Paralegals and Conflicts of Interest
WHAT IS A CONFLICT OF INTEREST?
A conflict of interest, in the legal sense, involves information about a client held by a member of the legal team...an attorney, paralegal or legal secretary. That information does not have to be attorney/client privileged information, nor does it have to include actual documented facts about a client's legal matter. It only needs to be information about the client that, were it revealed to other members of the legal team, may cause some harm, injury or prejudice to the client.
The National Federation of Paralegal Associations' Model Code of Ethics and Professional Responsibility and Guidelines for Enforcement states:
Canon 8: "A Paralegal shall avoid conflicts of interest and shall disclose any possible conflict to the employer or client, as well as to the prospective employers or clients."
A paralegal possesses information about a client's transactions, the attorney's strategies, thought processes, work product, and/or other client privileged information. Conflicts of interest involving paralegals usually result from personal and business relationships outside the legal environment or from legal matters handled at the paralegal's prior employment.
If a conflict of interest is not identified and disclosed to the client or supervising attorney, the firm or employer may lose considerable time and money expended in handling the client's legal matter.
HOW DOES A PARALEGAL KNOW WHEN A CONFLICT OF INTEREST EXISTS?
For paralegals who are supervised by or accountable to an attorney, the attorney is obligated to determine whether there is conflict of interest between the paralegal and the client or legal matter. In practice areas where paralegals are not supervised by or accountable to an attorney but deal directly with the clients, paralegals make those decisions.
Paralegals should abide by the decision made by the attorney. If, however, a paralegal feels uncomfortable continuing to work on a matter with which a conflict was not determined, it should be discussed with the supervising attorney or a conflicts committee within the firm or employer's structure.
Examples of when a paralegal may have a conflict of interest in a legal matter:
Changing jobs: if a paralegal works at one law firm that is handling a legal matter on behalf of a client and then goes to work for another law firm that is handling the same legal matter on behalf of the adversary;
Family and personal relationships: if a paralegal is related to or close friends with a party, a client, or someone involved in the legal matter;
Business interests and professional relationships outside the employment: if a paralegal is involved either within a legal profession organization or in another business entity.
HOW TO IDENTIFY A POSSIBLE CONFLICT OF INTEREST
** On your first day of employment (if it has not been done during the interview process), ask the supervising attorney or other appropriate person for a list of legal cases or matters that the firm or employer is handling. Review that list to identify the names of clients, parties in litigation, acquaintances, friends, or family members that you recognize.
** Compare your list of all legal cases or matters on which you have worked against the new employer's list. If you work in litigation, also review the names of attorneys representing the various parties.
** Advise the employer of any matters in which you suspect you may have a conflict of interest. Provide only enough information about the matter for the employer (or a firm or corporation conflicts committee) to determine whether there is a conflict of interest. Usually, the client or matter name is sufficient to assess this.
** As new clients and legal matters come into the office, or if new parties are added to cases already underway, check their names against your list as described above.
** Despite your best efforts, a matter or client in which you have a possible conflict of interest may slip through. If this happens, bring it to the attorney's attention as soon as you become aware of it.
** Maintain your list of matters on which you work throughout your paralegal career.
WHAT IS AN ETHICAL WALL?
An ethical wall (or Chinese wall, as it used to be called) is an imaginary boundary placed around an individual or individuals with whom a conflict of interest is discovered. This imaginary boundary is supposed to bar any communications, written or verbal, between the members of the legal team handling a matter and the person with whom the conflict of interest exists.
PURPOSE OF ERECTING AN ETHICAL WALL
The primary purpose of erecting an ethical wall is to protect the client's confidences and secrets. Sometimes an ethical wall is erected not because the person with whom the conflict exists would reveal the client's privileged information but simply to "avoid giving any appearance of impropriety." In other words, the ethical wall is erected to ensure that there is absolutely no opportunity for client's confidences and secrets to be revealed to anyone other than those handling the client's legal matter.
A secondary purpose for erecting ethical walls is to avoid limiting legal professionals' job mobility. If it were not possible to erect an ethical wall, members of the legal profession may encounter serious hurdles when changing jobs. If they have a conflict of interest involving too many clients, no employer would want to hire them because the law firm or other employer would be disqualified from handling those cases. In essence, they may be precluded from finding work because of the vast amount of legal matters to which they were exposed.
HOW TO ERECT AN ETHICAL WALL
** Once it is established that a conflict of interest exists, the client's consent for continued representation in the matter must be obtained. If the paralegal is working in a traditional setting, the attorney will obtain that consent. Additionally, if the matter is adversarial (i.e., in litigation), the attorney must obtain the adversary's consent.
** Send a memorandum alerting all firm or corporation employees to the conflict of interest. The memo should advise employees that they are not permitted to communicate any information about the file with, or in front of, the person with whom the conflict of interest exists.
** Maintain in the file a hard copy of that memorandum establishing the ethical wall (a) to remind people about the wall and (b) in case a challenge to the wall is made by an adversary or other individual.
** Place on the file folder a red tag or some other notation that reminds everyone handling the matter that a wall has been erected.
** In some instances, it may be appropriate to physically move the files to another location away from the person with whom the conflict of interest exists.
** Above all, respect the ethical wall once it is erected. Do not talk about, listen to, or read anything about that legal matter once the ethical wall has been erected.
SOURCES OF INFORMATION ABOUT CONFLICTS OF INTEREST
NFPA's Model Code of Ethics and Professional Responsibility (1993)
The paralegal profession has faced issues concerning professionalism and ethics. In response, NFPA members adopted a Model Code of Ethics and Professional Responsibility (Model Code) in May 1993. This Model Code shows the commitment of NFPA's membership to increasing the quality and efficiency of legal services and recognizes the profession's responsibility to the legal community and the consumer.
NFPA's Ethical Wall Its Application to Paralegals (1989, rev. December 1995)
This research paper discusses conflicts of interest as they relate to paralegals working in the legal profession. It explains how a paralegal is exposed to information considered confidential, e.g., the attorney's strategies or other substantive information gained while working on legal matters. The report identifies recent case law and ethics opinions that apply to conflicts of interest involving paralegals and procedures for erecting and maintaining an ethical wall.
NFPA Ethics and Disciplinary Opinion 95-3
American Bar Association (ABA) Opinion 88-1526 and ABA Model Guidelines for the Utilization of Legal Assistant Services
State and Local Court and Bar Association Ethics Opinions