It is common for law firms to have procedures for running conflict checks when new clients walk in the door and new engagement letters are signed. While such policies can help protect firms from the most easily identifiable conflicts of interest, they may not always address hidden conflicts that arise from informal and unexpected attorney-client relationships.
Indeed, conflict of interest claims can come from unexpected circumstances. For example, providing casual advice or creating attorney-client relationships outside the bounds of proper documentation can create conflicts issues. Below are three common circumstances from which unexpected conflicts issues materialize.
As noted, law firms may have clearly articulated file-opening procedures that include both client intake procedures and the resolution of potential conflicts of interests. This practice involves 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 another party.
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 can arise in a casual conversation through an in-person social interaction or an online website rather than in connection with a formal retention 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. And, that alone 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 potential conflicts, as well as client relations issues, arising out of this situation.
These are not uncommon occurrences. Attorneys are frequently called on by family members or friends to give “friendly” advice in situations like the above. However, an attorney providing advice in such a context often does not follow the law firm’s conflict of interest identification and resolution procedures. By properly identifying the potential client(s) before providing legal advice, there is a greater likelihood that all of the firm’s intake procedures will be followed, which is important for ensuring that conflict resolution procedures are effective.
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 prevent 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 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 one client. When that happens, the representation is usually a multiple representation that may require use of conflict resolution procedures.
One example of this may arise in the probate context, when an attorney may be asked by one person to simultaneously represent the executor, estate, and beneficiary of an estate. In other situations, an attorney may be asked to represent both the president of a closely held corporation and the corporation itself.
In these scenarios, it might appear that all of the potential clients are 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 considered a separate client. When that happens, if the interests of the various persons or entities are distinct, the law firm can consider the application of multiple representation conflict of interest resolution procedures.
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, which may include full disclosure and consent if a waivable conflict exists. However, some attorneys wrongly believe that as long as the clients consent, the representation is always permissible.
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, Rule 1.06(a) of the Texas Disciplinary Rules of Professional Conduct prohibits an attorney from representing both the plaintiff and the defendant in the same lawsuit. An attorney also typically cannot represent a buyer and seller in the same transaction. In those circumstances, courts often find that impermissible conflicts exist even if all clients consented to the representation.
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 helpful to review the rules before providing advice. By identifying each client in the attorney-client relationship and by following standard intake procedures for each client, attorneys can stave off some of the problems that conflicts can create.
Shari Klevens is a partner and Deputy General Counsel at Dentons US LLP in Washington, D.C. Randy Evans is a partner at Dentons US LLP in Atlanta, GA. Together, they have authored several books on legal malpractice, ethics compliance, and claim avoidance.