In a span of two weeks earlier this month, both Mayer Brown and Orrick, Herrington & Sutcliffe showed the door to partners over what the firms described as inappropriate personal conduct. What’s more, they weren’t secretive about their actions: In statements provided to press, the names of the partners were acknowledged, and both firms said they were acting to protect their “values.”
Credit the #MeToo movement. Several years ago, law firms might have handled such cases far more quietly—perhaps with a confidential settlement. At K&L Gates, for example, an ALM investigation found a pattern of such settlements between the firm and women who alleged sexual misconduct and discriminatory behavior between 2002 and 2012.
New York employment lawyer Douglas Wigdor said in the past cases brought by his clients against law firms had resulted in confidential settlements, while those tagged with improper conduct remained partners in their firms. But things have changed, he said.
“Now, with these cases and others, the alleged wrongdoers are terminated and pushed out,” he said. “Law firms are now understanding that it’s a serious liability to have someone going to work as a partner or employee who’s engaged in this kind of conduct.”
The public firings suggest a new calculus, not necessarily a moral awakening.
“Firms are really concerned about bad publicity. They realize how interested the press is about this issue,” said Minna Kotkin, a professor of law at Brooklyn Law School. “One woman who comes forward can do a lot of harm, both for retaining clients and recruiting new lawyers.”
That’s altered the cost-benefit analysis for firms, which in the past may have been willing ignore evidence of misconduct, protect their rainmakers and keep fees flowing in.
If money explains why firms were willing to sit on their hands in the past, it also explains why they’re taking action now, according to Wigdor. They face “significant ramifications,” not just liability to the person who’s come forward, but the economic repercussions of clients heading elsewhere.
This dynamic is magnified by the fact that even prior to the rise of the #MeToo movement, many multinationals and banks had grown more attuned to the consequences of letting individuals accused of sexual misconduct and harassment stay put and were quicker to take steps to cut ties with them. These businesses are likely to have the same expectations for their outside counsel.
“You would think law firms would be leaders in this area, but unfortunately, they’re not,” Wigdor said.
Signs of change
The changing incentive structure doesn’t mean that the pivot is easy for firms. ”I think it’s taking a lot of serious conversations,” said Gwen Mellor, a partner with the Zeughauser Group.
She noted the challenge of getting multiple actors with stakes in the leadership of the firm on board: the managing partner or chair, the chief human resource officer, the general counsel, along with some of the highest performing partners in the partnership.
“They have to be aligned in an effort to take a bold step,” Mellor added.
One example of the changing approach is in firms hiring outside counsel to investigate reports of wrongdoing, rather than handling the matter in house.
Orrick hired Freshfields Bruckhaus Deringer to probe alleged misconduct involving Pascal Agboyibor, the Paris-based former head of the firm’s Africa practice, who was let go earlier in March. Mayer Brown declined to comment on whether an outside investigation was in place prior to the termination of Chicago-based banking and finance partner Zac Barnett. (Neither Agboyibor nor Barnett could be reached for comment.)
Observers say other firms are also turning to outside counsel more frequently.
“It takes out personal loyalty issues and concerns with rainmakers,” Kotkin said. “If you can an outside firm substantiating the allegations, firms are hard pressed to ignore that finding.”
Wigdor also called these investigations a step in the right direction, but he cautioned that the scope of the mandate is what matters.
“Are they given a blanket goal of going wherever the evidence takes them and with the understanding that the law firm will be cooperative in all ways, with access to emails and electronic devices and whatever they want?” he said. “Or will they give them a few people to speak to and control email volume by giving them what they’d like them to see?”
Kotkin said the trend is heading in the right direction. “In the past these investigations have drawn on for too long,” she said, “and often they ended up in findings that charges couldn’t be substantiated. That’s mostly because there wasn’t a significant investigation done and also because of fear of retaliation.”
Another indication of a firm’s commitment to change, for Wigdor, is whether it maintains a policy of obligating staff and associates to sign mandatory arbitration and nondisclosure agreements. Orrick ended its policy requiring these agreements in March 2018. Mayer Brown never required mandatory arbitration agreements.
And just as Orrick was part of a wave of firms responding to a wider conversation about these agreements, the swift action that it and Mayer Brown have taken are likely to have a wider signaling effect.
“When the highest performing firms in the industry start to make similar decisions, that definitely sets the pace for the rest of the industry,” said Mellor.