Jenkens & Gilchrist Shuts Doors

Today we learned that the law firm Jenkens & Gilchrist will shut its doors after being ordered to pay $76 million in federal penalties for its alleged role in creating illegal tax shelters. In January 2006, we wrote about the firm here to point out how a law firm cannot afford to ignore a brewing crisis that can  ultimately destroy its long-held reputation. Even the U.S. Attorney who announced the agreement with the firm today referred to the fact that the firm “has recognized ... that its tax-shelter practice has caused serious damage to its reputation, revenues and stability, and that as a result it ultimately cannot continue in business.”

The Associated Press article's last line was: "Spokesmen for the firm in Dallas didn't immediately return a telephone call seeking comment."  Sometimes a firm hurts its reputation by not returning a reporter''s phone calls promptly. 

We don't know how effectively the firm communicated with the media during the long-running investigations by the Department of Justice and the IRS. But we do know that the ongoing, negative media coverage during these investigations made clients leave in droves and forced the firm to shut down. This should be a lesson to those law firm leaders who cling to the mistaken belief that they can ignore the media during a high-profile crisis and still continue to see profits climb.