Conflicts Checking

Stories from the Trenches

By Brook Boehmler

Many firms conduct an initial conflict check at the beginning of each case, when opening a new matter. But that approach is no longer enough to protect your clients, and your firm. If you don't run ongoing, sophisticated conflicts checks through the lifespan of a case, you may pay the consequences.

The following short stories illustrate some of the potential hazards of sloppy conflicts checks. These conflicts are true, and only the names and places have been changed to protect the innocent, guilty, unbilled and embarrassed.

1. The Case of the Conflicted Vendor

Marvin Sureshot was a prominent litigator in New York City. He was the lead partner of a litigation group in a 200-attorney firm. He had a small civil litigation between an affluent Central Park East client and an unscrupulous interior design firm. Sureshot's group had taken the case as a referral from the firm's business group. The client was worth about $1.5 million in fees a year. Sureshot did a conflict for all related parties. No hits were reported, so Mr. Sureshot let his underlings handle the filings and paperwork .His plan was to come in and show the young associates exactly how to depose a witness.

The principal of the interior design firm would be his witness in two days. Sureshot was handed the case outline from his paralegal, and after review, knew that this case was going to be a piece of cake; the design firm had not completed its contracted work. Additionally, the work that had been done was not what the client had ordered, but the designers still wanted to be paid. So, Sureshot invited a few more associates to attend the crucifixion.

Sureshot started with preliminary questions, the designer's experience, education, and all the cream puff questions to make the principle relax before he went in for the kill. Sureshot was surprised by how relaxed the designer was by his initial questions; why, he was even smiling at his own lawyer. Maybe he wasn't aware of the firm's reputation as ace litigators.

Sureshot began questioning the principle about his past business practices and the designer's billing practices. Before Sureshot could finish his last question the designer produced past invoices and job orders. The designer then explained how he had the same kind of problem in the past, as a matter of fact; he had done exactly the same kind of job just under two years ago. He further explained how he resolved the problem and the client is now a reference for his design firm. The witness continued on to state that this client had even had the same problems and they had resolved it by exchanging the fabrics for one the client preferred after the job had started.

Sureshot knew that the designer was talking too much, and he was going to show his audience of younger litigators how to make a witness eat his own words. The young associates waited with anticipation for their crusader to make them proud that they had joined such a celebrated litigation group.

Sureshot just needed one final question before he started dissecting the designer's lame reference to how he had clients that would accept such business practices. He just needed to know the name of the client. He would deal with them later, maybe as a hostile witness, but still as a witness to be used against this charlatan of a businessperson. "So, Mr. Designer who is this person or persons who would accept these types of business practices?" Mr. Sureshot asked with a glint in his eye.

The designer sat up promptly and looked Sureshot directly in the eye and said, "It's your firm. You've been my client for years, and the incident with the fabrics happened in your personal office after your assistant decided that you would not be happy with the way the afternoon sun hit the color, so I exchanged the fabric for the customary restocking fee, which your firm gratefully paid."

2. The Case of the Conflicted Tire Kicker

Linda Kantcook was feeling the pressures of her unattending husband. She knew that sooner or later he would come home and have the talk that she had heard repeated from ladies at the club. The talk of how the last 20 years of their lives together had been nice. That they had raised two beautiful children together who were almost out of college. That she had been a great friend, but they had grown apart. The proverbial "grown apart" speech. She had heard rumors about them, she had even tried to picture Donald Kantcook, her husband trying to put it into words.

His parents were a well-to-do family in the valley. She was from the Midwest and had worked by Donald's side to build his business in L.A. to a stable profitable concern. Linda wasn't going to sit around and wait for the melodrama, she was going to make sure that Donald heard the "grown apart" not with their relationship, but with his money, both his and his family's.

So Linda proceeds to pursue a list of every prominent divorce attorney in L.A. and Orange County. She had plenty of divorced acquaintances, and they had no problem telling her either their successes or failures with each attorney. After compiling a list of the 20 most influential domestic law attorneys in the area, she started the process of setting appointments with each one. She made sure to take meticulous notes of when and whom she had spoken to regarding her disappointing marriage. Linda also made sure that every person in each firm heard her sorry case, from the receptionist, to the paralegal, the secretary and even the guy in the hall. By the time each attorney spoke to her, she had cried her story to at least four people in each of the prospective firms. After Linda had spoken to every attorney or their firm about her woeful tale of irreconcilable differences, she picked the best attorney who would have no problem filing a conflict of interest claim on her behalf.

So as Donald drove home through the picturesque hills of Beverly Hills, he dreamed about the new girlfriend he met on the Internet that afternoon. As he pulled into the driveway in his Mercedes Benz, and walked into his recently remodeled house, he was feeling happy and content. He was met at the door by Linda who explained to Donald that she thought that they had a wonderful marriage, which had produced two lovely kids together, she believed they had grown apart, and asked him to leave immediately. Donald's bags were out by the pool, rushing down the waterfall. "Oh," she said, "Good luck finding an attorney."

