Making a List: The Conflicts Check

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Our rules of professional conduct dictate that we hold certain information in confidence. We hold that confidence to the exclusion of all others, and can even resist a subpoena to protect our clients’ secrets. Similarly, we take an oath to zealously advocate for our clients. In an ideal world, these two responsibilities would never run afoul of each other.

But they do. And when they do, lawyers could lose clients, money, their job, or even their license.

To prevent these problems all lawyers know they are supposed to do a “conflicts check.” But that’s all they teach you in law school: you have to check for conflicts. Eric Cooperstein, a Lawyerist contributor and ethics-defense attorney, explains the purpose of a conflict check:

Um . . . to make sure there’s not a conflict? Even in very small or solo firms, lawyers should not rely on their memories to determine whether they have a conflict. Detecting a conflict after the representation has started may harm the client and the lawyer.

Minnesota Lawyers Mutual’s vice president of risk management, Todd Scott, writing in the ABA GP Solo’s Law Trends & News newsletter, puts it another way: The purpose of a conflicts check is to ensure that your commitment to your client’s matter will not be distracted by your commitment to any other person.

The importance of conflict checking

In the LAB, Sam says the only risks of missing a conflict are a potential withdrawal and some returned fees: “no big deal.” But Michelle Turbanic, a conflicts attorney with an international law firm, disagrees:

There is a reason conflicts checks are so often the topic of discussion at CLEs, especially those programs designed for new attorneys. Failing to perform a conflict check can result in having to fend off a disqualification motion, or worse, having disciplinary proceedings filed against you. In many larger firms, conflicts departments are considered a division of risk management. And I think that is exactly how you need to view a conflict check, as very necessary risk management procedures that ultimately protect you, your practice, and your firm.

The right information

The first step to conducting a conflicts check is having a system in place. But before you can structure the system, you need the information that your system will rely on. I asked Turbanic about what information needs to go into the system. “A list of names is really only a decent start to what a conflicts system should contain,” she said. She explained that the database should have as much information as possible because you may need more information once you uncover a potential conflict. Each contact should be linked to a file or a matter. Ideally, at a glance you will also know if that matter is open or closed. The relationship the firm had with the contact is also important. Turbanic explains that it is “most helpful to know if each name in your database had a client, adversary, or third-party relationship with you or your firm.”

Even for those contacts, the system will be useless without further information. For example, knowing that you represented Sue Smith in a divorce is comically useless unless you have an impeccable memory. The database should also include what Cooperstein refers to as “related names.” Spouses, children, employers, etc. As you input information, think about potential clients down the road. Cooperstein gives the example of an estate. If you represent the executor, make sure to include in your system the beneficiaries’ names. He also points out that it “may be useful to [include] the names of expert witnesses or key fact witnesses] in your database.

Finally, the database also needs to include information about any attorneys at your firm, including about their past clients. Include who they represented, what the issue was, and the other parties involved are all necessary information in your database. Turbanic reminds us that “it is extremely important to remember you have obligations to former clients, not just current ones.”

Maintaining the database

Modern practice management software allows firms to input this potentially voluminous data with relative ease. As opposed to binders or notecards, digital options can be searched almost instantaneously. And practice management suites like Clio, Rocket Matter, and MyCase all offer remote access to the information. Unfortunately, these systems are little more than rolodexes in this sense. None of the three systems allow you to link contacts to each other. Which means that if a name you’re searching for pops up in your system, you have some digging to do. You cannot easily see all of the contacts that person is associated with, such as their lawyer, their daughter, etc.

Of course, there is still the opportunity for human error. Beyond making sure that spelling is correct, it’s important that everyone in the firm is using consistent punctuation and abbreviations. That will allow the system to operate efficiently. It sounds obvious, but it’s easy for one person to abbreviate a company using its common acronym, while someone else normally spells things out. Soon the database could have S.H.I.E.L.D. as a client and the Strategic Homeland Intervention, Enforcement and Logistics Division as an opponent in another case, all because of a breakdown in abbreviation consistency.

