A law firm's reputation is built on the conduct of its partners. Firms have traditionally promoted from within, a thoughtful and incremental process. Today, however, it has become much more common to recruit partner-level candidates from competitors. Lateral recruiting can drive growth and enhance a firm's reputation, but it can backfire if not done carefully and with thorough vetting. Given the amount of money spent annually by law firms that hire investigators, it is a curious fact that a negligible percentage is spent conducting due diligence on prospective partners.

The reality is many firms hire senior lawyers on little more than a handshake and a personal recommendation. A 2014-15 study by ALM Intelligence found that few law firms maintain formal policies for vetting partner candidates: more than half do not conduct criminal background checks or credit checks, while nearly two-thirds do not check personal references in a comprehensive manner. Such a lax approach to hiring can be costly, as illustrated by a recent episode involving a former partner at Bradley Arant Boult Cummings.

Bradley Arant recently found itself with a big problem when a lateral hire, Walter “Chet” Little, was indicted on insider trading charges. Little, a real estate and finance specialist, moved to Bradley Arant from Foley & Lardner in July 2016. Unbeknownst to his new employer, Little had been fired from his old firm after an internal investigation found he had violated ethics rules by misusing confidential client materials to trade securities. According to the criminal complaint, Little accessed Foley's internal database to obtain material nonpublic information on at least seven publicly listed clients—none of which he represented—information that he and a friend used to make more than $1 million in profits on stock trades.