Peer to Peer Magazine

11 WWW.ILTANET.ORG BEST PRACTICES The Business of Avoiding Business Conflicts analyzed by a centralized administrative group and/ or returned to the requesting lawyer for analysis. The database of previous engagements maintained by most law firms focuses heavily on documenting "positional conflicts." These databases do a good job of tracking involved adverse parties but do not always provide insight into business conflicts issues, and they oen are not updated aer the maer has been opened. Leveraging Institutional Knowledge A basic step to identifying all types of conflicts of interest is to circulate the details of new proposed engagements to the firm's lawyers, allowing every lawyer in the firm to review proposed new business. This time-tested approach assumes some level of imperfection in the conflicts tracking database and the humans who participate in searching it. A conflicts circulation process allows the firm to review new engagements, ideally before they are formalized, and makes space for individuals to speak up if they have experience with the proposed client not documented in the conflicts of interest database. In addition to reporting on undocumented ethical or positional conflicts concerns, the lawyer reviewing the circulation report might identify potential business conflicts issues such as: » The law firm already represents a client in the same industry or competitive space. » A lawyer has performed work for or is adverse to related corporate entities not specifically named in the new engagement. » A representation might be unduly risky or deemed a jeopardy to the strategic goals of the law firm. » A proposed engagement could threaten to derail a lucrative piece of business being pursued by another lawyer. Reviewing lawyers can contact their peers directly or work through the conflicts of interest administrative department to ensure their knowledge is considered and documented. Several law firms also employ new business commiees or a similar administrative group to review new clients or large new engagements. This group typically includes practicing aorneys and resources from both the finance department and risk management who can assess whether new work is consistent with the law firm's risk profile, strategic goals and other clientele. Think of this commiee review approach as a focused version of the conflicts circulation process, but limited to a core group commied to applying the required scrutiny in a timely fashion. Defining and Documenting the Engagement Business conflicts (and other issues) can arise from differing perspectives on who or what is "the client." Absent clear engagement documentation, a potential client might assume their chosen counsel will represent all of the organization's corporate affiliates and corporate officers, or an individual might interpret their interests as represented when the lawyer's obligation Lawyers who are proactive about producing thorough engagement letters, ideally requiring a response, help draw out conflicting guidelines from the client. Effective Conflicts Circulation Consider the following for an effective conflicts circulation process: The circulation report should include the proposed client, details of the engagement and the parties involved in the matter. Policy and training should communicate the need for firm lawyers to review the conflicts circulation report regularly; it is of little value to the firm if not reviewed. The firm should consider whether to circulate all searched names or only the entities involved in new matters accepted by the firm. The report should be issued in a way that makes it easy for lawyers to review it quickly, such as on mobile devices when out of the office. A mechanism must exist to avoid circulating certain confidential and sensitive matters. 1 2 3 4 5

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