One of the law firm processes in most urgent need of legal workflow automation? Conflict of Interest (COI) procedures that have to be precisely managed in order to avoid undue risk.

In previous posts, we laid out why non-disclosure agreement and case management workflows should be at the top of a law firm’s list of processes to automate in the year ahead. What gives COI automation the same urgency?

First, let’s look at how potential conflicts of interest are traditionally policed by law firms.

The COI process we’re addressing is for uncovering conflicts of interest among a law firm’s own legal staff. Those occur if representation of a client will be directly adverse to another client, and/or when that representation would be negatively impacted by an attorney’s duty to another current client, a former client, or by any personal interest on the part of the attorney.

How does a law firm try to prevent this?  When contacted by a prospective new client, the firm asks for information about the opposing party in that legal matter. Ordinarily, that consists of a name and address, which the firm uses to complete a COI check. A staffer searches files and databases to make sure the opposing part hasn’t been consulted or represented by the firm in regard to that case, or for a similar legal matter.

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The (people) problem

Human due diligence isn’t enough to guarantee 100% thoroughness in this process. To start with, manually distributing COI policies via email or online documents is scattershot and unreliable, with large amounts of time spent pursuing people to fill out their COI forms.  If the law firm has an extensive roster of clients and a sizable number of past and present cases, it’s even more difficult to spy out staff conflicts, and the records for many of them may be paper-based. Even if those records are digitized, they may be stored in disparate databases or multiple locations.

It’s inevitable that oversights take place when a COI check is being conducted manually. Particularly since the repetitive and unrelenting drudgery of chasing down COI declarations and searching through a raft of records causes mistakes.

Global Law Firms Conflict of Interest Automation

What makes this traditional approach even more untenable is the need for many law firms to serve clients on a global footing.  Conflicts pose a serious issue for law firms operating in different jurisdictions, where different codes of conduct may apply. Those global firms may have enormous amounts of documentation to review, and it can stress legal staffs to the limit. In some cases, the firm may not have a clear or cohesive policy for managing potential conflicts for local or cross-border matters.

This, and the other pressures being presented by an increasingly complex and steadily evolving legal landscape, complicate an already difficult process. All told, hands-on approaches to COI checking increase costs and the potential for breaching conflict rules, with consequences ranging from regulatory discipline to disqualification, damages being sought by the client, and a black eye to a firm’s reputation and standing.

It’s a risk-laden situation, exacerbated by the fact there are law firms specializing in taking action against other attorneys over alleged conflicts.

Some recent examples?

Conflicts of interest take all shapes and sizes, and can be caused by inadvisable decisions or pure oversight on the part of the law firm involved. Two recent examples at very different ends of the scale?

  • Kattan Muchin Rosenman, a Chicago-based firm with over 600 lawyers in 14 offices across the U.S., London, and Shanghai, was disqualified from representing Mylan Pharmaceuticals in three litigations against Valeant Pharmaceuticals International due to the fact it already represented Bausch & Lomb, a subsidiary of Valeant.
  • Matthew V. Daley of The Nice Law Firm in Terre Haute, Indiana got a public reprimand from the Indiana Supreme Court; Daley had been appointed the public defender for two burglary suspects, but agreed to privately represent the second (without bothering to read the charges) and got a $1,450.00 retainer, and moved to file paperwork on that (paying!) client’s behalf. This was an obvious COI in terms of the level of service he was undertaking on behalf of each client.

What’s involved in automating your Conflict of Interest process?

Workflow automation of the COI process using a SaaS platform or solution can provide efficiencies and benefits that can bootstrap not just the process, but your entire ethics and compliance program. The secret is to adopt a legal workflow automation tool that has all the necessary features and flexibility it takes to address your distinct demands.

Here are just two example approaches to the COI process that only a good workflow automation solution make feasible:

Approach A: 

An online portal contains COI “smart” forms, and staffers are sent notifications to complete these, typically on a yearly basis.  These forms are designed by the law firm to their own exact requirements, as can the entire workflow.

Once a form is filled out and submitted,  it can be escalated appropriately (if necessary) to receive approvals or have issues addressed. Each person’s responses are archived, providing the firm with a defensible audit trail.

To ensure compliance, automated reminders are sent to staff so they’ll complete these forms, and managers can easily view who is or isn’t responding. Any identified conflicts can be carried over year-to-year, as staffers can simply update their profile each annum.

“…the evil [of a conflicted representation] . . . is in what the advocate finds himself compelled to refrain from doing,”

U.S. Supreme Court
Holloway vs. Arkansas

All this information can be stored centrally, so all parties can access a reliable resource, instead of hunting down spreadsheets and emails. If the workflow is integrated with a content management system, the firm’s past records can be analyzed to identify any potential conflicts.

Approach B:

Online forms or a portal are used by law firm staffers only when a conflict is known to exist, as they need to ask for approval to move forward. As with the previous example, all requests, individual workflows, etc., are centrally stored and visible to management.

The benefits of COI workflow automation?

  • Immediate, audit-ready reporting means a law firm can run ad hoc reports to identify who’s providing COI information, and what conflicts exist. That shows their COI process to be defensible and able to meet client or judicial scrutiny.
  • Expanded capabilities through integration, as a COI workflow can be connected to existing platforms and systems.
  • Verifiable and secure approvals, if the workflow automation software includes e-signature tools.
  • Improved monitoring and management via centralized dashboards, providing visibility into every stage of a workflow.
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  • Significant time and cost savings over manual processes, by automating repetitive tasks for immediate ROI impact.
  • Accelerated efficiency and responsiveness, as the COI process is streamlined and expedited, allowing a law firm to deliver better service and value to its clients.