I've used Latham & Watkins. Just made a call to let a partner there know what I think about his firm's alumna and how it colors my opinion of him and his firm.
Encourage everyone to check with your firm's General Counsel about this. If you use Latham, or Kirkland or Weil, encourage your GC to reach out and make your views heard. It's despicable that these lawyers are harassing their firms' former and potential clients.
Obviously these firms don't have much power over their ex-attorneys, but a culture that opposed this sort of thing might be a disincentive to strike out as a troll (what if you want to go back to respectable practice some day?). And, more dramatically, a firm that wanted to clear its name could easily volunteer some hours to fighting trolls - that's the sort of thing that could make an immediate difference.
There's also the plain-and-simple risk that lawyers at a firm I've handed the keys to know a lot about my company. That they may use this to profit against me, in a personal capacity, is all kinds of wrong. It's akin to an investment firm, doing confidential diligence on Company X, having an employee, who may or may not have been on the diligence team, run out and start a hedge fund that shorts Company X.
It's not, by itself, necessarily unethical. But it smells fishy and deserves to be dug into.
The scenario you described involving diligence and shorting would almost automatically merit an investigation from the SEC. I think it might actually merit an automatic "fine" under short swing profit rules.
I think you can find disciplinary records/proceedings online in most states. If former associates of a firm you engaged are bringing suit against you, then yes, that can raise professional responsibility issues and it's a good idea to contact the firm as you did and ask about the firm's internal knowledge management system and what information about your business those associates might have had access to.
What you describe is, without a doubt, not only unethical but also illegal. A lawyer or accountant with confidential information on a current or former client who trades on that information violates SEC rules against insider trading, agency law prohibiting an agent from profiting from his position, and rules of professional responsibility. The first could send him to jail, the second would cost him his profits, and the third could cause him to lose his license to operate.
I believe that's about "who may or may not have been on the diligence team". It's not inherently unethical, because the investment firm employee starting the hedge fund may not actually have any secret knowledge.
But it's deeply alarming, because it's very possible (and hard to confirm) that they do have secret knowledge, so that practice is generally illegal even when it's not unethical.
Lawyers I know are extremely risk adverse. It starts with law school, where it is the default, safe path for a lot of people who think "I want to be really important and make money" but have a degree in English, philosophy, etc. and don't know how to translate that into a high powered job without more schooling.
Then the grind of law school, where they all obsess over class rank, who gets the best internship, who gets the best job. It's a very reputation based industry, where even trying to switch to another firm could get you blackballed if done improperly and without tact.
If a lot of tech people make a big stink about this to the partners, it will quickly make this path dangerous for employees and it will stop fast.
If you've left Big Law, you are already off the risk-averse path. These are very seniority-focused places, which will not hire you back after you've left the Big Law system (with the exception of a few high-prestige postings, like a court clerkship). i.e. these lawyers will probably never again work at Latham anyway.
Considering most lawyers in big law won't make partner (from what I've heard, what makes logical sense, and what this Quora post says[0]) most non-partner lawyers in big law will eventually leave. Let's keep them from becoming patent trolls, shall we?
Well, law firms commonly do some amount of pro bono work as a public service and reputation builder. I'd be interested to see a firm or two donate legal support to smaller companies fighting trolls - it'd be a show of good faith and might immediately knock out low-powered trolls.
Newegg has showed what happens when these cases actually get fought, and that's something a firm could offer to build popularity and support.
It's less about them doing something ex post facto and more that this reflects on the type of people Latham hires and retains. If a bunch of people leaving an investment bank run out and commit fraud, the bank doesn't (necessarily) look bad for failing to stop it. It looks bad by association. We assume, rightly or wrongly, likeness in peoples' voluntary associations.
It could potentially violate conflict rules. (The idea being that the lawyer might have been privy to your secret information while his old firm represented you.)
Like all forms of punishment, it isn't (or at least shouldn't be) about hurting the people involved after the fact - it's about raising perceived costs of a deed so it doesn't get committed again in the future.
Encourage everyone to check with your firm's General Counsel about this. If you use Latham, or Kirkland or Weil, encourage your GC to reach out and make your views heard. It's despicable that these lawyers are harassing their firms' former and potential clients.