Should you be concerned about paralegal conflict of interest?
Recently, we published a conflict of interest checklist for California law firms. For the most part, that post addressed conflicts of interest involving a firm’s attorneys. But what happens when a conflict arises with non-attorney staff?
Employees such as paralegals, legal assistants, and administrative personnel also carry potential conflicts which, if not properly managed, can expose a firm to ethical breaches and disqualification.
Thus, this adjunct article explores the critical importance of recognizing and addressing these unique conflicts. And, just to make things a little less dry, I’ll do this by using a real-life example from my legal career.
Paralegal conflict of interest: Setting the stage
Many moons ago, I worked on one of those litigation matters that seemingly drags on forever. We’re talking about the better part of a decade.
My firm represented a company we’ll call Party A. Party A had sued Party B for misappropriation of trade secrets. Over the course of many years, dozens of depositions were taken and tens of thousands of documents were produced.
As the young associate overseeing discovery on the matter, I worked hand in hand with the paralegal working for the firm representing Party B (we’ll call her “Mary”). Right away, my colleagues and I noticed that Mary was the most responsible legal professional on our opponent’s team. She was always prepared, professional, and polite – unlike her employers.
It was also evident that Mary hated her job. We didn’t say anything to her during the course of the litigation, of course. We simply observed and hoped that someday she’d find a law firm that appreciated her talents.
Much to our surprise and delight, Mary applied for a job with our firm after the case settled. We knew we’d be foolish not to extend an offer. Nonetheless, we had to be careful.
Although Party A v. Party B had concluded, our firm represented another client with a matter pending against Party B – and Mary obviously knew all the dirt there was to know about Party B.
Personal ethics aside (and thank goodness I worked for a firm where personal ethics were plentiful), what’s a firm to do in this situation? If we hired Mary, would we be disqualified from representing other clients in litigation against Party B?
This scenario is actually more common than you might think. So, let’s talk about how a firm can ethically navigate obvious paralegal conflict of interest involving non-attorney staff such as Mary.
Key legal frameworks and precedents
As you know, most jurisdictions have developed specific rules and guidelines surrounding conflicts. I practiced in California so my colleagues and I knew our state’s ethics rules were the first place to look.
As it turns out, California Rule of Professional Conduct 1.10 provides the framework for understanding and managing this type of situation.
Rule 1.10, along with its commentary, clarifies that while representation by others in the firm is not prohibited when a non-lawyer has a conflict of interest, such individuals must typically be screened from any personal participation in matters where a conflict exists.
That’s all good, but the commentary to rules isn’t necessarily binding.
Fortunately, California case law provided further guidance. In the case of Kirk v. First American Title Insurance Co., for example, the California Court of Appeals expressly recognized that vicarious disqualification of a law firm is not necessary under these circumstances.
Specifically, the court stated that “[w]hen a tainted non-attorney employee of a law firm, possessing confidential case information, moves to an opposing law firm, vicarious disqualification of the opposing law firm is not necessary if the employee is effectively screened.”
Now we had something to work with. We had to engage in effective screening if we wanted to hire Mary and not cause a paralegal conflict of interest issue.
Implementing effective screening measures
Given that we knew about an actual conflict of interest for our paralegal hire from the outset, effective screening measures became our goal. But what the heck does that mean?
The Kirk case (and the cases cited therein) instructed that, in order to be effective, our screening efforts had to be: (1) timely; and (2) include preventive measures to ensure that information did not inadvertently pass between Mary and others in our firm.
That meant that we had to build a wall – a screening wall, to be more precise.
Taking our guidance from Kirk, our screening protocol included:
- Physical, geographic, and departmental separation: This meant Mary could not work in close proximity to the team handling the second litigation matter against Party B.
- Prohibitions against and sanctions for discussing confidential matters: Next, the partners in our firm crafted and distributed policies that prevented Mary from discussing any related matters (and prevented the attorneys from pumping Mary for information). As I recall, the policy also provided clear penalties for breaches.
- Established rules and procedures preventing access to confidential information and files: To satisfy this prong, we had our IT team implement technical safeguards such as restricted access to electronic files and we also made sure the physical storage for relevant documents was locked. Mary didn’t get a key.
Finally, the firm circulated a memorandum welcoming Mary to the firm but warning all employees to isolate Mary from communications concerning the matter and reminding everyone not to give her access to relevant files.
Managing ongoing compliance and oversight
Of course, effective implementation of conflict of interest protocols requires more than just setting up initial screens; it demands continuous oversight and management.
I was fortunate enough to work at a boutique firm where the attorneys with managerial authority made sure that the Kirk standards were not only established but consistently adhered to.
Ongoing compliance
In our case, ongoing compliance involved regular training sessions and periodic audits of procedures to ensure Mary wasn’t providing clandestine information to the team working on the second litigation matter against Party B (this wasn’t hard; Mary was a highly ethical person).
If your firm finds itself in a similar situation, your ongoing training should cover both the ethical obligations of non-attorney staff and the practical steps they must take if they encounter potential conflicts. This continuous education helps maintain awareness and reinforces the importance of ethical behavior within the firm.
Importantly, the firm should meticulously document its efforts so the firm can easily prove its screening protocol to the court in case you ever face a disqualification motion.
And remember, continuous oversight isn’t just a good idea; it’s the law. In fact, supervisory responsibilities are outlined in various professional conduct rules, such as Rule 5.3 of the California Rules of Professional Conduct.
Rule 5.3
In essence, Rule 5.3 recognizes that non-attorney staff aren’t necessarily bound by the rules for lawyers; and that therefore, managing attorneys must make reasonable efforts to ensure that the firm has measures in place to keep the conduct of non-lawyers compatible with the professional obligations of the lawyer so as not to cause a paralegal conflict of interest violation.
This includes ensuring that non-attorney staff are aware of the professional standards that govern the firm and are equipped to adhere to them.
Of course, these days, the most effective way to manage conflict compliance is through the use of technology. There are a plethora of software systems that can help track conflicts of interest.
Although those programs weren’t as sophisticated back when my firm hired Mary, modern systems can be programmed to alert managers to potential conflicts when new cases are entered into the firm’s database, or when new hires are added to the team.
New solutions
This is particularly important in large firms where every single employee is not necessarily aware of every single new hire. In such firms, proactive tech solutions significantly reduce the risk of human error and ensure that all conflicts are managed swiftly and efficiently.
It’s also a good idea to make routine audits and reviews of the screening measures and their effectiveness part of the firm’s regular practice. These reviews help identify any weaknesses in the system and provide opportunities to strengthen protocols before any issues arise.
And, as always, updating policies and procedures as laws and standards evolve is also critical. Lawyers know better than anyone that the laws are continually changing, and what was sufficient last year may not meet new legal requirements or best practices.
Keeping on top of changes in case law, statutory regulations, and professional ethics opinions is essential for maintaining effective conflict management protocols.
Hire more Marys
I have to admit, hiring away our opponent’s best paralegal was one of the coolest victories of my legal career. We knew without ever having to post an ad or conduct interviews that we were gaining one of the best and brightest paralegals in the industry.
It also came with the added benefit of causing a particularly obnoxious opposing attorney a bit of heartburn.
That said, it was a move fraught with risks. Fortunately, the rules about managing conflicts with non-attorney staff are relatively straightforward in California.
So long as you make timely efforts to put effective screening protocols in place, you too can enjoy the rich benefits of giving a quality legal professional a better home.
