even when it's not unethical.
- logicallee 9y agoif gp confirms that's what they meant then that's fine. (it seemed unlikely due to the word "having".)
- bdowling 9y agoWhat you describe is, without a doubt, not only unethical but also illegal. A lawyer or accountant with confidential information on a current or former client who trades on that information violates SEC rules against insider trading, agency law prohibiting an agent from profiting from his position, and rules of professional responsibility. The first could send him to jail, the second would cost him his profits, and the third could cause him to lose his license to operate.
- kevin_thibedeau 9y agoAll it requires is DAs with enough backbone to start enforcing barratry laws against abusive lawyers.