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Analysis: Lawyers' letter spells more bad news for Murdoch

BSkyB Chairman James Murdoch and his father, News Corp Chief Executive and Chairman Rupert Murdoch, are questioned by parliamentary committe
BSkyB Chairman James Murdoch and his father, News Corp Chief Executive and Chairman Rupert Murdoch, are questioned by parliamentary committe

By Carlyn Kolker

NEW YORK (Reuters) - Harbottle & Lewis, the law firm embroiled in the phone-hacking scandal sweeping Rupert Murdoch's News of the World newspaper, has taken the unusual step of fighting back against its former client to preserve its reputation.

Rupert Murdoch and his son James implicated the London-based law firm in the burgeoning scandal in July, saying Harbottle conducted an internal investigation into hacking at the News of the World in 2007, and absolved the company.

But that is not the line Harbottle presented in a 46-page submission to Parliament, dated August 11 and released with a host of related material on Tuesday.

The firm was hired in 2007 solely to deal with a wrongful termination claim by News of the World editor Clive Goodman, Harbottle contends -- not to provide a wide-ranging investigation with a criminal component, the view espoused by the Murdochs.

"The exercise undertaken by the firm was short, limited in terms of access to documents, without any access at all to witnesses, undertaken by civil practitioners, and undertaken for a narrow and specific purpose in an employment dispute," the firm wrote.

The inner workings of internal investigations by law firms rarely come into the public view. Such pursuits, after all, are by nature private. But in July, News Corp, which owns News of the World, waived attorney-client privilege at Harbottle's behest, allowing some details of Harbottle's work for the media company to come to light.

"I think it's pretty much unprecedented, but it's an unprecedented set of circumstances all around," Tony Williams, a legal consultant with Jomati Consultants in London, said of Harbottle's response.

The correspondence shows that Harbottle "feels the need to protect their position," said Williams. While it's unusual for a firm to confront a client publicly, firms rarely, if ever, find their investigative work available for public consumption in the first place, Williams said.

Firms must balance their duty of loyalty to clients with their need to preserve their reputation as competent lawyers, said Anthony Davis, a U.S.-based lawyer who advises law firms on ethical matters.

"Apart from the ethics and the law, the question is, how good is it for lawyers' reputation to turn on a client?" said Davis, of the firm Hinshaw & Culbertson.

A News Corp spokesperson did not respond to a request for comment.

A spokesman from Harbottle's outside public relations firm, Luther Pendragon, declined to comment.

SHORT INVESTIGATION

Harbottle's investigation was short, limited -- and not very expensive, it contends.

The firm received about 10,000 pounds for an investigation that took just two weeks. The work was performed by attorneys who have since left; a group of junior lawyers spent about 45 hours reviewing electronic files provided by News International, News Corp's British unit.

The computer files were "not straightforward," and some email messages were truncated, the firm said.

Ultimately, Harbottle reached the conclusion that former editor Goodman didn't have a valid reason to appeal his firing.

Harbottle reserved its sharpest words for the Murdochs over the way they characterized Harbottle's investigation during their July testimony to Parliament.

The Murdochs over-stepped the bounds of the law firm's engagement when it held up the firm's conclusions as proof that it had investigated a hacking scandal, said Harbottle.

"The firm was not being asked to provide some sort of 'good conduct certificate' which News International could show to Parliament, or the police, or anyone else," Harbottle wrote.

Finally, Harbottle maintains, Rupert Murdoch got the wrong guy. BCL Burton Copeland, a London-based firm, provided extensive white collar advice, Harbottle said, citing a previous Parliamentary report.

"The evidence above suggests that Mr. Rupert Murdoch may in fact have been thinking of the instructions given to Burton Copeland," Harbottle wrote in the letter.

Harbottle suggested Parliament ask News International to waive the privilege for BCL Burton Copeland. The firm did not return a call seeking comment.

One waiver could pave the way for other client work to spill into view, said Stephen Gillers, an ethics professor at New York University School of Law.

"The risks to the Murdochs is, they have in effect freed all their law firms working on this issue to speak," said Gillers. "My supposition is, given the crucible they are now in, they are going to find it difficult to resist further waivers."

Reuters is a competitor of Dow Jones Newswires, the financial news agency that News Corp acquired along with the Wall Street Journal in 2007.

(Reporting by Carlyn Kolker; Editing by Eileen Daspin)

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