Your intake staff checks dozens (or hundreds) of potential conflicts every day. You’re also navigating complex potential former client conflicts with lateral hires. A disqualification means losing a client. But strong ethical walls, in law firms, can save the relationship. Orion makes it easy to lock down digital matter information so that you can ethically represent your clients.
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What Are Ethical Walls in Law Firms?
Ethical walls (also known as ethical screens or screens) lock a disqualified attorney out of a client’s matter. It may also be necessary to set up walls for paralegals or other professional staff when conflicts of interest exist.
ABA Model rule 1.0* defines screening as: “the isolation of a lawyer from any participation in a matter through the timely imposition of procedures within a firm that are reasonably adequate under the circumstances to protect information that the isolated lawyer is obligated to protect under these Rules or other law.”
Ethical walls are high-stakes. If used incorrectly, attorneys may be liable for ethics violations, the firm might be required to return fees collected from the client, and the firm’s reputation could be damaged. But ethical walls can also allow firms to retain clients they might otherwise lose, and they prevent clients from losing access to their preferred lawyers.
*The ABA Model rules cited in this article may be modified by the jurisdictions that adopt them. Firms must comply with local rules. The ABA provides some guidance on jurisdictional differences (but may not reflect current legal guidance).
Why Ethical Walls Are Essential for Legal Compliance
Clients rely on their attorneys to act in their best interests. When attorneys have responsibilities to multiple people whose best interests don’t align, a “conflict of interest,” as defined in the ethical rules that govern attorneys, may exist.
Attorneys Must Check For Conflicts of Interest
As a general rule, a lawyer cannot represent a client when there is a conflict of interest, although some conflicts can be avoided if affected parties give informed consent.
But if an attorney simply proceeds normally in a matter where there is a conflict of interest, they risk discipline from the bar and civil liability. That could include losing their law license and having to pay back fees collected from the client.
Thus, when an attorney is considering representing a client, they are required to analyze whether a conflict of interest exists with respect to:
- Another current client
- A former client
- Any other person
- The lawyer’s personal interests
This is typically done with conflict-checking software, at least initially, and may be supplemented by an additional report that is circulated among attorneys.
Conflicts of interest can also come up when an attorney moves to a firm from a government, judicial, arbitrator, or mediator role, or when a firm takes on representation adverse to a prospective client, even though the prospective client never hired the firm.
Law firm confidentiality management, including analyzing conflicts of interest, is tricky and fact-intensive. Some firms retain conflict counsel to assess especially complex situations, like incoming lateral hires.
A Conflict of Interest Could Apply To the Whole Firm
When an attorney moves from one firm to another, or to a firm from a government and/or in-house role, the duties that attorney has to former clients are imputed to the entire firm. Essentially, if one firm attorney can’t ethically represent a client, none of the firm’s attorneys can.
That’s a problem, because it can keep people from accessing necessary legal services, disrupt a firm’s existing client relationships, and limit firm growth. But there are exceptions to the rule. For example, another attorney at the firm can represent the current client if:
- The firm notifies the former client (there are detailed requirements for this), and
- The disqualified attorney is screened from the matter (via an ethical wall) and receives none of the fees from the matter.
The current client may also be able to waive the conflict, and will probably require an ethical wall as a condition of waiving the conflict. Some conflicts, however, can’t be avoided with ethical walls, even if clients consent.
Ethical Walls Allow Firms To Avoid (Some) Conflicts of Interest
By implementing compliant ethical walls in law firms, firms can screen out a disqualified attorney so the firm can accept representation without the risk of bar discipline or other liability. Here’s an example of what can happen when a lawyer moves laterally (from one firm to another):
- Attorney Alex represents Driver A, who was in a car accident with Driver B.
- Alex quits his job and withdraws as Driver A’s attorney. He applies to work at a new firm. That firm represents Driver B.
- If the new firm hires Alex, Alex’s duty to his former client (Driver A) could disqualify the new firm from Driver B’s ongoing case against Driver A. Driver B would lose her lawyer and the firm would lose a client.
- Screening Alex out of the matter (with an ethical wall) might resolve the problem, provided that the other rules are followed. The new firm could hire Alex and continue representing Driver B.
The ethical wall would have to lock Alex out of Driver B’s matter entirely. Legal ethical wall best practices would require that no one at the firm communicates with him about the case, his office is not in a location where he is likely to overhear information about the case, he has no access to physical files, and he is locked out of any case management software.
How Legal Software Supports Ethical Wall Management
When choosing legal software, it’s essential to choose products that include strong digital controls for use in creating ethical walls. In addition to high-quality conflict checking software, Orion’s practice management software allows supervisors to restrict digital access in seconds.
Setting up an ethical wall in Orion is simple.
- Select the “Edit ethical wall” from the tool menu (at the client level or matter level).
- Tick the box next to each individual that should be screened.
- Save your changes.
You can revert the screen if it is entered in error, and you can copy ethical wall settings from one matter to another one.
Once the ethical wall is created, Orion’s built-in data access controls for law firms and secure cloud infrastructure prevent unauthorized parties from gaining access.
Ethical wall settings apply across multiple features, including:
- Matter lookup screens, contacts by matters, and matter status screens
- Time management and fee entry
- Daily payment totals
- Prebill management and bill preparation
- Billing and invoices
- Accounts receivable
- Expense management
- File maintenance management
Many Orion reports also honor the ethical wall settings, including:
- Transaction Listings (Fee Listing, Expense Listing, and Client-Matter Status Reports)
- Aged AR and Aged WIP
- Client-Matter AR ledger
- Inactive Matters Report
- Invoice Listing
- Retainer and Trust Balances
- Statement of Account
Best Practices for Managing Ethical Walls and Compliance
While rules for ethical walls in law firms vary across jurisdictions, most include the following four elements.
1. Timely Implementation
Walls should be created as soon as they become necessary. Ideally, they are created before the screened attorney has any access to information, like prior to hiring for a lateral attorney.
Your firm should have clear, written processes and procedures to ensure that ethical walls can be created immediately and that all personnel understand what to do when a wall is in place.
2. No Financial Benefit
Screened attorneys can receive regular salaries, but should not receive compensation (including bonuses or credits) directly related to the matter. Firms must carefully allocate origination credits and ensure that bonus calculations do not include any revenue collected on the screened case.
3. Prompt, Compliant Notification
ABA Model Rule 1.10 requires firms to notify former clients, including:
- A description of the screening procedures employed.
- A statement of the firm’s and of the screened lawyer’s compliance with the Rules.
- A statement that review may be available before a tribunal.
- An agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures.
- Ongoing reporting.
4. Robust Systems and Procedures
Simply telling people not to share information is not enough, and neither is controlling digital access only. You must make every effort to ensure that nothing crosses the ethical wall. Robust law firm confidentiality management might include:
- Creating written legal ethical wall best practices, policies, and procedures and training all staff on them.
- Informing personnel immediately in writing when a screen is implemented, including which information cannot be shared across the screen.
- Having the screened attorney sign a document agreeing not to access information behind the screen.
- Controlling access to physical files and documents.
- Shifting work environments if restricted information might be overheard by accident.
- Locking down digital records related to the representation.
- Monitoring compliance with the ethical wall, taking immediate action on ethical wall violations, and holding violators accountable.
Build Stronger Ethical Walls with Orion Law Software
Every law firm needs the capacity to swiftly construct a sturdy ethical wall. With Orion’s ethical wall feature, your team can lock down digital information in seconds. With that worry out of the way, you can concentrate efforts on other aspects of legal ethical wall best practices and protect your firm from liability.
Want to learn more about how Orion can help you? Contact Us.