Every big-firm litigation partner has received the call from his colleague in the corporate department: "The big deal that I was working on fell apart, and now the client has been sued. Can you handle the litigation?" While this turn of events is not good news for the client, it is not necessarily bad news for the law firm, which may now be looking forward to lengthy litigation and big fees. Because of that, the litigation partner's response is usually the same - he says, "yes," and simply assum…
Read moreEvery big-firm litigation partner has received the call from his colleague in the corporate department: "The big deal that I was working on fell apart, and now the client has been sued. Can you handle the litigation?" While this turn of events is not good news for the client, it is not necessarily bad news for the law firm, which may now be looking forward to lengthy litigation and big fees. Because of that, the litigation partner's response is usually the same - he says, "yes," and simply assumes that his partner was not the cause of the litigation or perhaps just ignores that possibility. In either case, he eagerly accepts his partner's offer to handle the case and merrily embarks on the litigation path. After all, getting clients out of trouble is what litigators do. But lurking in the background is an ethical landmine that has received little attention from the courts, the academic community or the bar - if the litigator comes to believe that his corporate partner's legal work (e.g. the insertion of a poorly drafted clause into the critical contract) may have been to blame for the failure of the deal and the subsequent litigation, then the firm may have an ethical obligation to report that fact to the client. And, moreover, the failure to report that fact to the client, as well as the continued representation of the client in the litigation, may itself give rise to an independent claim against the firm. Remarkably, although this scenario plays out all the time at firms all over the country, little attention has been given to this issue. This is even more remarkable because, upon closer examination, the lawyer's self-reporting duty is obvious. This article takes the first comprehensive look at this duty. Part I explores the source of this self-reporting duty, which is well rooted in Rules 1.4 and 1.7 of the Model Rules of Professional Conduct as well as the fiduciary law governing the lawyer-client relationship. Having established the legal source of the self-reporting duty, Part II of this article will turn to the moral and philosophical source of the duty - the notion of informed consent. Part III will then focus on the scope of the self-reporting duty. Lawyers make mistakes all the time but under what circumstances do those mistakes require self-reporting? In addition, once the self-reporting duty arises, what precise obligations does the self-reporting duty place on the attorney? In Part IV, I explain why a failure to self-report can give rise to an independent claim for legal malpractice, as well as other significant negative consequences. These negative consequences should give lawyers an incentive to think more about their potential self-reporting obligations and, in the appropriate circumstances, to report their errors to their clients.