Check and Double-Check: Avoiding Conflicts of Interest Malpractice Claims
Just uttering the word conflict is enough to make anyone nervous—but not attorneys, right? When their own interests may collide with that of a client’s, however, it’s a different story. Jobs and reputations could be at stake. In fact, “conflict of interest” (including perceived conflict) was the most-cited legal malpractice claim of 2018. Good lawyers know conflicts of interest will eventually happen; smart lawyers know how to plan for them.
Defining Conflicts of Interest
While the American Bar Association gives Model Rules of Professional Conduct, each area has its own interpretation of these rules. In her article, “Analyzing Conflicts: A Necessity for Every Lawyer,” author Marian C. Rice points out that in most jurisdictions, however, conflicts can be analyzed within the following four categories.
PERSONAL CONFLICTS BETWEEN A LAWYER AND A CLIENT
As Rice states, this type of conflict of interest can be broadly interpreted. Romantic entanglements can of course become an issue, as can many other types of personal relationships. Any financial or business interests the lawyer has with a client may also be called into question.
CONFLICTS CONFRONTED IN THE SIMULTANEOUS REPRESENTATION OF CLIENTS WITH DIFFERING INTERESTS
When multiple client interests are involved, the lawyer’s professional judgement can be impaired. An attorney attempting to represent two individuals engaged in divorce proceedings would be an example of this.
CONFLICTS BETWEEN A CURRENT AND FORMER CLIENT
“Current” and “former” can be complex to define, but this conflict may be the easiest to avoid. A closing letter sent by the firm verifying the end of its representation is usually enough to clarify the client’s status.
CONFLICTS INVOLVING THIRD PARTIES
Every decision and action performed by an ethical attorney hinges on his or her duty of loyalty to their own client. Any outside influence that may call that commitment into question should be analyzed. This may include someone other than the client paying the attorney’s fees, or a previous prospective client who divulged information.
Seeing Conflicts Management as Risk Management
Conflict of interest rules need to be established by the firm, and a management plan put into place for their discovery. In fact, conflicts attorney Michelle Turbanic urges legal practices to view conflict management as “very necessary risk management procedures that ultimately protect you, your practice, and your firm.”
Another way to approach conflicts of interest is to think about them in a different way. In her article “Dealing With a Lawyer Conflict of Interest,” author Lori Tripoli encourages lawyers not to panic when these issues arise. “Would we flinch quite so easily,” she wonders, “if conflicts of interest were labeled something more neutral, such as client engagement opportunities or client-centered considerations?” Remember that the ABA and jurisdictions have set up these model ethics rules and regulations not to hinder legal practices, but protect them. If a potential conflict of interest arises or is discovered, it doesn’t necessarily mean the relationship with the client must be terminated. Oftentimes a lawyer can proceed with a known conflict of interest provided there is informed consent, firewall, or other protective prerequisites put into place.
At its core, a management plan should consider how conflicts will be identified, how they will be assessed, how they will be managed, and any long-term goals the firm or its attorneys may be considering. (Will the practice be expanding into other areas of the law? Is an attorney gaining a larger foothold with clients in a particular legal area?) For the most comprehensive management plan, Tripoli further urges attorneys to plan ahead for possible complications by thinking about: at what point a conflict can be discovered, who can discover it, whom should be approached once it is discovered, and what further action will be taken.
The Conflicts Checklist Database
Firm-hopping is on the rise, which means new lawyers may not be aware of a firm’s conflicts of interest. Therefore, a maintained conflicts database system is crucial for every firm, solo or multi-location. Ethics-defense attorney Eric Cooperstein warns attorneys should never “rely on their memories to determine whether they have a conflict.” While some may rely on a binder system (or maintain the boast of elephant-like recall powers), the database system most recommended is a digital one—such as Microsoft Excel or Google Drive. Everyone at the firm should be on the same page and have access to the same information.
In his article for Lawyerist.com, “Making a List: The Conflicts Check” attorney Josh Camson outlines the five elements an effective conflicts checklist database should include.
LIST OF CLIENTS
Include client first and last names, what type of case they are associated with, and a link to the file number.
OPEN OR CLOSED CASE
Anyone consulting the conflicts database should be able to tell at a glance the status of the associated case.
Turbanic advises firms to notate the relationship the firm had with each name in the database as “client,” “adversary,” or “third-party.”
Cooperstein refers to these database entries as “related names.” The information should include names of: spouses, children, employers, beneficiaries, and expert/key fact witnesses.
ATTORNEYS AT THE FIRM
As a cross-reference check, there should be a section in the database listing all lawyers at the firm, including previous ones. The information included here should be, first and foremost, past clients. Also notate the attorney’s area of expertise; then link to information on past issues and the other parties involved.
Once the information for the database has been gathered, the system should be maintained and utilized on a regular basis. Everyone in the firm should be trained on best practices for inputting new information. Additionally, it should be standard procedure for all members to run a conflicts check after every prospective client meeting. Even if no legal conflict exists, Camson encourages attorneys to continually keep their firm’s image and reputation top of mind when considering new clients.
As I always advise, planning is simply the best way to avoid malpractice. If you want to stay in the game and out of trouble, always look ahead. Having systems like a conflicts database in place aren’t just a good idea; they’re business practices your firm’s protection and future are dependent on.
Todd V. McMurtry is a Member at Hemmer DeFrank Wessels, PLLC. He is a 2019 Top 50 Kentucky Super Lawyer and Harvard trained mediator, who is dedicated to professional excellence. Todd has been married to his wife, Maria C. Garriga, for 32 years. They have three adult children. You may reach him at [email protected] or (859) 578-3855