The Legal Professional
Rules for lawyers, law firms and legal service organizations
Any law firm or in-house corporate or governmental legal department, regardless of its size, locale and practice areas, should employ a reasonable system for screening and handling conflicts of interest.1 A law firm or legal department may be confronted with a conflict of interest if (a) a prospective client’s or existing client’s legal interests are directly at odds with the legal interests of another client in an important way; or (b) a firm’s or legal department’s ability to competently and diligently represent a client is materially limited by responsibilities to another client, a former client, a third person.2
For law firms, reviewing conflicts of interest should normally involve checking the firm’s computer data base, reviewing past and present client lists and communicating within the firm about clients, relationships and interests which may require declining the representation or seeking waivers from affected clients. Similarly, for in-house corporate or governmental legal departments, detecting conflicts typically involves assessing whether engagement of outside counsel is warranted because (a) the entity client’s legal interests may be adverse to interests of constituents of the client, or (b) continued representation of the entity may be materially limited by the legal department’s loyalty to other affiliates or clients.3 The following are some of the points that may comprise your law firm’s or legal department’s conflicts check list:
- Checking Conflicts with New Hires. When new lawyers and staff are hired by a law firm or in-house corporate or governmental legal department, the new lawyer or staff should be asked to disclose information regarding potential conflicts of interest relating to their past clients at prior places of employment, but should not disclose specific confidential past client information.4
- Obtaining Parties’ Names Before Details. Before any client consultation on a new matter, a law firm or in-house corporate or governmental legal department, after clearly identifying the client or clients, should ask the existing or potential client(s) to disclose the names of all parties involved in the matter, including opposing parties' names, and associated persons’ and entities' names.
- Checking Law Firm Records. To screen conflicts, a law firm must first review its computer data base, as well as present and former client lists.
- Remaining Mindful of Conflicts. In-house corporate or governmental legal departments should remain mindful of whether outside counsel should be engaged because the legal department’s representation of multiple parties may be materially limited or the parties may be adverse to one another. Legal departments might also encounter a conflict of interest, due to unforeseen developments, such as changes in corporate and other organizational affiliations or realignment of parties in litigation.
- Gathering Facts to Assess Conflicts. During the initial consultation with the existing or potential law firm or in-house corporate or governmental legal department client(s), each existing or potential client must disclose all relevant information about the details of the matter.5 Lawyers screening the conflict of interest must ask all the right questions to discover whether there is a potential or actual conflict of interest.
- Circulating a Conflicts E-mail/Memo. A conflicts e-mail/memo should be circulated to all lawyers and staff of your law firm or in-house corporate or governmental legal department for their review and response.
- Review and Analysis of Potential Conflicts. The law firm or in-house corporate or governmental legal department should carefully analyze the results of the circulated e-mail/memo to determine whether any conflict of interest exists. Depending on the complexity of the conflict of interest question, a committee of lawyers may be called upon to review the question, or the firm or legal department should present the question to outside ethics counsel.6
- Entering All New Clients in Conflicts System. If no conflict of interest is discovered, or the conflict is properly waived in writing by each affected client, the law firm should enter the new client into its records system and send an engagement letter to the client.7
- Documenting Conflicts Review. In-house corporate or governmental legal departments should document their review of conflicts of interest in order to monitor whether a potential or actual conflict later develops.
- Informing Clients of Non-Engagement. If a conflict of interest is discovered, and the law firm or in-house corporate or governmental legal department is not permitted by ethical rules to accept the representation,8 the law firm or legal department should send a non-engagement letter or other written documentation to the client.
- Engaging Outside Counsel. If a conflict is discovered by the in-house corporate or governmental legal department, and consent to the conflict is not obtained, one or more outside law firms should be engaged to represent parties.9