Who Should Care About Legal Conflicts of Interest?
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1 Who Should Care About Legal Conflicts of Interest? Presented by Jennifer Buhler, JD LI13 4/3/2017 1:45 PM - 2:45 PM The handouts and presentations attached are copyright and trademark protected and provided for individual use only.
2 Conflicts of Interest Jennifer Buhler Risk Management Counsel Today s Presentation Discuss how conflicts of interest are created. Provide examples of how you can create a better system to identify and resolve conflicts of interest. Provide examples of recent conflicts of interest. 1
3 What Creates a Conflict? Direct Adversity Cannot be adverse to a current client in any matter even if the matter is completely unrelated Breach of the duty of loyalty Nature of representation is irrelevant Amount of confidential information is irrelevant Amount of time that will be spent on the matter is irrelevant What Creates a Conflict (cont.) Material Limitation Created by responsibilities to another client, a former client or a third person or from the lawyer s own interests A conflict of interest exists if there is a significant risk that the lawyer s ability to consider, recommend or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer s other responsibilities or interests Must obtain a conflict waiver for all joint representations 2
4 Former Client Conflict Duties owed to a former client. A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing A lawyer continues to owe a former client a duty of confidentiality Additional Common Conflicts Situations A lawyer cannot enter into a business transaction with a client without first obtaining a waiver. A lawyer shall not accept compensation from anyone other than the client without first obtaining consent from the client. 3
5 Timing of a Conflicts Search Before meeting with the client. Before significant time is spent trying to obtain a new client. After an initial consultations prior to opening a file or in conjuction with opening a file. Throughout the life of the matter. Prior to hiring new lawyers or staff. Contents of an Effective Database New matters. Name of every client Name of client contacts Name of all opposing parties Name of related, neutral and other involved parties Prospective clients from whom lawyers have obtained confidential information. Business entities in which lawyers are the officers, directors, or have an ownership interest in the company. 4
6 How to Build a Better Conflicts System Require use of a file opening system where every party s relationship to the matter must be identified. Use categorizations such as client; related; opposing; neutral; potentially adverse Provide definitions Provide a resource to help lawyers identify new parties How to Build a Better Conflicts System (cont.) Require a second method of identification such as banker; parent company; trustee; defendant. Require descriptive matter names do not allow General. Require the use of I am not your lawyer letters. Send out notifications to request that the database be periodically updated. 5
7 How to Build a Better Conflicts System (cont.) When a file is closed, send out close out correspondence. Require that someone in the Conflicts Department review all Outside Counsel Guidelines. Waivers All waivers must be confirmed in writing/executed (an may be sufficient) Must obtain waivers from someone who has the authority to waive a conflict of interest Institutional clients usually have a specific system for obtaining waivers and possibly a form waiver An effective waiver must clearly identify the nature of representation; the issue creating the conflict; the potential ramifications of the conflict; and, a statement that the client waives Amount of detail is dependent upon the sophistication of the client Form letters must be consistently reviewed and updated 6
8 Outside Counsel Guidelines Who is your client? Guidelines may expand your Firm s duties beyond the party you have agreed to represent What is a conflict? Guidelines may define a conflict to include an issue conflict or to prohibit representation of competitors When do you need a waiver? Guidelines may contain a blanket waiver How do you obtain a waiver? Guidelines may require waivers from a specific person or to be obtained from a specific system Failure to follow Guidelines may result in conflict or a breach of contract claim. Ramifications of a Conflict of Interest Malpractice Suit Conflicts can add millions of dollars to malpractice lawsuits Many jurors may not understand a legal malpractice claim Everyone understands conflicts of interest claim duty of loyalty issue/duty of confidentiality issue Most people are outraged when they think the lawyer was working under a conflict In America duty of loyalty and confidentiality are central to the attorneyclient relationship conflicts of interest are a breach of one or both of these duties 7
9 Ramifications of a Conflict of Interest (cont.) Loss of at least one Client possibly two Generally conflicts involve two clients Both clients will be upset May have to withdraw and/or will be terminated by client Reputational Harm Conflicts can be newsworthy Disciplinary Action Conflicts Gone Bad Law firm withdraws retraction request to CNN over Price story Washington Post Dentons originally sent a letter to CNN on behalf or Rep. Tom Price regarding a story on CNN regarding Rep. Price. After the letter was sent, a conflicts check revealed Dentons represents CNN on unrelated matters. Dentons sent CNN an apology letter that was later published in the Washington Post and on Above the Law. 8
10 Lateral Hire Conflict Alston & Bird LLP represented a doctor accused of beaching a non-compete agreement. Alston hired a lateral attorney from the firm representing the Plaintiff Alston lawyer didn t recall ever working on the matter Judge disqualified Alston citing the fact that the potential conflict created a material limitation conflict. Questions?? Please do not forget to turn in a review of this session. 9
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