Randy Evans and Shari Klevens, Dentons partners. ()
Lawyers are often asked for free legal advice. It happens at parties, at the grocery store, via email and on online forums. The inquiries come from friends and family, as well as outright strangers, but they are all potential clients. Few attorneys stop to think that each piece of legal advice casually given out presents a potential conflict of interest for his or her firm. Most internal conflict check procedures do not address or protect firms from the risks that arise out of these informal and unexpected attorney-client relationships.
Some attorneys are ignorant of the risks that can be created outside the traditional attorney-client relationship. Indeed, sometimes conflict of interest claims come from unexpected circumstances, not from situations where an attorney skirted the rules or attempted to avoid the clear application of the conflicts rules. Providing casual advice or creating attorney-client relationships outside the bounds of proper documentation can create conflicts issues. Below are the three most common circumstances from which unexpected conflicts issues materialize.
Unexpected Attorney-Client Relationships
The best practices for managing a law practice involves clearly articulated file opening procedures that include both client intake procedures and the resolution of potential conflicts of interests. The most effective practice procedures begin with one important step: properly identifying the client.
Contrary to popular belief, not every attorney-client relationship begins with a prospective client who walks in the door and asks an attorney for legal services. Instead, sometimes attorney-client relationships are implied from the facts and circumstances surrounding a pattern of communication between an attorney and someone else.
In today’s world, these kinds of implied representations are becoming more and more frequent. In many instances, requests for legal services and the responses arise in a casual conversation 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. Nonetheless, if the inquiry involves the seeking and rendition of legal advice, it can be the basis of an attorney-client relationship—at least for purposes of the attorney-client privilege or a potential malpractice claim (or complaint to the bar). And, that alone—the protected nature of confidential information received from either a potential or actual client—can be the basis of a conflict of interest.
Imagine this scenario. A former roommate reaches out to an associate at a law firm and asks for a favor: How can a tenant force a landlord to return a security deposit? The associate replies with the appropriate citations to the rules regulating security deposits and the related draft language for a legal demand. The former roommate 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 headaches created by this snafu.
Attorneys are frequently called on by family members or friends to give “friendly” advice in situations like the above. Generally, an attorney providing advice in such a context does not follow the law firm’s conflict of interest identification and resolution procedures.
By forcing attorneys to properly identify the potential client(s), before providing any legal advice, the law practice can meet two conflict resolution goals. First, identifying the proper client leads the firm to formally count the number of proposed clients for each representation. Any time there is more than one, effective client intake procedures dictate that the law practice determine whether there are any multiple representation issues that might be implicated.
Second, doing so increases the likelihood that all of the firm’s intake procedures are followed.
Effective conflict resolution procedures depend on their application and enforcement every time. 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. However, 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.
Theoretically, identifying clients before the rendition of any legal services and strictly adhering to the rules should be easy enough. The tough part for some attorneys, however, is the degree to which a single representation involves more than just one client. When that happens, the representation is actually a multiple representation typically requiring all of the associated conflict resolution procedures.
The best example of such a situation involves representations in the probate context. It is possible that an attorney is 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 be a separate client. When that happens, if the interests of the various persons or entities are distinct, most law firms facing this scenario will comply with the multiple representation conflict of interest resolution procedures.
If the interests of the various clients in the block differ, then the law firm may take steps to obtain the appropriate consent to the multiple representation after full disclosure in accordance with the rules. There may also be situations in which the conflicts cannot be resolved with full disclosure and informed consent; these situations can be very dangerous for risk management purposes but will only be identified if the attorney knows to identify each client to the representation.
Of course, there is no prohibition against a single attorney or law firm representing multiple clients in multiple capacities. The key is to make sure that all applicable rules are met, including full disclosure and consent if a waivable conflict exists. The problem for some law firms, however, is the mistaken belief that as long as the clients all consent, then the representation is permissible. This is simply not accurate in many circumstances.
Instead, there are some conflicts that are not waivable and to which clients cannot consent, even if they are willing to do so. For example, an attorney cannot represent both the plaintiff and the defendant in the same lawsuit (although some have tried). And, an attorney cannot represent a buyer and seller in the same transaction. In those circumstances, impermissible conflicts exist even if all clients consented to the representation.
Always Follow The Rules
Although the conflict rules are not complicated, they can be difficult to apply to nuanced factual scenarios and the risks of noncompliance can be great. Thus, it is important not to provide advice without first ensuring compliance with the rules. Best practices dictate that attorneys identify each client in every attorney-client relationship and follow standard intake procedures for each one, including running a conflicts check and issuing an engagement letter. Remember that conflicts 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.