Conflict of Interest Systems

by Terri Olson

When I'm in a law firm consulting with the partners and ask what conflict of interest systems they have, more often than not I'm told "my memory" or "my secretary". (These are the same lawyers that forgot to tell their staff I was coming.) There's no doubt: for good or ill, many law firms rely on their collective memory to avoid conflicts of interests. But how can this possibly be effective if all the secretaries are new and two lawyers have been with the firm less than a year? You can't remember what you never knew! In any case, lawyers would do well to consider the adage "the palest ink is better than the most retentive memory."

Problem situations aren't limited to big firms in big towns, or to small-town practices either; they can occur anywhere. In this article, I'd like to focus on some system changes that can help prevent conflicts of interest from arising. I emphasize systems because some things -- conflicts that arise through mergers and lateral hires, conflicts arising from sitting on one too many boards of directors, conflicts that stem from holding a financial interest in a company you act as counsel for -- are not law firm management issues and are beyond the scope of this article. (That is not to say they're not critically important!)

Firm meetings. Regular firm meetings are an informal but very useful tool in preventing conflicts of interest. (They should not, of course, be the only tool.) When partners meet once a week and briefly review new matters with each other, they not only help bind the firm together through requests for help and war stories, but they can also alert others to the possibility of conflicts of interest. The senior partner may be the only one who remembers that the new divorce client's husband used to be on the board of directors of the bank the firm represents. A firm meeting is a perfect time to get that information out.

Firm-wide distribution of new client information. A similar and highly effective protection for the firm is to publish a list of new clients or matters on a daily or weekly basis (depending on how many clients you typically take in) and distribute it to everyone in the firm. This also has significant client relations benefits: staff recognize the names of the new clients and will hopefully remember spelling and pronunciation.

Central client intake and client database. Never allow individual attorneys or secretaries to keep private lists of their "own" clients that no one else can access. Every client coming into the firm should be placed on a central client list, or preferably, into a central computer database containing all your new and old clients. Each attorney should use a new matter information sheet with a line that includes miscellaneous conflict data in addition to the standard name, address, company, etc. of the client and the opposing party. A secretary or file clerk can then enter this information into your system, whether automated or manual.

It should be immediately apparent that any manual conflict of interest system requires a good deal of cross-referencing: a card or entry must be set up not only for the client, but also for the opposing party and often for other concerned parties as well. Because of the time involved and the difficulty of searching through endless Rolodex cards, database software is definitely the preferred method. A question I'm asked frequently is "what software should I use for conflict checking?" For most firms, the time and billing software and/or case management software you use should be more than adequate, so long as it has at least one or two user-definable fields in which you can store miscellaneous client information and so long as it's possible to easily search for any word found in its database. Separate conflict of interest databases may be needed for firms with multiple locations where offices don't otherwise share billing or other client data with each other.

Immediate entry of conflict data. Put every client into your firm database immediately; don't wait until you need to send a bill or calendar an item. If you have manual systems, be aware that many secretaries will put aside the new client sheets until they accumulate a nice stack and then do them all at once. Don't permit this! If your firm takes in more than one new client a day, you can't afford for your conflict of interest information to be a week, or even several days, behind.

Immediate check for conflict data. As a new client is entered into the system, you or your secretary need to run a search to make sure that no potential conflicts appear. It's even better practice to run this search as soon as a potential client makes an appointment: don't wait until you've agreed to represent, and don't talk over the specifics of the matter with potential clients until you have checked and cleared them.

Staff training. Often it's the staff who spot a conflict first, since they may have worked on files for several attorneys or been at the firm longer than you have. Make sure they understand the importance of avoiding a conflict of interest and what course of action to take as soon as they spot a problem. All new hires should be advised as part of their orientation (you do have orientation for new employees, don't you?) how files they have handled for previous employers may result in a conflict of interest in their new situation and what they need to do about it.

This article was originally published in the Georgia Bar Journal, August 1997, Vol. 3 No. 1