Third Party Risk and “Balch Owed No Duty”

In a week, one of Balch & Bingham’s top clients, Southern Company (parent of Alabama Power), will be hosting its annual shareholders meeting at Callaway Gardens in Georgia.

Southern Company’s CEO Tom Fanning has quietly, but brilliantly, distanced the company from Balch & Bingham.  Southern Company has not used Balch for lobbying efforts in Washington, D.C. since 2016, and allocated resources to other lobbying firms on Capitol Hill according to the Center for Responsive Politics.

Balch & Bingham appears to have become a third-party risk.

And now Balch & Bingham has bigger problems on the horizon as the $50 million lawsuit against Balch from ex-Drummond Company executive Dave Roberson has its first court hearing scheduled at the end of this month.

In their complaint, Roberson’s legal team alleges, “Balch has ratified, approved, and adopted [convicted felon and ex-Balch partner Joel I. Gilbert’s] acts.”

They note that Roberson “is not a lawyer or otherwise legally trained regarding such matters, and he believed and reasonably relied on Gilbert’s misrepresentations to his detriment by refraining from objecting to the Plan and approving Balch’s invoices seeking reimbursement for what the prosecution charged and the jury determined were ‘bribes’ to Oliver Robinson.”

And how did Balch defend itself? “Balch owed no duty” to Roberson, they conclude.

Again we ask, what clients would want to deal with a law firm whose partners engage in unsavory conduct, criminal acts, and/or legal malpractice, and then declares “Balch owed no duty” to the client’s executive and blames the client’s executive for  “wrongful conduct” that Balch’s partner falsely told him was legal?

No sane corporate General Counsel would ever hire Balch if the firm believes that a client’s representative is “owed no duty” for omissions, negligence, or crimes caused by legal malpractice.

We wrote a year ago:

The cancer of corruption, influence peddling, egocentric envy, and blatant racism from a third-party is deadly if not confronted directly, swiftly, and honestly by corporate management.

Southern Company’s corporate management appears to be confronting the third-party risk as are others. Balch lost 17 of 18 previous lobbying clients in D.C. costing them millions.

The only people not dealing with this grave third-party risk are Balch & Bingham’s senior management executives.

Will Balch top guns next declare it “owed no duty” to its staff, partners, or attorneys?