Analysis: News Corp says Harbottle law firm bungled inquiry
NEW YORK (Reuters) - London law firm Harbottle & Lewis is known for representing beleaguered celebrities whose private lives have been splashed across the tabloids, and counseling Virgin Atlantic, the cheeky British airline.
Yet, Harbottle is now being blamed by News Corp (NWSA.O) for not uncovering widespread hacking at the media company's News of the World, Britain's biggest selling Sunday newspaper until its closing earlier in July because of the hacking.
News Corp claims that it hired Harbottle to conduct such an investigation, but the law firm counters that the characterization is just wrong. The upshot: Harbottle is being probed by a committee of the House of Commons for why it was hired by News Corp and what it uncovered in the process.
The relationship between Harbottle and News Corp dates at least back to 2007, when News International, a subsidiary of News Corp, brought in Harbottle as the company was facing a wrongful termination claim by News of the World editor Clive Goodman.
News Corp maintains it retained the firm to conduct an independent investigation. The company says that it wanted Harbottle to review emails that News International itself already had reviewed after Goodman left.
News Corp said that it relied on Harbottle's conclusion that hacking at News of the World was not widespread and had been limited to one reporter. When New Corp executive James Murdoch appeared before the House of Commons on July 19, he testified that Harbottle failed to uncover illegal hacking.
Last week, News Corp waived attorney-client privilege, meaning that the law firm is now free to speak with officials about why it was hired and what it uncovered.
A spokesman for Harbottle said that the News Corp's description of what the law firm was hired to do was "erroneous."
"We can't talk about what <the law firm> may or may not have done," said a spokesman with Luther Pendragon, a public relations firm in London representing Harbottle. "But it goes to the heart of the issue." Harbottle did not respond to a request for comment.
By some accounts, including a July 25 report in the Daily Mail, Harbottle was retained to defend claims, not as external counsel to independently investigate claims that hacking was widespread at News of the World.
News Corp directed questions to News International, which declined to comment for this story.
CAPACITY IN WHICH IT WAS RETAINED
Legal ethics scholar Stephen Gillers said that the capacity in which a law firm is retained influences the nature of its work. Gillers, a professor at New York University School of Law, said that a law firm hired to defend litigation has a duty to learn the facts as they pertain to a particular lawsuit and to fashion a defense based on those facts.
A law firm hired to investigate allegations and render an opinion, he said, has a duty to learn all the facts, to instruct employees to cooperate and to disclose its findings objectively to the company.
"Perfection is not required," Gillers said. However, if a law firm fails to uncover information that, if imparted to the client earlier would have avoided the problem, it may face a malpractice lawsuit by the client for the failure.
Gillers said that ethics laws in the UK and the United States are basically the same on the issue. Damages against the law firm, at least in a U.S. case, could include losses the company incurred because of the hacking.
It's not likely that losses would include those from shutting News of the World, said Gillers, since those losses likely were not foreseeable.
If News Corp managers or officers authorized the hacking or tolerated it, such conduct generally would provide a complete defense to a malpractice claim, Gillers said.
In London legal circles, Harbottle is known for its media practice, and often serves as plaintiffs' counsel for high-profile clients, including soccer player David Beckham and his wife, Victoria, Prince William and the Duchess of Cambridge, former Dior designer John Galliano and 1970s crooner Englebert Humperdink.
With about 75 partners, solicitors and consultants, the firm also has a notable corporate practice. It does not list corporate or internal investigations among its services, and at least one local lawyer said the firm wasn't known for that kind of work.
"We don't know the terms of what they were hired to do, but they are not known for doing internal investigations," said Tony Williams, former managing partner of law firm Clifford Chance and now a legal consultant in London.
According to The Lawyer, a UK publication, Harbottle & Lewis' revenue in 2010 was 16.8 million British pounds ($27.6 million), which was flat compared to 2009. It is ranked 117 among the UK's top 200 law firms in terms of revenue.
Reuters is a competitor of Dow Jones Newswires, the financial news agency that News Corp acquired along with the Wall Street Journal in 2007.
(Additional reporting by Erin Geiger Smith; Editing by Eileen Daspin and Steve Orlofsky)