The Ethics of Conflicts of Interest

Ellen Lockwood, ACP, RP

Ellen Lockwood, ACP, RP

The increase in the size and number of law firms, as well as lateral hires, has made screening for conflicts of potential employees even more important. More and more paralegals are keeping lists of the matters on which they have worked, as well as the parties involved, in order to avoid conflicts. Freelance paralegals must always maintain this information since they accept work from different firms or legal departments at the same time. Paralegals who work for one firm or legal department at a time most often deal with conflicts issues when they change employers. Paralegals must be particularly mindful when moving to an opposing law firm during ongoing litigation or prior to the closing of a corporate transaction.

Particularly in the current economy, many paralegals work for other employers part-time, or for themselves. Unless you are already working as a freelance paralegal, you should be especially cautious about taking on additional paralegal work from other than your current employer. Paralegals should notify their primary employers of their plans and assure him or her that you will not be doing any work for others that could create a conflict of interest. It would reflect negatively on you if your primary employer should not find out about your freelance work from another attorney or worse, from a motion to disqualify. You would not be able to accept assignments from firms that are adverse to matters handled by your primary employer, even if you would be working on a matter that you don’t work on for your primary employer. Any work you do for another attorney, even if all you do is file a document, could be enough to trigger a conflict of interest. The court may assume that if you have access to files, even if they are filed documents that will be publicly available, you may have access to confidential information regarding a matter. Accepting such an assignment could result in both firms being disqualified.

If you decide to take on an additional job that isn’t related to the legal field, you will need to carefully consider whether there could be a conflict of interest.  For example, if you take a part time job with Lowe’s Home Improvement and your primary employer represents The Home Depot, or any of its related companies, that could be considered a potential conflict of interest.  If there is even a remote chance of a potential conflict, you should discuss the matter with your primary employer before accepting additional employment.

Paralegals should also consider whether primary or secondary jobs held by members of the paralegal’s family, as well as stock owned by the paralegal or her family members, could be a conflict of interest.

If a paralegal believes there may be a potential conflict, he should notify the supervising attorney immediately so the attorney may determine whether a conflict exists. It is important to note that paralegals are never the arbiters of whether a conflict exists. That decision should be made by the supervising attorney. Paralegals should bring any potential conflict, no matter how remote, to the attention of the supervising attorney as soon as possible. If a firm does not address a conflict as soon as possible, it may prevent the firm from overcoming the conflict, resulting in the firm being disqualified.

If a firm hires a paralegal who has a conflict of interest, the entire firm should be notified that an ethical wall is to be erected around the paralegal and that no one may do the following:

1. Discuss the case in the presence of the paralegal.
2. Allow the paralegal access to any documents, including keeping all files locked away from any cabinets to which the paralegal would normally have access, and using passwords or other electronic security protections for documents stored on the firm’s network.
3. Engage in any discussions with the paralegal about her work on the case or work her previous firm may have done.
4. Disclose the conflict of interest to the relevant client as well as opposing counsel.

These precautions are necessary to avoid the firm’s possible disqualification in the case. An ethical wall is no guarantee that opposing counsel will not file a motion to disqualify the firm. When defending the motion, firms may be required to produce billing records or other documents, as well as provide documentation of any ethical wall that was erected around the person in question. If a firm files a motion to disqualify opposing counsel in a matter, the onus is on the opposing counsel (the attorney against whom the motion is filed) to prove they do not have a conflict of interest.

Ellen Lockwood, ACP, RP, is the Chair of the Professional Ethics Committee of the Paralegal Division and a past president of the Division. She is a frequent speaker on paralegal ethics and intellectual property and the lead author of the Division’s Paralegal Ethics Handbook published by Thomson Reuters. She may be contacted at ethics@txpd.org.