Attorney ethics rules require lawyers to decline a potential client if the representation would create a conflict of interest with a current or former client. Sometimes, albeit rarely, this is as simple as refusing to represent both sides in a dispute. Conflicts of interest are usually harder to detect than this, and require vigilance by lawyers and their staff.
How can lawyers recognize and avoid possible conflicts of interest when taking on new clients? Multiple low- and high-tech options are available to help lawyers check for conflicts. Taking preventive measures in advance can help lawyers avoid legal claims that require them to call their legal malpractice insurance provider.
What Is a Conflict of Interest?
The exact definition of “conflict of interest” is a matter of regular dispute among lawyers, clients, and bar associations. Each state and the District of Columbia has its own rules regarding conflicts of interest. While the American Bar Association’s Model Rules of Professional Conduct (“Model Rules”) are not binding, they offer a useful example of what most bar associations’ disciplinary rules have to say on the subject.
With every new client, a lawyer must check to make certain that their representation of this client will not have a negative impact on the interests of another client, past or present. A lawyer may not put one client’s interests above those of another client, nor may they put their own interests above those of a client.
Conflicts Between Current Clients
Model Rules 1.7 and 1.8 discuss conflicts between two or more current clients. A lawyer may not represent a client if:
- Doing so would “be directly adverse to another client”; or
- A “significant risk” exists that “the lawyer's responsibilities to another client, a former client or a third person or...a personal interest” would negatively affect their ability to represent the new client.
The lawyer may take the new client on if they can meet four criteria:
- They “reasonably believe” they can effectively represent both or all clients;
- Everyone affected by the potential conflict consents in writing;
- None of the parties are asserting claims against one another; and
- No other law bars the lawyer from taking the new case.
Based on this, it appears that the only type of representation that is absolutely barred in all situations involves representing opposing parties in a dispute. Everything else has at least a small amount of leeway, provided that the lawyer is aware of any potential conflict and takes prompt action to address all concerns.
Conflicts Affecting Former Clients
Model Rules 1.9 and 1.11 deal with conflicts affecting former clients. A lawyer cannot represent someone after representing someone else “in the same or a substantially related matter” if the new client has interests that are “materially adverse” to the former client’s interests. If the lawyer previously worked for a firm that represented the former client in the above scenario, they may not represent the new client if it would risk them using confidential information obtained from that client. This also applies to former government attorneys when a new client has a claim against or involving the government. These restrictions can be waived with informed, written consent from the former client.
Conflicts Among Lawyers in a Firm
Rule 1.10 says that if one lawyer in a firm has a conflict of interest with a prospective client, the entire firm has a conflict of interest. The firm can avoid the conflict of interest by keeping the conflicted lawyer completely separate from the case. It must notify the previous client and keep them informed about their procedures for keeping the lawyer screened from the case. The former client’s consent is not required in advance, but the firm must give them opportunities to object.
Conflicts Among Business Clients
Identifying conflicts with individual clients is relatively easy when compared to conflicts with clients that are business entities. Representing a subsidiary of a company can lead to a conflict of interest with a prospective client who has a dispute with the parent company or another subsidiary.
How Lawyers Can Recognize Potential Conflicts of Interest
Identifying potential conflicts of interest becomes increasingly difficult with larger firms and lengthy careers. The Model Rules do not provide a “statute of limitations” for conflicts of interest. A lawyer with no memory of work they did for a company years or decades ago might still be barred from taking a case now. An attorney in one division of a large law firm might have to contend with the conflict of interest of another lawyer in a different division.
Given the immense importance of identifying and avoiding conflicts of interest, a lawyer’s memory is not going to be enough. No lawyer is going to remember every single client and case that they have handled. Documentation is essential.
Tools to Help Lawyers Avoid Conflicts of Interest
Every attorney or law firm has a list of all of their clients, even if only for billing purposes. A list of names is a start, but it is not likely to be enough for a thorough conflict check. Lawyers need detailed records for the specific purpose of checking for conflicts of interest.
Solo and small firm lawyers do not necessarily need expensive, high-tech tools, as long as they can maintain a low-tech system consistently and securely. A three-ring binder with records for every current and past client has been enough for many lawyers through the years, and it can still work in the 21st century.
A conflict check system needs records for every client, former client, prospective client, opposing party, witness, and other individuals or businesses involved in the lawyer’s legal work, with the following information at a minimum:
- Their full legal name;
- Any previous names, for both individuals and businesses;
- Parents and subsidiaries of business clients;
- The case name and file number;
- The attorney(s) who handled the case(s);
- Status, such as retained client, consultation only, opposing party, a relative of a client, etc.
- The date that the record was added to the conflict check file; and
- Details about the person and/or case that would help someone determine whether a future prospective client will present a conflict of interest.
High-tech tools are available to lawyers to streamline conflict check processes. They perform the same function as a binder full of paper, but they are computerized and searchable. This is indispensable for larger firms. Many law practice management software systems include conflict checking mechanisms. They offer advantages, such as online client intake forms that can automatically update the conflict check database.