One and Done May be OK for Kentucky Basketball, but Not OK for Kentucky Lawyer Conflicts of Interest Checks

Lawyers typically make a careful conflict of interest check when accepting a new client.  Some, however, are not alert to conflicts that can arise during a representation. Best practice is to use a conflicts system that recognizes new information during a representation that poses a conflict issue.  Our risk management advice on conducting interim conflicts of interest checks is: 

During the course of a representation a conflict check should be made anytime a new party is named, a new entity becomes involved, new witnesses are identified, or any other development arises that triggers conflict issues.  This is especially important in business and commercial transactions.  When the deal goes bad or the business fails, lawyers involved with any whiff of a conflict are sued either for malpractice or breach of fiduciary duty.  These are difficult claims to defend and juries have little sympathy for lawyers perceived as disloyal or devious.

Spotting interim potential conflicts can be particularly difficult when representing corporations. Katherine Ikeda of Orrick, Herrington & Sutcliffe LLP suggests these client intake procedures for corporations to help screen for interim conflicts issues:

• Specify the clients name in the engagement letter – don’t use “You” or “Client.”
• Clearly define who is your client.
• Check the client’s outside counsel guidelines for subsidiaries and affiliates provision.
• Ask the company to identify its subsidiaries and affiliates.
• Run a conflict check with the parent company’s subsidiaries and affiliates.
• Update your conflict check as necessary.
• If you are going to use an advance conflicts waiver, make sure it specifically defines the subject matter, the parties, and the scope.  For example, is it to be applicable to nonlitigated matters as well as litigated matters?

Source: ABA/BNA Lawyers’ Manual On Professional Conduct, Current Reports, Vol. 31, No. 5, p.133 (3/11/15).