Ethics Tip of the Month - December 2013

Checking that Conflicts List Twice

Brought to you by ABA ETHICSearch


An excellent early New Years’ resolution is to start or improve your system for detecting conflicts of interest when taking on a new client.  If this concept falls into the category of the best laid plans of mice and men that go astray, now is a time to start somewhere.  It can be as simple as an index card system, or more in tune with the modern age using specialized computing software.

One reference work suggests that 20 pieces of information per client are necessary in a conflicts system. See, The Lawyer's Desk Guide to Legal Malpractice 81-82 (1999) as cited in the chapter entitled, Avoiding Malpractice that appears at page 301:1001 (last updated in 2013) of the ABA/BNA Lawyers’ Manual on Professional Conduct.  According to the Desk Guide, the minimum records include: (1) the full name of current clients; (2) the names of adverse persons, and (3) a summary of the representation.   Various practice areas require different information to help avoid undertaking the representation of a client that can give rise to a conflict. 

Representing a client that has conflicts with other clients can seem like balancing the odds of getting found out against forgoing the fee if the lawyer turns down the work, but much more is at stake.    Verdicts can be challenged and set aside after the conclusion of the case. An ABA malpractice claim survey undertaken in 2012 showed that while only 4.3 percent of malpractice claims involved conflicts of interest, these clams are some of the most costly cases brought in malpractice.  Conflicts of interest can also lead to claims for breach of fiduciary duty, above and beyond ordinary negligence and professional discipline.  This sounds worse and turns out worse as well, bringing in significantly higher verdicts. 

Top Five reasons to check for conflicts

To help ring in the New Year, your friends at ETHICSearch have compiled a list of the top five reasons you need a conflicts checking system:

1. You want to avoid losing the client or clients; the most common consequence of representing clients in violation of Rules 1.7  Conflict of Interest: Current Clients and 1.10   Imputation of Conflicts of Interest: General Rule is disqualification of the lawyer or the lawyer’s entire firm.

2. Representation of clients with adverse interests may also cause a law firm to forfeit part or its entire fee.   See, the chapter entitled Conflicts of Interest: Representation Adverse to Existing Clients (last updated in 2010) as it appears at page 51:101 of the ABA/BNA Lawyers’ Manual on Professional Conduct.   Resisting a disqualification motion in the face of a blatant, undeniable conflict can even lead to an award of sanctions.  51 Law Man Prof Conduct 127.

3. When the client’s new malpractice lawyer deposes you about a conflict, you want to be able to show some evidence that you made a good faith effort to avoid it.  51 Law Man. Prof Conduct 124  

4.  Violation of the prohibition against representing adverse interests may result in imposition of professional discipline.  See the following excerpt from paragraph 3 of the Comment to Rule 1.7: 

To determine whether a conflict of interest exists, a lawyer should adopt reasonable procedures, appropriate for the size and type of firm and practice, to determine in both litigation and non-litigation matters the persons and issues involved. See also Comment to Rule 5.1. Ignorance caused by a failure to institute such procedures will not excuse a lawyer's violation of this Rule. 

Similar language appears in the Restatement (Third) of the Law Governing Lawyers §121 cmt. (g) (2000).    A conflicts system may not catch every problem, but it can prevent or mitigate a finding that the lawyer acted unethically.

5. When your malpractice insurer does a follow-up after paying out, you don’t want your premium to skyrocket.  The Restatement states that if a lawyer undertakes a representation where a conflict could not reasonably be identified at the time of the undertaking, the lawyer is not liable for damages or for professional discipline if a conflict emerges later. Restatement (Third) of the Law Governing Lawyers §121 cmt. f (2000).

State Bar Ethics Opinions and other resources

New York City Bar Asscociation Ethics Opinion 2003-3 (2003) is a good resource for information  about conflicts systems. (Note: At the time this opinion was issued DR 5-105(e) of the New York Code of Professional Responsibility mandated the use of conflicts checking systems for lawyers in that state.   In 2009, the New York Code was withdrawn and replaced by the New York Rules of Professional Conduct and the substance of DR 5-105(e) is now a part of Rule 1.10 of the New York Rules.)

The opinion directs firms to make a record of each new engagement as soon as it is undertaken and to maintain a system for checking new clients against current and previous representations, to maintain such records in a way that they can be searched.    Determining whether a client remains a current client or has become a former client is another aspect of the system mandated by the opinion.

For further information on conflicts checking systems, check in with your professional liability insurer or your state or local bar association.   There is also an abundance of materials that are available on line and in your local law library.  See e.g., Ronald E. Mallen and Jeffrey M. Smith Legal Malpractice, Thompson West (2014) §§ 2:7 Intake—In general and 2:9. Intake—Analysis of ethical issues—Conflict analysis and management.  Chapter 4 of the California Professional Practice Guide: Professional Responsibility by Paul W. Vapnek, et al. (Rutter Group, 2013). (On Westlaw as TRG-CAPROFR.) also provides suggestions for a conflicts checking system.  The Canadian Bar Association has a web page entitled, “Developing a Conflict Checking System for Your Law Firm.”


© 2013 by the American Bar Association


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