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The Appearance of a Secondary Interest

3/4/2013

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     Conflicts are a daily part of the practice of law, so much so that we usually don’t write a lot of them.  Every lawyer knows about them from law school on.  Nevertheless, I remain amazed at how many lawyers choose a broad view of them.  Probably nine times in a row, the “conflict” they overlook does not become a problem, but on the tenth one, it is a real problem.

     The presence of a conflict can be totally independent of any impropriety.  But like so many things, the appearance of one can be harmful.  You may have done nothing wrong and have an excellent work product, but I cannot defend you if you have a legal malpractice claim with a conflict of interest in it.  Juries are just not friendly to lawyers on a good day, but will unload on you when they perceive that you had divided loyalties.  The biblical serving two masters comes to mind.  So, you have a good defense to the claim, but the conflict that existed prevents them from seeing that.  You lose your fee you earned and the claim.  You have lots of lost time defending it, a real black eye in the community and likely you lose the client for good.  Plaintiffs’ counsel look for a conflict in every claim because their job just got easier.

     Yet lawyers resist saying no, or fail to pursue the proper consents or waivers in the face of conflicts.  Our rules are full of duties and responsibilities that can amount to avoidance of conflicts.  Every town has lawyers that never see a conflict; “Oh, his office is down the hall and there is no conflict.”  When a conflict bites them, it will bite hard.

     In my role as counsel to a law firm, I spent 5% of my total working time last year resolving or advising on conflicts last year.  That significant number was on top of a staff devoted to conflicts checks and all the time of the individual lawyers checking, and resolving these.  It was a big component of firm time.

     Every firm must have an effective way of quickly checking a new client and matter against the body of work previously done by the firm.  As the files and lawyers grow in number, mechanical checks must be done on all files and then people have to resolve whether the same person or same issue are involved.  There must be a person responsible for each check and a way to hold them accountable, and all this before any work is done.

     Many can be resolved by the human part of the check and then disclosure to the new client.  Use the grandmother test.  If she found out later, how could I possibly explain that conflict to her if she was my client.  Many clients are fine with the issue when fully and knowledgeably vetted with them and the other proper consents obtained.  All this front end work is vexing, but really necessary when you look at it from the prospective of a defense attorney picking up a claim file later.  My most common initial statement I hear is:  “I never should have taken this file.”

     Here is the Restatement view on consents:

     § 122. Client Consent to a Conflict of Interest

     (1) A lawyer may represent a client notwithstanding a conflict of interest prohibited by § 121 if each affected client or former client gives informed consent to the lawyer’s representation.  Informed consent requires that the client or former client have reasonably adequate information about the material risks of such representation to that client or former client.

     (2) Notwithstanding the informed consent of each affected client or former client, a lawyer may not represent a client if:

     (a) the representation is prohibited by law;

     (b) one client will assert a claim against the other in the same litigation; or

     (c) in the circumstances, it is not reasonably likely that the lawyer will be able to provide adequate representation to one or more of the clients.

     When puzzling over the hard calls, look at some cases to see how the courts have handled the issues.  Chicago lawyer William Freivogal maintains a good site:  “Frievogal on Conflicts:  A Guide to Conflicts of Interest for Lawyers” http://www.freivogelonconflicts.com.



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    Steve Crislip was the General Counsel and Loss Prevention Member to a 11 office and 7 jurisdiction law firm for 10 years and has been defending lawyers and firms for more than 25 years and litigating for 40 years.
    These articles reflect lessons learned for Law Firms.

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