Conflicts of Interest

The rules regarding conflicts of interests are a dangerous trap for the unwary attorney. Violations of those rules can result in discipline by the State Bar, malpractice liability, disqualification from further representation of the client and forfeiture of all fees paid by the client.

A conflict is defined as any action that prejudices the client. Conflicts can include legal, financial, or business relationships with a party related to a client’s matter. A conflict may also occur where an attorney has a business, financial, or professional interest in the matter. If an attorney has such an interest, or is related to a party that has such an interest, the attorney must provide a written disclosure of the interest to the client.

If the attorney or any member of the attorney’s firm has an existing attorney/client relationship with a party adverse to the client in any matter, or the attorney or other firm member has previously represented a party now adverse to the client on a matter that is substantially related to the current matter, the attorney must obtain the informed written consent of both the former and current clients.

The most important thing an attorney can do to guard against conflicts of interests is to establish a conflicts system and ensure that everyone in the office uses it. A conflicts system consists of a conflict database that lists all clients, past and present, the matters in which any attorney in the office represented the client, all adverse parties in those matters and any additional parties which were aligned with the client or the adversary. The conflicts system should also include the dates on which the representation began and concluded.

During the very first contact with a potential client and before discussing the client’s problem, an attorney should always get the potential client’s full name, the names of any related parties and the names of any adversary parties, all of which should be run through the database. Even a brief conversation about the merits of a case could be enough to establish an attorney/client relationship, so failure to run a conflicts check before having a substantive discussion with the prospective client can prevent an attorney from representing a valued current client.