Are you doing enough to check for conflicts of interest before you start working a case?
If you work in a big law firm, your organization almost certainly has a standard process in place for checking – and tracking – conflicts of interest. After all, when hundreds of lawyers are serving thousands of clients, conflicts are sure to arise and must be dealt with immediately.
But if you’re in a smaller firm, you operate your own practice, or your firm doesn’t have a robust conflict-checking system, you could put yourself at risk of complicated problems.
Conflicts aren’t just unique to lawyers. Real estate agents can have them, as can investors, therapists, and a whole host of other professionals. However, the ethical rules for law firms make it particularly problematic to discover a conflict of interest late.
For lawyers, untangling these conflicts is not just about adhering to legal requirements; it’s about fostering trust, ensuring fair representation, and upholding the sanctity of the legal system.
Whether you’re a seasoned attorney or a fresh face in the courtroom, understanding and managing conflicts of interest is pivotal. It ensures that your decisions and advice remain unbiased and solely in your client’s best interests – and it can keep you out of hot water with the state bar.
The rules about conflicts of interest
The first step in checking conflicts of interest – identifying them – requires a blend of vigilance and adherence to established guidelines.
The ABA Model Rules of Professional Conduct set the framework for the national stance on conflicts and will serve as the foundation of our analysis.
Of course, it’s always best to check with your state’s specific Rules of Professional Conduct in order to determine if any variances from the Model Rules exist. With that in mind, here’s an overview.
Reviewing the ABA rules:
Rule 1.7 (Conflict of Interest: Current Clients): This rule states that a lawyer must not represent a client if the representation involves a concurrent conflict of interest, which occurs when the representation of one client will be directly adverse to another client, or there is a significant risk that the representation will be materially limited by the lawyer’s responsibilities to another client, a former client, or a personal interest of the lawyer.
The only exception is if the lawyer reasonably believes that:
- they can represent each affected client competently and diligently,
- the representation is not prohibited by law,
- the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal, and
- each affected client gives informed consent, confirmed in writing.
Rule 1.8 (Conflict of Interest: Specific Situations): This rule outlines specific scenarios where conflicts of interest are likely to arise — business transactions with clients, sexual relationships with a client, accepting substantial gifts, using client information for personal gain, or representing clients with conflicting interests.
Rule 1.9 (Duties for Former Clients): This rule prohibits representation in which a former client’s interests are materially adverse to that of a prospective client unless you have the former client’s informed consent in writing.
Rule 1.10 (Imputation of Conflicts of Interest: General Rule): This important rule deals with the imputation of conflicts of interest within a law firm.
It states that if one lawyer in a firm is precluded from engaging in a representation due to a conflict of interest, the entire firm is typically precluded as well, unless the conflict is based on a personal interest of the disqualified lawyer and does not present a significant risk.
This rule underscores the collective responsibility of law firms to manage conflicts of interest and ensures that conflicts are not circumvented through the use of multiple lawyers within the same firm.
Rule 1.18 (Duties to Prospective Clients): This rule covers duties to prospective clients, addressing conflicts with potential clients, and the use of information learned in the consultation process.
Please note that this is just an overview of the rules surrounding common conflict situations. There are other rules — particularly those dealing with things like government offices and judges — that are not outlined here.
When in doubt, always consult the full text of your relevant professional rules of conduct before agreeing to take on a new matter.
Best practices to assess conflicts of interest
Some conflicts are obvious, but you shouldn’t assume that you’ll spot every potential conflict of interest without needing a standardized process.
If your firm handles a high caseload or has multiple attorneys, you might be wise to consider dedicated software to check for conflicts. These tools allow you to search and sort by a huge variety of filters, and they make it much faster and easier to go through your rigorous conflict checks.
Whether you’re using software or reviewing manually, here’s an overview of all the elements you should consider:
Establish comprehensive client intake procedures
Your client intake procedures should be detailed enough to reveal potential conflicts early.
Be sure to consider the intake data in the context of past and future matters, too. You should be able to see if this client has ever worked with another person at your firm, if they’ve ever been in litigation against your firm, and whether they have any kind of ongoing legal relationship with you or your associates.
At a bare minimum, the firm should maintain a client database that identifies:
- (For individual clients): The potential client’s full legal name, married and maiden names, common nicknames, date of birth, address, and phone number.
- (For business clients): The name of the business as well as any DBAs or trade names, the names of all officers and directors, the names of any substantial investors, and the place of incorporation.
- (Opponents): In addition to obtaining information about your new client, be sure to collect and analyze the same type of information for the client’s opponents.
- (For new hires): Remember that imputation rule discussed above? Well, any time your firm wants to hire a new attorney, it needs to run a conflict check against that attorney’s past, present, and potential clients as well.
Run your initial conflict check against the firm’s client database before any lawyer in the firm even provides an initial conversation with a prospective client.
Write down your rules and processes
What do you do when a potential conflict arises?
More importantly, how do you make sure that everyone in your firm handles conflicts in the same way?
Have a clear, documented process for what steps to take when a conflict is identified. Lay out the procedure to consider whether the conflict is consentable, then the steps to either obtain written informed consent or withdraw.
Write these steps down and make sure that everyone in your firm can find the documentation. Nobody should have to go to their boss to check on the correct procedures.
For complex situations (such as when a new lawyer is hired or your firm absorbs another firm), consider having conflict assessments reviewed by an independent party like an ethics counsel or a committee within the firm.
This probably isn’t necessary in all cases, but it’s a good idea when the stakes are high.
Consider creating some rules around situations that might call for a third party review, and include those guidelines in your documentation.
Regularly update conflict check systems
This is one administrative duty that you do not want to get behind on.
Keep conflict of interest databases updated with new client information, past engagements, and any other relevant data that could influence current representations.
Additionally, your firm should regularly assess whether or not your conflict checking system is still meeting your needs. Do you need to adopt or upgrade your software? Are your electronic records detailed and easy to navigate?
Along with these check-ins, make sure you’re doing this:
Offer ongoing training
Ensure that all staff (not just lawyers) are trained in identifying potential conflicts and using the firm’s conflict check system.
If there’s an update to ethical guidelines or a change to your internal procedures, that’s a good time to revisit training. Refreshers are always a good idea.
Even if nothing is changing, though, it’s a good idea to review the existing rules at least once per year. When the rules are top-of-mind, your firm is a lot more likely to catch potential conflicts before they cause a problem.
Takeaway: the key to catch conflicts of interest is consistency
However you build your conflict checking system, it will only work if you follow those procedures for every case. That means that everyone in your firm should be able to find and follow the rules without going out of their way.
Technology is a huge help. Using a conflict checking tool means it’s easy to stay consistent, you can complete conflict review faster, and you’re less likely to overlook things.
The more consistent and clear your process, the less stress — and the lower your risks. It’s worth putting in the effort to build a thorough process up front.
