Mention the collapse of Andersen to a lawyer and the reaction will typically be a mixture of shock, amazement and fear – plus a touch, perhaps, of a sense that “there but for the grace of God”. Many lessons can be drawn from this unfortunate episode, not least that a professional firm’s reputation, one of its most valuable, albeit intangible, assets, can be a fragile thing, vulnerable to harm. Andersen’s professional reputation, carefully and expensively established over a number of years, was destroyed virtually overnight as a result of the actions of people within the firm or by clients that have indulged in irregular activity.
Lawyers believe, perhaps reasonably, that they are not responsible for the behaviour of clients. However, the fact remains that the firm’s reputation can be damaged by the misbehaviour of a client. In today’s media conscious and litigious world, there is such a thing as guilt by association for advisers. Yet litigation practices in particular have acted for a variety of clients, some of questionable standing, over the years, generally without a stain on their character.
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