Today we visit the prosaic topic of conflicts-checking. I’ve come to believe it’s not so prosaic after all.
Consider:
- The highly-publicized referral to the UK’s Law Society Regulation Board of two senior Freshfields partners, announced last week, culminating a two and a half year investigation into Freshfields’ representation of the corporate raider Philip Green when he attempted (unsuccessfully, in the event) to take over the fabled UK retailer Marks & Spencer. What was the problem? Simply that Freshfields had previously advised Marks & Spencer on a retainer basis, which Marks & Spencer pointed out to the court within days. This is how Legal Week summarized it 10 days ago:
"Today – finally – after well over two years of deliberations, the Law Society has announced that Barry O’Brien, the partner who led on the deal, and UK head of corporate Tim Jones have been referred to the Solicitors Disciplinary Tribunal (SDT) “over the claim that Freshfields were conflictedâ€.
"O’Brien and Jones are two of City law’s biggest names. O’Brien was a contender for the Freshfields senior partner job before he decided to step out of the race because of the ongoing threat of a tribunal referral. Jones is regarded by many Freshfields partners as a potential senior partner. The embroilment of two such high-profile and respected City figures in a SDT hearing is unprecedented."
Freshfields’ defense? Essentially, as recounted here, that its prior work for M&S was not material and that they’d erected an internal Chinese wall in any event. All that can be said at this point on the ultimate question is, "We shall see," but the notoriety of even an alleged conflicts offense is something no one needs.
- In a conversation I had with an AmLaw 25 partner recently, he recounted with fervor his frustration at his own firm’s conflicts-checking system, which took three days to respond to what he thought was a "drop dead simple" analysis of a potentially major litigation representation. After three days, the potential client lost patience and went elsewhere.
- Three out of three CIO’s of AmLaw 25 firms to whom I posed the question in the past few weeks have said they believe that conflicts-checking is one of the most complex tasks firms face because, as one put it, "it cuts across every facet of the firm—absolutely everything."
- When I’m asked if I can envision the legal industry evolving towards a structure really like the accounting firm structure (i.e., a handful of behemoths and no name recognition below that), my answer is always, "No," for a variety of cultural and economic reasons (including the intense localness of law, especially litigation, and associated national, regional, and provincial traditions), but the most non-negotiable fact of life distinguishing our profession from accounting is our conflicts rules. Simply put, the bigger your firm, the more likely you’re going to start tripping over conflicts. Who among our clients—and who among us—would prefer a future of only half a dozen firms to choose from?
If (a) conflicts matter; (b) many firms manage them poorly; and (c) their importance is only going to increase, then what is anyone doing about it?
One answer is to enhance the power of "enterprise search," which means the ability to search across all the various databases inside a firm—finance and billing, document management, human resources, marketing, client contact systems, etc.—from one unified interface. (To be sure, each of those databases is individually searchable today; enterprise search means being able to search once across all instead of searching once for each.)
Firms providing the ability to do this include, for example, Recommind and Autonomy. I happen to have had personal experience with the products of each and, by and large, they perform as advertised: Once, and that’s a big once, they’ve been tailored to appropriately "hook into" each of your disparate databases. (And while we’re on the topic of tailoring appropriate hooks, don’t overlook the reality that those other databases will change, be upgraded, come out in new versions, etc.)
Another option is to look to outside providers such as Legal Key, to provide services that attempt to look across internal and external data sources (such as Dun & Bradstreet).
But what is to my mind the single most important issue raised by the "conflicts-checking" exercise is a strategic one: Is this client/matter one we want?
- Does it fit with our long-term practice migration goals?
- Would it foreclose us from accepting business from a specific potential client we’re ogling jealously?
- Is it in a low-rent district (commodity practice area) we want to escape from or minimize going forward?
- Even if this particular matter is small potatoes, can it provide us entree to a sexier world?
"Conflicts," in other words, while it may be all about database searching and green eye-shade yawn-inducers, can be one of the most critical issues for senior management to attend to. It is, by its normal name in corporate-land, "new business intake."
Need I remind you that if you get it wrong, you may be making the close personal acquaintance of Messrs. O’Brien and Jones?
