For most lawyers, there's an easy bright-line rule to remember: If you have a conflict of interest, tell your client about it.
If you plan to continue to represent a client after a conflict has been disclosed, you better be sure to get a specific written waiver, especially if you also plan on getting paid after that conflict comes back to bite you in the backside. And if you need a real life cautionary tale to help you remember why avoiding conflicts is in your financial interest, you can thank the California Supreme Court and BigLaw firm Sheppard, Mullin, Richter and Hampton LLP.
Run a Check and Say Something
In the California case, the law firm had an advance conflict waiver clause in its retainer agreement. However, the California Appellate court held that the general advance waiver was not valid when actual conflicts exist that were not disclosed at the time of retention. After $2 million of case work, the firm was disqualified due to the undisclosed conflict, and then their client, naturally upset at this result, went after the firm for the fees paid.
California's Supreme Court ruled that the agreement was voided as a result of the improper waiver clause, but that the law firm may still be entitled to recover pursuant to a quantum meruit theory.
What's Your Conflict System?
In the above case, the conflict actually arose due to the firm representing a defendant of the new client in an unrelated matter. For most readers, this should seems like Law Practice 101 stuff. After all, the first step of client intake is running a conflict check.
However, as firms get larger, and more attorneys, and offices come on board, conflict checks become more complex. Fortunately, technology has come a long way, and sophisticated databases and software is available. While these might require some upfront and/or regular costs, implementing a system that will work for your practice may pay for itself many times over it helps you prevent a potential conflict of interest catastrophe.
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