Peer to Peer Magazine

December 2012

The quarterly publication of the International Legal Technology Association

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Updated professional responsibility rules, new ethics opinions and evolving client concerns are pressing law firms of all sizes to re-evaluate their policies and processes. Pressure on attorneys to open matters quickly and meet billable hour quotas can also be in direct contrast to the careful analysis that some potential conflicts of interest require. Basic fundamentals of the conflict-searching process must be in place to ensure your firm is protecting itself from risk and avoiding disqualification, disgorgement of fees and negative public attention. Rules of Professional Conduct In general, attorneys have a duty to avoid any situation that might impair their abilities to be vigorous advocates for their clients. This premise has been defined in detail by the American Bar Association's Model Rules of Professional Conduct and adopted verbatim by many state bar associations. Every state outlines some version of these tenants to provide guidance to lawyers and law firms on avoiding conflicts of interest. A lawyer cannot engage in a representation where there is a concurrent conflict of interest or where they are representing a client adverse to current clients, as outlined in Model Rule 1.7. A separate rule details the responsibility of a lawyer to a former client. Model Rule 1.9 advises that a lawyer may not represent a client in an engagement adverse to the position of a former client where the matter is the same or substantially related to the initial representation. These rules place an immediate burden on lawyers to understand and document a number of issues, including: • Exactly who the firm's client is for each matter, instead of who referred the matter or who is paying the bill • Whether there is an ongoing relationship with each client, as perceived by the client, not the law firm • Exactly what the nature of the representation is and whether it is substantially related to existing or prior engagements In certain situations, a client may provide consent to waive a conflict of interest faced by the law firm. Firms are required to properly document these conflicts waivers, and their exact language has to be considered when faced with new potential conflicts. Model Rule 1.10 details how a conflict of interest for an attorney or group of attorneys imputes to other lawyers in a law firm. It is assumed that a conflict of interest for even a single attorney can affect the ability of any lawyer in the firm to properly represent the client. Rule 1.10 allows a law firm to represent a client despite an attorney's conflict of interest in certain conditions: • If the prohibition is based on the personal interests of the disqualified lawyer and doesn't present a risk to the remaining lawyers of limiting the representation of the client • If the prohibition is based on the lawyer's duties to a former client when with a prior firm, the disqualified lawyer is effectively screened from the matter in a timely manner, receives no part of the client's fee, and the former client is given notification of the conflict and screening provisions When an attorney leaves a law firm, the former firm is no longer burdened by that departing attorney's conflicts of interest, in most cases. As long as the current or proposed representation is not the same or substantially related and no remaining lawyers have information material to the matter, the new matter can be accepted without a conflict. Rule 1.10 was significantly modified as recently as 2009 to allow firms more latitude in avoiding conflicts of interest in the age of frequent lateral attorney movement between firms, although not all states have adopted the modified langage. Technology and Identifying Conflicts Technology has become an invaluable part of identifying conflicts of interest for most law firms. Virtually every firm over a certain size has an automated conflict-checking system that tracks details of the firm's engagements. These systems have evolved from manual card systems previously used to track engagements and involved parties. A number of bar associations, including those in New York, North Carolina and Washington D.C., have issued ethics opinions detailing some of the information that conflict-checking systems should contain. Your firm's system must be capable of performing nuanced searches to identify various iterations of an entity name and the particular involvement a party held in a matter. Firms are contending with how to capture complex details such as technology areas that their clients work within, advance conflicts waivers granted by the client and corporate affiliations. Third-party databases can be invaluable for understanding issues of corporate ownership and company relationships. Conflict Analysis Through ThirdParty Review There are many models for analyzing conflicts of interest after they have been reported from a database, but meaningful review cannot be replaced by a software system. A majority of firms leave analysis of potential conflicts to the attorney requesting the new client or matter. This presents its own possible conflict of interest, as the individual with the most interest in opening the matter is evaluating whether the work can proceed. Law firms employ new business review committees, circulation of new matters to the partnership and third-party review of conflicts to manage this tension. Third-party review takes the analysis of conflicts of interest out of the hands of the requesting attorney and uses highly trained administrative personnel or nonpracticing attorneys to evaluate conflicts neutrally. An increasing number of firms are pursuing this approach to alleviate the burden on practicing attorneys and to better manage risk. Peer to Peer 63

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