5 Mistakes that People Make When Hiring a Securities Litigation Lawyer

Whether you are an individual securities professional or a manager at a securities brokerage, firm, or other company, coming to the realization that you need a securities litigation attorney is a huge step. It means that the investigation or legal threat that you are facing has escalated to the point where you no longer think that you can handle it on your own. The potential for legal liability has become real.

Unfortunately, making the decision to hire a securities litigation lawyer is only the beginning of what can be a stressful experience. You still have to decide which lawyer or law firm to represent you. Because this is a process that, hopefully, you will only ever have to do once in your lifetime, it can be daunting and, most importantly, unfamiliar. As a result, lots of people who need an effective securities litigation defense attorney make big mistakes in who they choose to represent them.

The securities litigation lawyers at Oberheiden P.C. have legally represented numerous clients facing serious allegations of financial misconduct. Here are five of the most common mistakes that they have found people making during the hiring process.

1. Not Hiring a Firm That Specializes in Securities Litigation

First, it is important to remember that not all lawyers are the same. Many focus their practice on certain areas. Other law firms are what are colloquially known as “door practices” – they take whatever kind of case comes through the door.

If you are facing the threat of securities litigation, you need a securities litigation lawyer or law firm. Not a law firm that handles everything. Not an attorney who takes cases in a different practice area. Not even a lawyer who handles similar types of cases, like tax fraud.

Securities litigation is a very specialized field, with lots of unique nuances that are not at issue in other practice areas, even similar ones like white collar crime defense. It is essential to have an attorney who knows not just the ins and outs of this esoteric field of law, but also the many different procedures at play. This includes a strong familiarity with how cases can escalate from civil to criminal allegations, as well as the long-term effects that even a groundless accusation can have on your securities business or career.

The very basis of the field, the concept of a security, is not something that most lawyers fully understand or appreciate. If your attorney does not have a firm grasp of the concepts that underlie your legal situation, they are unlikely to be able to help you very much.

2. Hiring a Friend or Associate

Another mistake that we find people making – especially individual securities professionals, rather than companies or brokerage firms – is hiring a family member, friend, or personal associate to handle a securities litigation situation. Unless your acquaintance’s practice area is securities law and they have many years of experience handling these cases, tapping them to represent you drastically increases both the odds that your defense will not be as good as it could be, and that your personal relationship with them will get strained past the point of no return.

As we have already mentioned, securities litigation is a unique field of law. There are a lot of complicated topics that are more business than legal in nature – things like securities, accounting, and corporate frameworks. Understanding these topics requires a legal background, yes, but also a deep familiarity with corporate governance and business practices.

A personal relationship with your attorney, no matter how strong it might be, cannot overcome your lawyer’s lack of understanding in these regards. While you might find yourself able to trust your personal acquaintance from the outset, that trust will be for the wrong reasons: You should trust your legal representative not because you know them and have been friends for years, but because they are experienced and can effectively represent you both inside and outside of the courtroom.

But hiring a lawyer friend to see you through a precarious securities litigation situation is not just a bad way to avoid significant legal liability. It will also threaten your personal relationship, as well.

By hiring a friend or acquaintance to represent you in a field of law that they rarely handle, you make them try to overcome a steep learning curve and learn a new discipline on the fly, all while the future of someone they know and care about is at stake. Even if they manage to succeed and mount an effective defense against the allegations that you are facing, they may look unfavorably on you in the future for putting them through such an excruciating experience.

What is more likely to happen, though, is that they are going to be overwhelmed by the complexities that are inherent in securities litigation. If they fall into one of the many pitfalls that trip up new practitioners, you will pay the price for their mistakes. Even the strongest of friendships tend to wilt when one friend is responsible for another friend’s prison sentence or crippling civil judgment.

Hiring a friend or relative to represent you in securities litigation is a good way to lose your case and your relationship, too.

3. Falling for a Law Firm’s Marketing

Once you start searching for a securities litigation law firm, though, it is easy to make another common mistake: Falling for a law firm’s marketing rather than more important metrics, like the firm’s track record of success and experience in the field.

It is important to remember that law firms are just like other kinds of businesses – they market themselves in order to attract new clients so the firm can provide legal services, get paid, and earn a profit. While there are numerous rules and regulations that prohibit firms from overpromising or exaggerating their skills or expertise in deceptive ways, the marketing material that you get inundated with whenever you research firms to hire is designed to influence your decision. In many cases, it works extremely well, and you end up choosing the lawyer or law firm with the most persuasive advertisements, rather than the one that has the ability to defend your case.

This can reduce your odds of successfully fighting off the allegations of misconduct that you are facing.

While it can be difficult to ignore the marketing material and empty claims, it is possible. Instead of getting distracted by promises of what a particular lawyer or law firm can do for you, focus on the things that they have done for others like you in the past.

Nearly every law firm that markets itself to potential clients touts its past successes. Search through those prior results for clients who had the same or at least similar problems that you are having, now. Note the outcomes that the firm produced in those cases. While those prior results do not necessarily mean that you will get the same outcome, they do show what this particular attorney or law firm is capable of doing.

In addition to prior results, an attorney’s experience is also an important metric. Securities litigation has lots of hidden dangers that new attorneys are prone to falling into, as well as short-term defense strategies that seem wise, but are disastrous in the long-term. Securities litigation lawyers who have been practicing for over a decade will know where these hazards lie and which defensive tactics seem good, but are not.

Focusing on these two things – results in prior cases that are similar to your own, and the lawyer’s experience in the field – will likely lead you to the lawyer or law firm that is in the best position to protect your interests.

4. Delaying for Too Long

Perhaps the most common mistake that we see in our securities litigation practice is a delay in hiring an attorney. Many clients turn to us with cases that have been simmering for months, already. The plaintiffs alleging misconduct or the law enforcement agencies investigating it have had ample time to collect evidence and have put together a strong case, all while the client moved forward without legal representation. It was only once they realized how bad things had gotten did they come around to the idea of hiring a lawyer.

These cases are far more difficult for attorneys to win. However, it is the client who delayed in getting a lawyer on board who pays the price in them.

This is especially true in securities litigation. Much of the evidence against you is put together through audits and investigations. You have rights during these investigations. Raising them can prevent potentially damaging evidence from getting into the hands of your accusers. Raising those rights, though, is very difficult if you do not have a lawyer on hand during these initial stages of the investigation. Having a lawyer from the very start is essential in all cases, but particularly for securities litigation. It can set yourself up for success and can prevent a potentially catastrophic situation where you make an unforced error in the early stages of your case and reveal evidence that becomes the centerpiece of your opponent’s claims against you.

5. Deciding Not to Hire a Lawyer, At All

The worst mistake that you can make, though, is deciding that you do not need a lawyer at all. There are numerous reasons for making this decision. Some of the most common are:

  • Underappreciating the severity of your case
  • Not understanding the penalties that you can face
  • Thinking that the case will go away on its own
  • The cost of hiring a defense lawyer
  • Relying on your securities firm for legal representation

For individuals who are facing securities litigation, legal counsel provided by their firm or employer can seem like an obvious and reliable solution: They get the legal defense that they need without having to pay for it.

However, your firm’s attorney will have the firm’s interests at heart, not your own. If there comes a time in the case where it is to the firm’s long term benefit to throw you under the bus, their attorney will do just that.

For other people or companies facing the threat of securities litigation, one of the most important things to do is to look up the worst case scenario for your situation, and then to adopt the mindset that hiring a lawyer is an investment against that outcome.

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