Nell Gluckman, The Am Law Daily
August 10, 2016
Of all the things a lawyer might put on his or her resume, being involved in litigation with the government isn't high on the list.
But past entanglements with government prosecutors don't always put lawyers on a hiring blacklist, as illustrated by the case of Arent Fox partner Robert Schulman.
On Wednesday, Schulman was charged in a federal indictment in Central Islip, New York, with tipping off an investment advisor about Pfizer Inc.'s $3.6 billion acquisition of King Pharmaceuticals Inc. in 2010. Schulman had been mentioned in a related 2013 case brought by the U.S. Securities and Exchange Commission that accused Tibor Klein, the founder of investment advisory firm Klein Financial Corp., of trading on the information Schulman allegedly let slip about the merger. Schulman was not named as a defendant in the SEC case, though the allegations parallel those levied in the indictment unsealed this week.
Arent Fox hired Schulman two years after the SEC case was filed. He works as a patent litigation partner in the firm's Washington, D.C., office.
In an email to The American Lawyer sent Wednesday, Schulman denied any wrongdoing.
"I will fight this and I will win," he said. "I did not divulge the information alleged by the indictment, nor did I have any knowledge of the 15k trade made by my broker in my retirement account."
Arent Fox declined to comment on Wednesday, but Schulman remains on the firm's website.
Firms take on legal and reputational risks when they hire new partners who have an association with past or ongoing litigation, said Michael Ellenhorn, general counsel of Decipher, a consultancy that vets potential lateral hires for law firms.
"As you see over and over again, people can do almost anything and get hired by another firm," Ellenhorn said. "They may have great clients. And people make mistakes."
Sometimes such mistakes turn out to be aberrations, or a lawyer was unjustly accused. But other times it's indicative of a broader problem, Ellenhorn added. Law firms can look into the backgrounds of potential hires, but there is no standard practice for how to do so.
"Firms are all over the map for how they vet their candidates," Ellenhorn said. Some do almost nothing, while others do deep background checks into potential hires' character, past work, financial history and other information.
Decipher CEO Howard Rosenberg said that according to his firm's data, about 18 percent of malpractice claims worth $500,000 or more stem from lateral hires. He said he believes the size of malpractice claims is increasing.
Arent Fox isn't the only firm that has hired a lawyer who has been accused of wrongdoing, or was on the cusp of facing charges.
Earlier this year, Evan Greebel resigned from Kaye Scholer after being charged alongside former pharmaceutical CEO Martin Shkreli of wire fraud conspiracy. Last year, Greebel lateraled from Katten Muchin Rosenman, where he worked when the alleged scheme took place. Both firms said they were conducting internal investigations into Greebel's work.
In a separate incident, real estate partner David Schwinger left Katten amid an SEC investigation into whether he'd traded on insider information related to JPMorgan Chase & Co.'s acquisition of Vastera Inc. Schwinger later landed at Locke Lord, but left in 2009 because of litigation with the firm that stemmed from an "internal partnership dispute," according to The Am Law Daily.
Williams & Connolly hired a former junior manager from Dewey & LeBoeuf who was charged alongside that firm's top executives in a case that accused them of hiding the firm's true finances from lenders and investors. But that hire, Zachary Warren, who was 24 and had not yet gone to law school when he worked at Dewey, received a deferred prosecution agreement that will likely dismiss all charges against him. He has since graduated from Georgetown University Law Center, completed two federal clerkships and will start at Williams & Connolly in the fall.
In the end, Ellenhorn said, firms must weigh every detail when vetting a potential hire. "Every case is different," he said.
Contact Nell Gluckman at firstname.lastname@example.org or on Twitter: @NellGluckman
Case Against Arent Fox Partner Highlights Big Law Hiring Risks
DECIPHER℠ is an independent corporate intelligence provider which assists firms with reducing the risk of a bad executive level hire.
© 2016 Decipher. All rights reserved Disclaimer