The legal industry depends heavily on word-of-mouth exposure. Referrals, networking and even personal relationships are the standard currency of most legal practices. But what happens when these standard practices begin to look like conflicts of interest?
Take for example the censuring of one New Jersey attorney earlier this year after allegedly steering 19 clients to use his employer without the correct waivers in place. Fortunately, there are a few steps attorneys can take to protect themselves from a complex conflict-of-interest issue.
Asking the right questions
When presented with a prospective client, attorneys must consider the relationship through the perspective of the American Bar Association’s (ABA) Model Rules of Professional Conduct. At minimum, attorneys should ask “does this client’s interest relate to another existing client’s interests?” “Does taking on this client infringe on my ability to serve another existing client?” or “Does taking on this client create a potential confidentiality breach, whether with an existing or former client?” If any of these answers is yes, there are some extra steps involved.
If an attorney considers taking on a client who presents a potential conflict-of-interest or disqualifying conflict-of-interest, they must obtain a waiver. Some cases are considered nonwaivable, such as if representation is prohibited by law, if the attorney is providing the client with financial assistance and more. Attorneys may access those rules via the ABA Model Rules of Professional Conduct.
If a conflict-of-interest waiver is applicable, the attorney should get written informed consent from the prospective client. To do this, attorneys must inform all impacted parties of the conflict-of-interest and explain the risks associated, as well as offer reasonable alternatives for the client to consider that would not pose a conflict-of-interest risk.
Protecting your business
Even with waivers and the correct documentation in place, an attorney might find themselves being sued for malpractice due to a perceived malicious conflict-of-interest. Be sure your Lawyers Professional Liability Insurance (LPLI) policy covers related litigation costs in the event of a malpractice claim. An insurance professional who specializes in insurance for legal professionals will have the necessary insight to ensure an attorney is adequately protected against such claims.
Some conflict-of-interest scenarios will present risks that outweigh the benefits of taking on a client. It is the responsibility of an attorney to determine the potential risks of taking on a client and if they are the best person to take on the case. By being thorough and leading with transparency, attorneys can focus on what they do best: serving clients.