Lawyers often look forward to their next client and their next case. It’s exciting to meet new people and learn about their legal needs. However, in the rush to entertain a new business opportunity, proper conflict checks are sometimes neglected.
Neglecting conflict checks can lead to an adverse outcome for both a client and their lawyer. Here are seven conflict checks tips for reducing your chance of a malpractice claim.
1. Know the Risks of Overlooking a Client Conflict
Especially in today’s high-stakes litigation, a missed conflict of interest can be costly. In 2022, the global law firm Dentons lost its appeal to a $32 million malpractice verdict based on a claimed conflict of interest.1
The client, whose laser tech is used to make jeans appear faded, hired the law firm’s U.S. office to represent it in a patten infringement lawsuit against a major retailer. However, the firm’s Canada office had previously represented that retailer. The plaintiff’s case fell apart when the conflict came to light and it sued for malpractice. The verdict was upheld on appeal.
The case tested how conflicts may be judged for a number of new law firm business models. Dentons had claimed its Swiss Verein model kept its operations in different countries separate, but the court disagreed. Other new models, such as virtual law firms, nonlawyer ownership firms and global multiple entity firms may also face risks of conflict claims.
2. Understand Your Requirements for Professional Conduct
A number of bar associations and ethics boards have weighed in on client conflicts. Perhaps most notably, Rule 1.7 of the ABA Model Rules of Professional Conduct states that:
“…a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
- the representation of one client will be directly adverse to another client; or
- there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by the personal interest of the lawyer.”2
Lawyers should thoroughly research additional professional requirements for their conflicts checks.
3. Develop a Robust Conflicts Check Policy and Apply It Consistently
Some solo practitioners and small firms still use pen and paper to check conflicts. But this can be risky. Informal notes passed around the office, and an attorney’s mental recall of past clients and cases on a particular day, may not be enough to avoid a conflict and a claim. Making use of today’s technology is a far safer alternative.
Even so, some firms which have a practice management system or stand-alone conflict checker could put themselves at risk if they do not use it consistently for every matter and every client. A small matter or small client can still result in a big conflict, because the technology is only beneficial if lawyers are using it.
A robust system should allow the authorized personnel of a firm to collect necessary information about clients and case matters, search for potential conflicts with persons or their business entities and document that the check was conducted and record its results. Conflict checks may need to be repeated under certain circumstances, such as when:
- An existing client asks for representation in a new matter.
- An additional party is named as part of a pending matter.
- The firm makes a lateral hire of a lawyer with prior practice.
It is also a good idea for the firm to have written documentation on the proper process for entering client and case matter information and for the performing of conflict checks.
4. Check Additional Systems and Records
Even with a robust system in place, it’s still possible to miss a conflict. Something as simple as a data entry typo or a miscommunication between a potential client and your frontline staff could lead to a conflict not coming up in a search. For this reason, many firms conduct additional searches to be sure.
One option is to check party names against your internal billing system records. Today’s sophisticated billing software can allow you to run party names to reveal any conflict or prior representation of the parties.
Another possibility is to check the case filings in your local jurisdiction. Now that nearly all case filings are done electronically, you can confirm your conflict check by checking case filings in your jurisdiction’s system. This may even help you avoid taking on a client whom you would rather screen out and not work with.
5. Circulate Conflict Checks With a 24-Hour Deadline
It is good practice these days to use a 24-hour response deadline when circulating conflict checks at your firm. You may not know who your partners have represented in the past. Or, perhaps they have already spoken to the opposing party in your potential case. Either way, you need to know as soon as possible.
Lawyers ought to remember that the clock is often ticking for client as well. Most clients reach out for representation after a matter has risen to the level of potential litigation. Taking too long to check on conflicts could lead to lost business for the firm, with the client deciding to take their case elsewhere. Conversely, a fast and efficient conflict check system may actually help your firm win more business.
6. Implement Proper Client Screening Procedures
It’s also important to make sure that you and your staff follow proper procedures for screening potential clients before you speak to them. A contacted lawyer should not allow a potential client to reveal facts or confidences until after a conflict check has been conducted.
This saves you time, and more importantly, may protect an existing client relationship. By not taking a call or meeting with a potential client in which you learn confidential information about the case, you could still represent your current client without being conflicted out. Otherwise, a lawyer could potentially lose out on business from both a potential client and current client.
Though it may seem tedious, the obligation of performing a proper conflict check will save you time, money and client relationships. With the right system, checking for conflicts can become routine, efficient and nonburdensome.
7. Carry the Right Insurance to Protect Your Firm
Having the right system in place can greatly lower your risk of facing a malpractice claim over a conflict. However, it’s important to remember that some risk will always remain. Every year, a small number of lawyers face the challenge of defending themselves against malpractice claims even when they have done everything right. To protect against this risk, the right insurance is key.
Lockton Affinity Lawyer is part of the world’s largest privately held insurance brokerage, allowing us to be more flexible and creative than many others. We have access to a variety of carriers, including markets exclusive to us and other specialized and hard-to-place markets.
When you become a client with us, you’ll discover we offer a free consultative look at your current risk profile that costs nothing and may be able to save you money, plus we are a one-stop-shop for all your business insurance needs, including legal malpractice, cyber and more.
Complete our 5-minute price indication request to take the next step and ensure your firm has the coverage you need.
- See RevoLaze LLC v. Dentons US LLP, Supreme Court of Ohio, No. 2022-0708.
- See ABA Model Rule 1.7 (2024).