Conflict of Interest Systems
| Publication year | 1987 |
| Pages | 628 |
1987, April, Pg. 628. Conflict of Interest Systems
A conflict of interest is not limited by the type of matter which the client has brought into the office or whether the matter involves litigation. It is often a business client or a partner, shareholder or principal officer of the client who gets involved in litigation or in another business matter in which the firm is put in the position of representing the other side. This may result in an embarrassing episode or, worse, a grievance or legal malpractice claim for breach of fiduciary duty. It can also result in a claim or a suit for return of legal fees paid to the firm that were related to the matter.
These conflicts, and others, may be alleviated by the creation of a conflict of interest system. A conflict of interest system should aid the firm in answering the questions listed below.
1. Does the firm have a claim against the new client or any of the principals (officers, directors, shareholders or partners) of the new client?
2. Is this particular client in competition with other clients to whom the firm is currently providing services?
3. Does the potential new client want to make a claim against a third party whom the firm already has a claim against (for non-payment of fees, for example)? This could result in the firm and the new client competing against each other to get their claims satisfied by a third party who may have insufficient assets to satisfy both claims.
4. Has there been full and fair disclosure of any potential conflict? If so, has written approval been obtained from all parties who may be affected by the conflict in order for the firm to be able to accept the engagement?
5. Does the firm know the principals who are associated with the potential new client?
6. If the firm is small with few clients, the implementation of a conflict of interest system may be unresasonably costly and time-consuming. Could the names of all the past and present clients of the firm be entrusted to memory?
7. Does the firm want to run the risk that a conflict of interest necessitates withdrawal from a case, resulting in the firm paying attorneys' fees for the former client's new attorneys? Remember that the new attorneys will have to acquire the information and knowledge of the...
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