Attorneys and law firms typically devote significant resources to risk prevention relating to potential conflicts of interest. Conflicts among legal representations can lead to legal malpractice claims or bar grievances. However, most firms have a road map for how to identify traditional conflicts and, if possible, resolve them.
However, more and more law firms are discovering potential conflict issues arising from nontraditional sources. While most conflicts are identifiable on the beginning of a new attorney-client relationship, the modern law practice sometimes leads to conflicts—or the risk of a conflict—arising in unexpected circumstances.
For example, providing casual advice or creating attorney-client relationships outside the bounds of proper documentation can create conflict issues. Below are some common circumstances from which unexpected conflicts materialize.
Undefined Clients Many attorneys have no difficulty identifying who the “client” is on a new attorney-client relationship. Then, the attorney runs that client through the firm’s conflicts system to identify any potential issues.
It can be trickier, however, when a single representation involves more than one client. Sometimes, attorneys can fail to recognize that the representation involves multiple client entities or roles that should be treated distinctly. It is possible that an attorney could be asked by one person to simultaneously represent the executor, estate and beneficiary of an estate. Or an attorney may be asked to represent both the president of a closely held corporation and the corporation itself.
In each situation, it might appear that all of the potential clients are in reality a single person or legal entity. Yet, for purposes of the conflict-of-interest resolution procedures, each separate capacity and each separate entity may actually be a separate client. When that happens, if the interests of the various persons or entities are distinct, the law firm may need to comply with the multiple representation, conflict-of-interest resolution procedures.
However, if the representing attorney does not identify the possibility of multiple “clients,” then a potential conflict may go undiagnosed or unresolved. If the interests of the various clients in the block differ, then the law firm may need to take additional steps to resolve the conflict or amend the terms of the representation.
Unwaivable Conflicts Of course, it is quite common for a single attorney or firm to represent multiple clients in multiple capacities in a single representation. The key is generally to make sure that all applicable rules are met, including full disclosure and consent if a waivable conflict exists.
It is important to know, however, that some conflicts are not waivable and cannot be resolved by client consent. For example, an attorney generally cannot represent both the plaintiff and the defendant in the same lawsuit (although some have tried). And an attorney usually cannot represent a buyer and seller in the same transaction.
Nontraditional Attorney-Client Relationships In the modern era, not every attorney-client relationship begins with a prospective client who walks in the door and asks an attorney for legal services. Sometimes attorney-client relationships are implied from the facts and circumstances surrounding a pattern of communication.
These kinds of implied representations are becoming more frequent. Attorneys do not always take seriously the risk that casual requests for legal services, through an in-person social interaction or online website rather than in connection with a formal engagement of legal services pursuant to an engagement letter or fee agreement, can create. Indeed, if the casual inquiry involves the seeking and rendition of legal advice, a court may conclude that it forms the basis of an attorney-client relationship, an obligation to maintain privilege, or an event that would later preclude a representation adverse to the “casual” client.
An example makes the point. An associate in a law firm receives an email from a friend, asking for some legal advice on how to break a lease. The associate sends the friend the relevant statute and some sample language, without running a conflicts check or opening a new matter. The friend then forwards the email with the associate’s language to the landlord. As it turns out, the landlord is a client of the associate’s law firm. It is not difficult to imagine the fallout of such a situation, both from an ethical and a business perspective.
Attorneys are frequently called on by family members or friends to give “friendly” advice in situations such as above. In so doing, it can be difficult for an attorney to remember to follow the conflict-of-interest identification and resolution procedures of his or her law firm.
Thus, many attorneys facing this issue will either view it hypertechnically—by reviewing the proper “new client” intake procedures to ensure there are no potential conflicts—or by having the direct and sometimes awkward conversation, noting that the attorney cannot give any legal advice without taking additional steps. Some acquaintances or family members may be surprised by such a response, but it may help save headaches or even hurt feelings down the road.
It is possible to mitigate some of this risk by modifying the footer on all emails to make clear that no attorney-client relationship exists in the absence of an executed engagement letter or fee contract. While this may provide some additional protection against a legal malpractice claim, it may not provide any relief against a motion to disqualify or a bar grievance based on a conflict of interest.
What Are the Rules? The conflict rules can be difficult to apply to nuanced factual scenarios. In addition, the risks of noncompliance can be great for attorneys.
Most law firms will require that, before a matter can be opened or time billed, attorneys must identify each client for every new attorney-client relationship and follow standard intake procedures for each one. For many firms, this includes both running a conflicts check and issuing an engagement letter.
Conflicts can arise in unexpected places. However, by following standard procedures in every new matter and thinking critically about providing advice in an informal manner, attorneys can stave off some of the problems that conflicts can create.
Shari L. Klevens is a partner at Dentons in Atlanta and Washington, D.C., and serves on the firm’s U.S. board of directors. She represents and advises lawyers and insurers on complex claims and is co-chairwoman of Dentons’ global insurance sector team. Alanna G. Clair is a partner at the firm in Washington, D.C., and focuses on professional liability defense. Klevens and Clair are co-authors of “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance.”