Putting information into your database when a new case is opened or a new client comes in is easy. Ideally, you’ll collect all the information about opposing parties and third parties up front. But that isn’t always what happens. Cases evolve and parties are joined or dismissed. Expert witnesses are hired, and principals leave companies. Michelle Turbanic points out that unless the system is up-to-date, you won’t be able to do a proper check. That’s why you should update the information once a case is closed, if there is a new matter for an old client, or if you lose a client.

The conflict check system

Now that you have your data, you can start to sort out your system. Methods for conducting conflict checks are as varied as law firm billing structures. In the LAB, several members described their conflict-checking systems. Some rely solely on attorneys’ memories, while others require a more thorough records check. In his article, Scott lays out several different methods. The first is a three-binder system. Scott explains:

The best way for the law firm to establish and maintain these lists [of clients and related contacts] is to keep them in three separate binders. The client list in the first binder is updated every time a new client retains the firm to handle a legal matter. A Client Data Sheet containing basic information about that client is added to the binder in alphabetical order, and is permanently stored in the binder.

The second and third binders containing lists of other parties and lawyers are always being updated as a client’s matter is ongoing. As you learn of new parties and individuals, as well as attorneys that become involved in your client’s matter, you fill out a short Conflicts File Memorandum form indicating the name of the person and their relationship to the legal matter involving one of your clients.

Scott’s article was written in 2006, and surely some firms still use this binder system, or its cousin, the notecard system. Presumably most firms have evolved to some kind of digital system for ease-of-use and security purposes.

You can have the most robust, easiest to use, and least expensive conflict check system in the world. And if nobody in your firm uses it, it is completely pointless. Thus the best system is one that everyone in the firm signs onto. From the partners to the paralegals, everyone must ensure that data is input correctly and the checks are actually conducted.

Binders or bytes?

The biggest and easiest decision to make is whether to maintain a paper system or a digital system. The digital system should be the obvious choice. It allows quicker searches, the ability to store more data, and it can be backed up. Paper systems are localized, prone to easy destruction, and can only be searched manually.

One terrific benefit of a digital approach is automatic fill fields. Even with Microsoft Excel or Google Drive, the system can start to autocomplete a name as you type it. If something unexpected comes up, it can prompt you to dig deeper in your conflicts check. But most importantly, it can help avoid human error. If you start typing in a name and the field prompts you to auto-fill with a similarly spelled name, you will be able to see if someone else had the same name in there spelled differently.

Digital systems also allow access when you are away from the office, and the check should be done as early as possible. A system that you can access remotely will allow you to do a conflict check when someone comes up to you in the courthouse looking for help.

Conducting the check

Eric Cooperstein points out that the conflicts check should be performed immediately, before you receive any confidential information from a prospective client. He notes that “detecting a conflict after the representation has started may harm the client and the lawyer.” Therefore the check should be part of your intake process, even before a file is formally opened.

There is some mystery around conflict checks. In law school we learn that we have to do them, but not how to do them or what they entail. In fact, the first step is incredibly easy. Run the name of the new client(s), any adversaries, companies, etc. through your system. If the name doesn’t come up, you’re likely in the clear.

If a name or organization is already in your system, it’s time to dig. Is this a current client? A former client? What is the previous matter they were involved with? How were they involved?

With all your information in hand, it’s time to turn to your jurisdiction’s ethics rules. Under the Model Rules of Professional Conduct, Rules 1.6 through 1.13 are all helpful depending on the relationships. You need to determine if you can represent this new client in this specific matter. And, if you can, whether it requires any formal waivers from any other people or entities. As Cooperstein notes: Some lawyers see conflicts everywhere; others can’t see a conflict sitting right in front of them. It’s a good idea to seek input from an unbiased lawyer when you think you may have a conflict or when someone accuses you of one.

Keep in mind conflicts can extend beyond your ethical requirements. There may be business conflicts or conflicts of interest looming around a corner. Consider your firm’s interest and image, and who the firm does business with regularly. These things can play a role in a decision to take on a  new matter.

(image: checklist via Shutterstock)

Legal Ethics

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