One of the leading causes of lawyers professional liability insurance claims are conflicts of interest. Beyond representing both parties in a proceeding such as a divorce, there are many hidden conflicts that can cause a law firm problems. Not finding conflicts can lead to loss of clients, loss of fees, disciplinary issues and attorney malpractice claims. Lawyers need to consider not only actual impropriety, but the appearance of impropriety when determining when to engage a client.
If you feel that there might be a conflict or potential, but are comfortable that it would not result in how you address the matter and does not violate the rules of professional conduct, at the very least make sure to get informed consent from all parties that are impacted. But certain things are a definite “no no”, i.e. representing both parties in litigation.
At a minimum, make sure as part of your client intake procedures to check conflicts before engaging the client. A conflict check prior to engagement helps prevent later claims of legal malpractice and/or ethical violations arising from an alleged conflict of interest. Get as many facts as possible regarding the potential parties to the matter to be sure that you do not have any conflicts of interest with any other parties or potential parties should a litigation matter result in third-party claims, counterclaims or cross-claims. Utilize a conflict checking software program to ensure that the engagement is proper.
It is good practice to create and maintain the following file opening procedures:
1. Prepare a file-opening form.
2. Establish procedures so that a file/billing number is not assigned without first performing a conflicts check.
3. Update file-opening forms when new parties are added to a matter and make sure to update your conflicts system.
Utilize conflict checking software that can search all active, inactive and closed matters for potential conflicts. Remember conflict checking software is only as good as the information in the system, “garbage in garbage out”. Be sure that all relevant client information is entered into the conflict system, frequently updated and adequately backed up in the event of system failure.
Attorneys that do not perform adequate conflicts of interest checks can expect malpractice claims, disciplinary issues, and higher attorney malpractice premiums.