3. The Case of the Conflicted Employee

Cindy Starfish was on the rise at one of the financial district's leading I.P.O. firms. She was known as the barracuda. Any hostile takeover or management reorganization was just the kind of case she looked forward to representing. The rest of firm knew if you need to make money for your client and things were going to get dirty, you brought in Starfish. It didn't matter who was involved, she was like a bull terrier on a new bone, and her legal jaws could crush anything and any one.

Starfish didn't need a lot of support from other people; she even thought it was funny how the old managing partner had relied on his assistant to do everything. She was the new breed of attorney; laptop, Blackberry and cellular phone were her tools of trade. She was a lone warrior; she had all the latest electronic weapons of legal warfare needed to bring any kingdom to its knees.

She had always done the traditional conflict check, the one you do to get a new matter number. Even waiting the 24 hours hours to get that was a hassle. What she didn't realize is that as parties come into a case, they were just as prone to a conflict check as the parties that were known in the beginning.

But the kiss of death was that poor Starfish didn't realize that the president of the new company she was tangling with was also her managing partner's assistant's husband. She didn't realize the consequence of making the managing attorney pick between a young hot-shot attorney and losing his assistant (who had been with him for more than 20 years). The assistant who was tendering her resignation because her husband is losing his company and will have to relocate.

If only Starfish had run a conflict check on an active database such as the firm's Rolodex or the company's holiday card list, she could have at least asked the question, of what was more important. Instead it looks like the managing partner will be busy recruiting for a new IPO attorney with the help of his assistant of more than 21 years.

4. The Case of the Conflicted Rainmaker

Marty Lardman was a business attorney for a 15-attorney firm in the Midwest.

Marty was the best at networking. He was the Chamber of Commerce's best diplomat, the Rotary Club's best sergeant-at-arms, and the person the firm depended on for new clients. If you didn't know him, he was going to know you. Lardman had heard that a new up and coming manufacturing company was starting in town and he went to talk to the principle. Marty had heard they were going to need legal counsel and he wanted his firm to represent this company. So when Marty went to see the principle, Marty told him how his firm could handle the company's legal needs from corporate, to patents, to employment law, and to collection law.

The principle was intrigued so he asked Marty about collection law; Marty said his firm was positioned to handle any of the companies needs. The principle explained that he didn't want any low-life collection firm handling his A/R. Marty assured the principle that his firm was most reputable. The principle explained how he had a personal dispute and he was turned over to some bottom feeding collection firm. After a long detailed story, Marty assured the man that his firm would never handle a matter like the one he described. So the principle gave Marty a $500 check for a retainer against future matters.

Marty Lardman, rainmaker extraodinaire, was taking a new client back to the firm, plus a $500 retainer. A new client that would cost the firm an embarrassing situation and $10,000, the exact amount one of its existing clients had turned over to the firm to collect. Marty had not done a conflict check on his possible new client, who just so happened to be a debtor to one of the firm's oldest clients. The collection partner's paralegal had just sent the first letter of collection on the principle of the new manufacturing company. Not a bad day, Marty had taken in a $500 retainer from a deadbeat client to have the privilege of paying $10,000 of his profit sharing, poor Marty.

And the Moral Is ...

Firms continue to look toward streamlining administrative costs to help combat shrinking billable rates, and attorneys are expected to handle more clients and cases with less administrative assistance.

At the same time, clients are expecting more hands-on attorney time, budget sensitive billing and one-shop legal advice. Many firms have spent overhead dollars in putting together either marketing or as some may call "client-development" departments.

These overhead expenditures not only include personnel, office square footage and equipment costs, but the biggest cost often is the effort required to accumulate, maintain and process a mailing list, to get out holiday cards or firm newsletters. This list is really nothing more than a database of names and addresses of companies or people that relate to the firm and its attorneys in some way. But it's also an ideal conflict-checking database.

What the firms don't realize is that attorneys are already maintaining a list of names in the their personal contact list in either Outlook or GroupWise. This PIM (Personal Information Manager) is what the attorneys use to look up phone numbers or addresses. Any time an address or name changes, the attorney updates his or her address book (PIM), first. Then, hopefully, the lawyer notifies the billing department to update the firm billing system, if it applies. Consequently, they may or may not update the firm mailing list, and hardly ever do they update the conflict database.

As you can see from the stories above, missed conflicts can expose the firm and its attorneys. The answer is not to expend more money on better maintenance of these databases, but to consolidate the databases into one centralized place. Conflicts checking should be done on an updated database, which includes all parties that relate to the firm and/or the attorneys.

Using this database for case management gives your firm a better handle for who is doing what, and with whom. Security is set up so employees only see the people that they are related to, but the firm has the all-knowing status of seeing how these people affect the firm.

Firm personnel continue to use the adage "our attorneys can't be trusted" when it comes to maintaining computer related databases. This attitude is an "old vendor-tale" that keeps firms buying more software and hardware, rather than using a single software system. This belief that attorneys can't keep track of their clients is not something that can be changed by just spending more money. Keeping track of your clients and your cases is called being a good lawyer; putting it off as an administrative function sets you up for disaster.

Brook Boehmler is vice president of business development with ProLaw Software, based in Albuqueque.