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Nine traps to avoid when checking for conflicts

Before a law firm accepts any new file, it must first ensure that no conflict of interest exists. Yet, despite having stringent conflict-checking procedures, conflicts of interest are still a serious problem for many firms. How do your procedures stack up? Do they address these common mistakes?

Any firm knows a conflict of interest can result in bad things.

Disqualification from a matter, termination by a client, nonpayment, disciplinary actions, malpractice allegations and even criminal prosecutions can result from failure to identify conflicts of interest in even seemingly routine matters.

Yet many firms aren’t aware of the holes that lurk in their conflict checking procedures.

Here are nine mistakes you should watch for.

Mistake #1: Skipping practice areas

First is not checking all types of matters.

Surprisingly, firms tend to think conflicts arise only in litigated or contested matters. Actually, conflicts can arise anywhere.

Business transactions, for example, can carry a tremendous number of conflicts, particularly if the firm represents a wide range of business entities.

Firms also tend to ignore pro bono work. However, just because there are no fees does not mean conflicts won’t exist.

Mistake #2: Failing to disclose

Second is not disclosing a conflict to all parties.

Most commonly, that happens because a firm leaves the notification up to the conflicts checker. Yet the attorney usually gives the checker only the client’s name and there can be other parties involved about whom the checker can have no way of knowing.

The firm needs to establish a policy that when setting up a file, the attorney must list the names of all parties involved. If it’s a slip and fall, for example, there’s not only the name of the grocery store that left the banana peel on the floor but the cleaning company that buffed the floor wrong and so on down the line.

Mistake #3: Not obtaining written waivers

The third mistake is not getting waivers from all the parties saying they acknowledge the conflict and waive the right to complain about it later.

An oral waiver isn’t enough. It has to be in writing.

The checking staff should have the authority to insist that an attorney get a signed waiver before proceeding with a matter.

Mistake #4: Overlooking the newcomers

The fourth mistake is not checking for conflicts again when new players are added to the matter. A supplemental conflicts form will show the checker the individual is new to the matter.

Mistake #5: Poor report form

Hard to read reports are the fifth problem. A conflict report needs to be uncluttered and easy to understand and should give enough information to tell the story of why there is a conflict. It should give the name and file number of the conflicting matter, the area of law involved, and the names of the supervising partner and the billing attorneys. It should tell whether the matter is active or inactive, the dates it was opened and closed, and who opened it. It should also give the name of the individual or entity creating the conflict and the role that party played in the matter, such as plaintiff, buyer, seller, or whatever.

Mistake #6: No process

The sixth mistake is not having a process to resolve contested or unclear conflicts. It’s not uncommon for two attorneys to be at odds on whether a conflict exists, with Attorney A wanting the business and saying there’s no conflict while Attorney B, who doesn’t want to imperil a current case, says there is. There needs to be a neutral resolution process. One way is to name a decider. It might be a professional standards committee. In a small firm, one partner may have that responsibility. Give the checking staff the authority to go to that third party whenever a dispute or question arises.

Mistake #7: Overlooking existing searches

After that comes the failure to check the existing searches, the seventh mistake. Don’t limit the checking to actual matters. Go further and check the existing searches that have not yet become matters. Most systems allow that. Searching the searches shows if anybody else has looked at the same client. It’s a tip-off that someone else in the firm has searched the same name and is potentially interested in representing a different party in the matter. That’s also a protection for the other attorney because it updates the earlier search.

Mistake #8: Not keeping a log

The eighth error is the failure to keep a log of the clients and matters that have been declined.

That’s necessary for reasons other than conflict. It helps identify matters on which the firm has received confidential information and that might be in conflict with an incoming matter as a result. It’s also helpful if the firm is approached by a different party in a declined matter.

Mistake #9: No management support

The ninth error is not getting support from the management.

No conflicts-checking procedure will work without it. Many firms don’t give that support because they don’t realize the breadth of information that has to be checked. In fact, many firms don’t appreciate conflict checking at all until they get burned by an incomplete check.

The conflicts department can’t force the firm to pay attention to danger. It takes the management to do that. Without management support don’t expect the attorneys to check out potential matters adequately.

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