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Major Law Firms Find Themselves in Hot Water

In today’s news section, you will see two articles involving two major law firms and the hot water they now find themselves in. First, a law firm that negotiated a huge settlement with the makers of the diet drug fen-phen has been ordered to stand trial over whether it manipulated the deal in a way that increased the lawyers’ share of the money. State Supreme Court Justice Charles E. Ramos said Wednesday he was ordering a trial because of questions about whether the firm, Napoli Bern Ripka LLP, violated ethical rules in apportioning shares of the settlement money. The firm represented 5000 users of the diet drug in a lawsuit against American Home Products, the maker of Fen Phen. They allegedly settled for over a billion dollars; however, and affidavit from a former Napoli employee says the firm wrongfully divided the settlement proceeds based on whether the client retained Napoli first or was referred by another lawyer to whom Napoli would have to pay a portion of the fee. The former employee says Napoli inflated the values of the cases on which they didn’t have to split fees with other lawyers. If there is any truth to this, this law firm is in deep trouble. Not only have the committed legal malpractice, the have violated a number of ethics rules which would justify suspension or disbarment. Lawyers owe a fiduciary duty to their clients, which means they must put their client’s interests above their own. This is especially true when the attorney’s only interest in monetary. For a law firm to wrongfully inflate the value of some cases over others in order to increase its fee is so abhorrent. Next, we have Jenkens & Gilchrist, once one of the largest law firms in Texas. Apparently, this national law firm has admitted its Chicago branch helped thousands of clients wrongfully avoid paying taxes by setting up bogus tax shelters. The law firm has agreed, in exchange for not being prosecuted, to close its doors and pay the IRS $75 million. The law firm has also been sued for legal malpractice by several of its former clients. It is reported that the settlement exceeds $80 million. Unfortunately, the former Jenkens clients are not off the hook with the IRS. Jenkens was forced to turn over its client list and the IRS is going after them. They clients will owe back taxes, plus penalties and interest. This is simply one more case of a law firm placing its own financial interests above its client’s best interest. Shameful. 

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