The Possible Implications of a Pending RICO Lawsuit Against a National Plaintiffs’ Asbestos Firm

Background

For the past three decades, lawyers who provide legal services have been largely immune from Racketeer Influenced and Corrupt Organizations Act (RICO) liability, even if their clients engage in criminal conduct. However, this legal advice protection may not extend to those law firms that commit fraudulent acts themselves. This scenario is currently being played out in a lawsuit filed against a national plaintiffs’ asbestos firm in the United States District Court for the Northern District of Illinois. The consequences of this litigation could have wide-ranging implications for lawyers representing clients in pattern litigation, especially those dealing with mass tort cases related to asbestos exposure.

The Traditional Legal Services Defense to RICO Liability

Lawyers typically enjoy immunity from RICO liability during their practice as long as their clients engage in the illegal activity, and the lawyers do not partake in the management and operation of the enterprise that committed the crime. The law assumes that the provision of “legal services” to the enterprise shields lawyers from RICO violations. Even if the racketeering organization follows the lawyer’s legal advice, RICO liability falls to the racketeering client alone.

The Pending RICO Lawsuit Against the National Plaintiffs’ Asbestos Firm

The lawsuit filed against a national plaintiffs’ asbestos firm in the Northern District of Illinois alleges that the law firm and its employees engaged in fraudulent activity prohibited by RICO. The accusation is centered on the law firm’s practice of coaching clients only to describe products from solvent, named defendants to minimize exposure to bankrupt defendants and hide claims against bankruptcy trusts to inflate the value of a widespread number of cases. This scheme, designed to defraud asbestos defendants out of inflated settlements, would increase the law firm’s profits.

The Implications of the Lawsuit for Lawyers Representing Clients in Mass Tort Litigation

The plaintiff pursuit of asbestos litigation has always heavily relied on identifying products containing asbestos. The more detailed and accurate the plaintiff’s exposure to a specific asbestos-containing product, the more value the claim likely holds in settlement negotiations with the manufacturers. In addition, the more solvent the defendants identified and listed in a lawsuit, the higher the amount of money tends to be available to compensate the plaintiff. Consequently, any plaintiff impacted by the result of this lawsuit is incentivized to identify as many asbestos defendants’ products as possible to leverage the largest payday.

The suit against the law firm could set a precedent that could change the traditional legal advice exception to the “operation and management” standard in determining RICO liability. It could invite more RICO lawsuits against law firms, particularly those representing clients in mass tort litigation. This will also require an in-depth discovery process of the law firms’ files, communication records, and memos, including those believed to be adequately protected by attorney-client privilege or work-product doctrine protections.

The Possible Waiver of Attorney-Client Privilege and Work-Product Doctrine Protections

The pending lawsuit against the national plaintiffs’ asbestos firm could potentially dig deep into files and communications long believed to be securely cloaked under attorney-client privilege and work-product doctrine protections. If those communications are put “at issue” in litigation, there is a possibility that this privilege and protection may be waived. Lawyers would be wise to keep track of this case as it progresses. It could provide additional guidance on the bounds of the legal advice protection to the “operation and management” standard in determining RICO liability.

Conclusion

The lawsuit against the national plaintiffs’ asbestos firm could have a significant impact on how the legal advice defense protects law firms from RICO violations. For many years, such legal services have offered protection to law firms even when their clients engaged in nefarious and fraudulent activities. However, if the pending lawsuit negates this practice, it could potentially open the door to more RICO suits against law firms, especially those representing clients in pattern litigation or other mass tort litigation.

Originally Post From https://natlawreview.com/article/rico-not-just-mob-lawyers

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