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CONFLICT OF INTEREST

Avoid disbarment with a conflict-checking procedure

As you know, a conflict of interest occurs when a lawyer or a firm takes on multiple clients who have conflicting goals or interests.

And if your law firm does not have a system in place to check for potential conflicts, you could be courting serious trouble with your bar association, clients, or other attorneys, according to Robyn A. Bonivich, founding partner in Robyn’s Law PLLC, and Elizabeth Miller, an independent law firm administrator and management consultant. The consequences for violating conflict of interest rules can be as severe as disbarment.

How conflicts of interest may arise

“There are several different scenarios in which you can have a conflict of interest. You can have a client come and want to have a consult with you where you’ve had a consult with the other party, like in a family law case, and you realize that you gave legal advice to the wife, so therefore you can’t represent the husband,” says Miller.

She also points to the possibility of a conflict of interest occurring in an automobile accident involving a driver and two passengers. If the driver was somehow responsible for the accident, Miller says a law firm cannot actually sign up all three clients unless they agree to sign a document waiving any claim they might have against the driver.

However, if the driver was responsible for the accident, waiving the claim against the driver might land you in trouble with your bar association, she says.

In larger law firms there may be situations in which one attorney is representing one corporate client and another attorney is representing another corporate client that may not even be involved in litigation. Still, they are competitors and so there is a very real potential for a conflict of interest down the road.

Not all conflicts of interest are obvious

Conflicts of interest can be difficult to navigate. There are guidelines created by the American Bar Association (ABA) to help attorneys identify and avoid potential conflicts of interest.

Miller says the American Bar Association and every state bar association has its own specific guidelines regarding professional conduct when it comes to conflicts of interest.

“You’re not supposed to represent somebody if there is a conflict of interest or the potential for a conflict of interest,” she says.

Bonivich notes that most bar associations have an ethics hotline that attorneys can use if they have any doubts or concerns over a potential conflict.

“As a lawyer, if I couldn’t get a straight answer as to whether there was a conflict, but I thought there was potential, it’s a case that I would probably turn away,” she says.

Establish a database and keep it updated

Bonivich says the best way to avoid conflicts of interest is to set up an easily searchable electronic database for each case, including parties, opposing counsel, judges, and experts. “For a small practice like mine, an Excel spreadsheet works for now,” says Bonivich. But she notes the larger the practice, the greater the need for an electronic searchable database, because you’re going to have a much greater volume of clients.

This database must be kept up-to-date. “It falls on the part of the attorneys to regularly monitor how the information is getting into the conflict list and it’s also on the staff to make sure the information is inputted quickly and that they understand the importance that has to the practice,” she says.

“If you set the database up right and get it to where it’s a procedure and it’s an everyday thing, like everything else it can be managed,” adds Miller. “It is not that cumbersome and is definitely worth it in the end.”

Miller and Bonivich both recommend that conflict of interest searches are documented in your electronic database. In the event that there is a question at some point during a case concerning a conflict that exists, proof that appropriate checks were performed will be crucial.

When to check for a conflict

Before taking on a new case, it’s essential to check your database for any potential conflicts of interest. But that’s not the only time. Miller says conflict of interests checks should be conducted at three intervals, namely:

  • Before the initial consultation,
  • Before a new file is opened, and
  • Anytime a new party or attorney becomes part of the case.

“If a potential conflict exists, but the parties still want the firm to represent their legal interests, have all parties sign a Waiver of Conflict of Interest, acknowledging the existence of the conflict and waiving any potential claims of conflict of interest,” says Miller. “If a conflict arises during the representation, you need to withdraw because a conflict has arisen. Send the client a Disengagement Due to Conflict of Interest letter.”

Bonivich warns that it can be tricky when someone, such as a client’s mother, is paying the legal fees in her daughter’s divorce case and wants information on the case.

“You (must) tell the mother, ‘Look, you’re not my client and I can’t speak to you without permission from your daughter,'” she says. “If the daughter fails to provide that and mom wants to know the answers, I think at that point you have to disengage yourself because it’s a conflict of interest to speak to the client’s mother just because she is paying the bills.”

Conclusion

Conflicts of interest are not always obvious. Be sure you have a system in place for check for conflicts and know who to call if you have any questions about whether or not a conflict exists.


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