The risks of conflicts of interest are not limited to instances when a firm hires a lateral attorney. Hiring non-attorney staff—such as paralegals or legal assistants—may implicate similar ethical issues. Indeed, a paralegal often possesses confidential information relating to the matters on which they provide professional services, and a paralegal’s prior work can create conflicts of interest when he or she moves to a new law firm.
The consequences of failing to properly consider non-attorney staff conflicts can be severe. However, those consequences can be avoided and the risks mitigated with foresight and planning.
Rule 1.10 of the California Rules of Professional Conduct generally prohibits attorneys in a law firm from representing a client when any one of the attorneys is prohibited from doing so due to a conflict of interest. Violations of this Rule can transform a single attorney’s conflict of interest into a firm-wide matter disqualification. Comment [2], however, explains that Rule 1.10 “does not prohibit representation by others in the law firm where the person prohibited from involvement in a matter is a nonlawyer, such as a paralegal or legal secretary,” so long as such persons are timely “screened from any personal participation in the matter.” Several California courts have concluded that a firm will not necessarily be disqualified from a matter if the conflicted non-attorney is adequately screened. Most other states that have addressed the issue have taken a similar approach, finding adequate screens can prevent imputing conflicts to the firm.
Together, the Rules and cases provide guidance to law firms that can help them avoid imputed conflicts of interest when hiring non-attorney staff. Here are some important things for firms and attorneys to consider.
Implementing Conflict Screens
California courts and the Rules recognize that an effective ethical screen must be imposed when the conflict first arises. Indeed, Rule 1.0.1(k) of the California Rules of Professional Conduct defines “screened” to include “the timely imposition of procedures” at a firm. Thus, a firm is typically called upon to be proactive rather than reactive when implementing screening measures. Examples of being reactive in this context include waiting until there is a court order or a motion to disqualify.
Not only can such screening measures prevent the imputation of conflicts, but they may also be necessary for the law firm or attorney to comply with their ethical obligations under the Rules. Comment [5] to Rule 1.10 provides: “The responsibilities of managerial and supervisory lawyers prescribed by rules 5.1 and 5.3 apply to screening arrangements implemented under this rule.” In turn, Rule 5.3(a) provides that “a lawyer who individually or together with other lawyers possesses managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the nonlawyer’s conduct is compatible with the professional obligations of the lawyer.”
Therefore, an attorney’s ethical obligations under the Rules could include implementing protocols to ensure that non-attorney conflicts are identified and, if necessary, adequately screened in a timely manner.
Hiring Due Diligence
Potential conflicts of interest are typically easiest to identify during the initial hiring process and before the non-attorney joins the firm. If the firm is aware of potential conflict issues before the non-attorney joins the firm, it will be in a better position to implement adequate screening measures.
For this reason, many law firms utilize a written application that includes questions regarding the non-attorney candidate’s prior legal employment and other relationships with attorneys or clients. The hiring law firm can take the list of law firms or attorneys from the application and run it through the firm’s standard conflict system, which may be the same general process used when hiring a lateral attorney. The hiring firm can inquire further into the non-attorney’s prior relationships that may be flagged by the firm’s conflicts system, such as where the non-attorney has experience with or worked for counsel that has connections with matters involving clients of the firm.
This type of early screening can help mitigate the risk of a conflicted non-attorney employee joining the firm and working on a matter that would have consequences for the entire firm if not properly addressed.
Ensuring the Screen is Effective
While the question of whether a particular ethical screen is effective and appropriate will typically depend on the circumstances, some practices generally help ensure an adequate screen. For example, a law firm may take steps to ensure the conflicted non-attorney employee is segregated from communications on a particular matter and is restricted from accessing the corresponding matter files.
Other elements of an effective screen may include the following, if appropriate to the circumstances: (1) prohibiting discussion of confidential matters and internally sanctioning any violations of that prohibition; (2) separating the conflicted non-attorney staff physically, geographically, and departmentally; (3) establishing procedures to prevent access to confidential information and files in the office and on the firm’s electronic system; (4) establishing procedures to prevent sharing profits with the conflicted non-attorney employee; and (5) continuing to educate members of the firm regarding their professional responsibilities.
Effective screening techniques are generally aimed at protecting the disclosure of confidential information regardless of whether the disclosure is from other members of the firm to the conflicted employee or from the conflicted employee to other members of the firm. These techniques to establish an effective and adequate ethical screen can help law firms balance the inherent risks of imputed conflicts of interest with their goals of bringing new, value-adding talent aboard to help them serve their clients.
Considering these issues at the outset can help firms implement adequate screening measures and mitigate the risk that they may be disqualified from matters down the road.