Why Conflicts of Interest Matter

Few topics carry as much weight in legal ethics as conflicts of interest. A conflict can force a firm to withdraw from a case, expose attorneys to discipline, and in some circumstances lead to disqualification or malpractice claims. Paralegals play a critical role in catching conflicts early because they handle intake, open files, and often notice that a name sounds familiar. Ethics questions are a staple of paralegal certification exams, so it is worth learning the rules thoroughly.

This article uses the ABA Model Rules of Professional Conduct as a framework. Individual states adopt their own versions, so always check the rules in your jurisdiction.

The Core Rules on Conflicts

What Is a Current Client Conflict?

Model Rule 1.7 provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict exists when the representation of one client will be directly adverse to another client, or when there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, a third person, or by a personal interest of the lawyer.

Even if a conflict exists, the lawyer may proceed if all of the following are true:

The lawyer reasonably believes that he or she can provide competent and diligent representation to each affected client.
The representation is not prohibited by law.
The representation does not involve asserting a claim by one client against another client in the same proceeding before a tribunal.
Each affected client gives informed consent, confirmed in writing.

What Is Informed Consent?

Informed consent means that the client agrees after the lawyer has communicated adequate information about the material risks of the proposed course of conduct and the reasonably available alternatives. A signature on a boilerplate form without explanation is not enough. Paralegals must never obtain consent on behalf of the attorney or explain the legal significance of a conflict, because that would be giving legal advice.

Conflicts Involving Former Clients

Can a Lawyer Oppose a Former Client?

Under Model Rule 1.9, a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the former client, unless the former client gives informed consent, confirmed in writing. Matters are substantially related if they involve the same transaction or legal dispute, or if there is a substantial risk that confidential information from the earlier representation would materially advance the new client's position. A lawyer also continues to owe duties of confidentiality to former clients.

Imputation of Conflicts

Model Rule 1.10 generally imputes a conflict of one lawyer to everyone in the same firm. If one attorney cannot take a case, the whole firm is typically barred. There are exceptions, notably when the conflict arises from a personal interest of the disqualified lawyer that does not present a significant risk of materially limiting the representation by other lawyers in the firm, and when a lateral lawyer's conflict from prior employment is addressed by timely screening and written notice to the affected former client.

Screening and Ethical Walls for Paralegals

What Happens When a Paralegal Changes Firms?

Nonlawyers such as paralegals and legal assistants are subject to supervision under Model Rule 5.3. Courts have long recognized that a paralegal who worked on a matter for one firm and then joins an opposing firm can create an appearance of impropriety and a risk of confidential information leaking. Most jurisdictions allow the new firm to avoid disqualification by building an ethical wall, also called a screen. A proper screen typically includes:

Immediate and complete exclusion of the paralegal from the matter
A prohibition on discussing the matter with anyone at the firm
Restricting physical and electronic access to the files
Written notice to the former client and to the firm's personnel
No sharing of fees from the matter with the screened paralegal

The screen should be established as soon as the conflict is discovered. A late screen may not be effective. If you are a paralegal considering a new job, disclose any past work on matters that could be adverse to the new firm's clients, subject to confidentiality limits.

Other Special Conflict Rules

Business transactions with clients (Rule 1.8(a)): terms must be fair, disclosed in writing, and the client must have a chance to seek independent advice.
Gifts (Rule 1.8(c)): a lawyer may not solicit a substantial gift from a client, including a testamentary gift, unless the client is related to the lawyer.
Literary rights (Rule 1.8(d)): a lawyer may not make an agreement giving the lawyer media rights based on the representation before it ends.
Financial assistance (Rule 1.8(e)): a lawyer may not advance or guarantee living expenses to a client, with limited exceptions for litigation costs.
Third party payers (Rule 1.8(f)): the client must give informed consent, and the payer must not interfere with the lawyer's independent judgment.
Sexual relations (Rule 1.8(j)): prohibited with current clients, unless a consensual relationship pre-dated the representation.
Prospective clients (Rule 1.18): duties of confidentiality can arise from consultations, even when the lawyer is never hired.

How Paralegals Help Prevent Conflicts

A reliable conflict check system is the first line of defense. When a new matter comes in, a paralegal typically gathers the names of the prospective client, adverse parties, related entities, witnesses, and other interested persons, and runs them through the firm's database. Keep these practices in mind:

Collect full legal names, aliases, former names, and business affiliates.
Search again when new parties are added to a case.
Escalate any hit to the supervising attorney immediately rather than evaluating it yourself.
Keep records of all searches and results.
Protect confidentiality at all times, including when running conflict checks.

Consequences of Missing a Conflict

Penalties may include disqualification of the firm, forfeiture of fees, malpractice liability, and professional discipline for supervising attorneys who fail to oversee nonlawyer staff. Paralegals who violate confidentiality may face termination and, in some states, regulatory consequences. Always ask the supervising attorney when you are unsure.

Prepare for Ethics Questions

Ethics exam questions are usually fact patterns, so practice applying the rules. Our ethics flashcards cover current client conflicts, former clients, imputation, and screening. Register for free to sample ethics questions, and check the pricing plans for full access to our timed practice tests.

Key Takeaways

A concurrent conflict requires informed consent confirmed in writing, and some conflicts cannot be waived at all. Conflicts are imputed to an entire firm, though screening can address a lateral hire's conflict, including those of paralegals. Run thorough conflict checks, escalate hits, and never give legal advice about the significance of a conflict.

Legal Ethics: Conflict of Interest Rules Every Paralegal Should Know