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Avoiding Conflicts of Interest

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The duty of loyalty is critical.

Executive Summary

Clients expect and deserve your undivided loyalty. If they think they’re not getting it, trust will erode. An ethics grievance or malpractice claim may soon follow. Minimize this risk by (a) screening for conflicts before accepting a new matter, (b) knowing how to deal with conflicts when they arise, and (c) training your staff to help avoid problems.

Duty of Loyalty

Loyalty is a pillar of the attorney-client relationship. Begin building that pillar even before you accept a new matter. Ask yourself: is there any impediment to my undivided loyalty to this client?

Conflicts arise when your personal or professional interests call into question your independent ability to represent a client. The conflict might be with another client you represent now or have represented in the past. It might involve another lawyer in your firm. It might exist at the outset or arise later in the representation.

Avoid trouble by having a reliable conflicts-checking system and being vigilant about spotting conflicts when they occur.

Alta Pro Practice Pointers

  1. Know the rules. All states have a rule like ABA Model Rule 1.7, which says a lawyer has a conflict of interest if (a) the representation of one client would be directly adverse to another client, or (b) there is a significant risk that the representation would be materially limited by the lawyer’s responsibilities to another client, a former client or a third party, or by a personal interest of the lawyer. Read and understand the particulars of your state’s rule.
  2. Avoid even the appearance of a conflict of interest. If someone suggests you may have a conflict in a case, stop what you’re doing and consider the situation. Don’t look for ways to work around the problem. Err on the side of stepping away. It’s embarrassing – and risky – to withdraw from a case in midstream when the potential conflict should have been identified earlier.
  3. Have an internal procedure for checking conflicts. Maintain a database of clients, opposing parties and adverse entities. Check your new client matter against the database. Include all known parties and a summary of the case on your intake form. Before the matter is accepted, every lawyer in the firm should review the form and screen for potential conflicts. Develop a process for discussing potential conflicts and deciding how to deal with them.
  4. Beware of representing multiple clients in the same matter. It’s okay to do so if the they have a common interest in how the case should be handled and what outcome is desired – for example, when a couple is sued jointly and they share liability. But if liability isn’t shared, or their interests diverge as the case unfolds, they should get separate lawyers from different firms. Another red flag: advising individuals you previously represented when they were with a business or organization.
  5. Clarify the relationship in your engagement letter. When multiple clients insist on sharing your services, use an engagement letter to clarify what will happen if a conflict arises. Avoid representing one side over another. Don’t invite a malpractice claim by trying to salvage your fee.
  6. When conflicts arise, get out. Don’t be the peacemaker when individual clients start fighting over how to handle or resolve the case.
  7. When representing an organization, identify the individual principals. Communicate your scope of representation. Let them know that in the event of a conflict between them, you represent the organization.
  8. Remember: it’s their case, not yours. Some conflicts occur when your interests clash with your client’s. This may involve fees, billing, case strategy or settlement decisions. The client’s interests must come first. Discuss the situation and lay out all options. Explain the thinking behind your recommendations. Ask yourself: am I recommending this course of action primarily because it benefits me?
  9. Make sure lateral hires don’t bring conflicts with them. When lawyers join your firm, add their previous clients and matters to your conflicts database.
  10. Recognize that a conflict of interest makes every other type of malpractice worse. Focus on your client. Document situations and issues that could lead to conflicts.
  11. Avoid asking clients to waive a potential or actual conflict. The safer course is to withdraw from representation.

The Bottom Line: Give your clients undivided loyalty by avoiding conflicts of interest.

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