A. Introduction
It is well known among lawyers that dishonest clients—or, if you prefer, “unworthy” clients—pose a major professional liability risk for even the very best law firms.1 Of the 73 publicly-reported settlements by or judgments against U.S. law firms that exceed $20 million, 45 are primarily attributable to the representation of dishonest clients, and at least another four were partly products of client dishonesty.2 In other words, of the catastrophic losses experienced by U.S. law firms, over two-thirds are attributable to the firm’s representation of a dishonest client. And, mind you, that is only the publicly-reported $20 million plus matters—there are other cases of similar value that were resolved confidentially. Further illustrating the serious risk posed by dishonest clients, a multi-year study of professional liability claims against Aon law firm clients revealed that the representation of dishonest clients is the third most frequent cause of loss, and the most severe cause of loss on average on a per claim basis.3