How to Conduct a Conflict Check at a Law Firm?
April 26, 2023
Contrary to popular belief, conflicts of interest are often unintentional, where there is the unrealized risk of a secondary interest of one of the parties involved which may be financial or non-financial. For example, if you represented a husband in a divorce case 10 years ago, representing his ex-wife in her divorce from her second husband is problematic - and unethical.
If representing one client is directly adverse, or potentially adverse, to the interests of another client (current or former), a lawyer may not represent them. At least not without informed, written consent. A reliable conflict-checking process can help attorneys avoid problems with potential conflicts of interest.
What Is a Conflict Check in a Law Firm?
You may be in violation of conflict of interest rules if you represent a client whose interests are adverse, or potentially adverse, to your own or to a client you have previously represented. This may sound like basic common sense, but adverse interests are not always so clear, and multiple model rules address conflicts. The ABA conflict of interest rules detail the two situations where a “concurrent conflict of interest exists”:
- The representation of one client will be directly adverse to another client;
- 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 a personal interest of the lawyer.
In many cases, a conflict of interest is waivable with the affected party’s informed consent. Although, oftentimes, lawyers would rather not be involved at all than chase down conflict waivers with former clients. It is the responsibility of the lawyer to consider whether a conflict of interest exists. Ethics violations can result in bar complaints, sanctions, and in severe cases, disbarment.
A conflict-checking system is a cross-check of client names and associations for identifying conflicts. You are not just checking for direct conflicts, but with conflicts with spouses, employers, children, insurance carriers, and businesses.
What Counts as a Conflict of Interest at a Law Firm?
Representation of clients must be ethical, and free from bias. If there is a conflict between professional duties and private interests, either by relationship, affiliation, or association, it is not appropriate for an attorney to represent the client without informed consent.
There are countless examples of situations where a conflict of interest may exist. Simple examples of conflict of interest include:
- A lawyer representing a plaintiff in an insurance claim when they previously worked as legal counsel for the insurance company at their former firm.
- A lawyer's new client was actually an opposing party in a former case.
- A lawyer representing a client in an HOA dispute when the wife of another lawyer at the firm is the president of the involved HOA.
- A lawyer representing two co-defendants in a criminal defense matter, who may be incentivized to be informants to prosecution.
- An attorney representing a client in a criminal defense matter when the lawyer’s brother was the arresting officer.
- An attorney engaging in a sexual relationship with a client.
- An estate planning lawyer asking a client to write them into their will.
- A divorce attorney allows the client’s in-laws to pay their bill without the client’s consent because the ex-in-laws can afford to pay it in full when the client will need a payment plan.
For the majority of situations, signed informed consent is sufficient for legal and ethical representation. However, if the client has potential other options for counsel, it may be easier and preferable for all parties if the lawyer does not take the case. The attorney can simply write a non-engagement letter to the potential client clearly stating that after the conflict checking process, they are unable to take the case and suggest they promptly look elsewhere.
How to Set Up Law Firm Conflict Check Process
A conflict-checking system should be used by a law firm prior to the initial consultation (with initial information available), prior to representation when an attorney-client relationship begins (when additional information has been disclosed), and periodically throughout the representation. Your law firm should have a documented, standardized conflict check law firm process that lists all information that should be checked in a conflict check process, such as full names, maiden names, nicknames, dates of birth, addresses, phone numbers, and email addresses.
1. Establish a Comprehensive Database of Your Clients
To run a conflict check, you need a searchable database of all your clients. This may be a simple spreadsheet that you update as part of your client onboarding process, a standalone conflict check software, or your client's legal case management software. You should also take your check a step further and ask attorneys and staff at your firm about any conflicts with a potential future client, existing client, or former client. It is impossible to anticipate every single potential client, as there are always associations and affiliations that aren’t documented.
2. Conduct Conflict Checks at Key Trigger Points
Ideally, a conflict or potential conflict is identified by law firms early, before the client is officially onboarded and money has been paid. At the minimum, you should perform a conflict check at three points prior to and during representation:
- When you are first contacted by a potential client and asked for a consultation.
- After the first consultation, before you agree to represent the client.
- At any point when a new party enters the legal matter or transaction.
- At any point when a new lawyer is hired by the law firm.
Smaller law firms may distribute “new client lists” or memos to inform attorneys and staff about new clients. Although these lists and memos are beneficial supplements, they are not substitutes for search-based conflict checks and actually asking attorneys and staff to confirm that no known conflict exists.
3. Send Non-Engagement Letter When You Decline to Act
It is vital that law firms communicate promptly and clearly when you decide not to represent someone due to a conflict of interest. Legal matters are often rapidly changing situations, and if a client is waiting on you to represent them, and then you don’t, their situation may worsen. A non-engagement letter can be sent via e-mail and mail to:
- Notify the individual or business that you will not be able to represent them.
- Advise the individual or business that they should find another lawyer promptly to represent them.
- Confirm that you have not received confidential information from them.
If statutes of limitations apply, such as in a personal injury matter, advise the party of that. Finally, confirm with the individual that they received your non-engagement letter.
How to Run Conflict Checks: Technology to Implement
Many law firms will have an attorney do a conflict check and document the check by preparing a Conflicts of Interest Search Results Memo for the client’s file. There are some ways to run conflict checks, including asking all attorneys and staff at a law firm to sign a statement confirming if they have any business or personal interests with the potential new client, or any relationship, affiliation, or association with the client. Beyond asking staff, conflict checks are often performed in several ways:
Spreadsheet Apps (Excel, Google Sheets, Smartsheet, etc.)
Although there are undoubtedly still lawyers using a paper file system or index cards, a searchable computer system for conflict-checking a potential new client will make the process faster and more reliable. For smaller firms that don’t use legal case management software, conflict checking can be done through a spreadsheet search process like Microsoft Excel, Smartsheet, or Google Sheets. A database can include names of existing clients, former clients, employees, and parties' spouses and family members. Ideally, a spreadsheet is shared and cloud-based, allowing staff members to update and search it, to keep it as up-to-date as possible.
Standalone Conflict Checking Software
Some law firms use standalone conflict check systems, including Client Conflict Check and RTG Conflicts that function independently of other software systems on your computer. While these conflict checking software programs can allow you to uncover potential conflicts based on the information you enter, you must input the information and update it. The more information you input, the more effective the conflict-checking software is at identifying professional and personal conflicts.
Comprehensive Legal Practice Management Solutions
The best conflict-checking system may be running potential clients against your database of clients and contacts in your practice management software. If you have legal practice management software, conflict checking can be even simpler, and more comprehensive than a spreadsheet app or standalone conflict check software. The advantage of initiating your conflict check for a potential new client in your case management software, is you do not have to update a spreadsheet or conflict check database, nor do you have to pay for a separate license for conflict checking software. Once you complete the check, you can save the report as documentation of the completed conflict check.
Performing conflict checks is an important step before entering into any attorney-client relationship, or even allowing a potential client to share confidential information with you. Identifying potential conflicts early on and handling them professionally can prevent legal and financial problems down the road. Smokeball’s law practice management software can help law firms of all sizes stay on top of client data and run a conflict check without the need for tedious spreadsheets or separate conflict-checking software. If you are ready to see how our robust practice management software can help your law firm, contact us to book a demo today.
Learn more about Smokeball document management for law firms
Book Your Free Demo
Ready to see how Smokeball client intake software helps you Run Your Best Firm? Schedule your free demo!