By Patrice Kennard, Senior Risk Consultant, Client Development and Intake Group, Wilson Allen
and Mike Madden, Senior Business Consultant, Client Development and Intake Group, Wilson Allen

Connection, Communication, and Exchange of Perspectives

What do law firm management and client leaders consider to be the most effective conflicts and risk policies, practices, and priorities? We sought to answer that question during a recent panel session Wilson Allen hosted that brought together conflicts and risk experts from both sides of the client and law firm equation.

The panel featured Michael Misiewicz, Vice President and Assistant General Counsel and Global Head of Legal Ethics & Professional Responsibility at JPMorgan Chase. Mike Madden, Senior Business Consultant, and Patrice Kennard, Senior Risk Consultant, both with significant prior law firm experience, represented Wilson Allen’s Client Development and Intake Group on the panel, which was moderated by Dan Bressler, a prolific conflicts and risk blog writer. Attendees included general counsel and conflicts and risk professionals from firms of all sizes.

As the discussion commenced, law firms’ evolving degrees of centralization and implications for reviewers’ management of conflicts and risk became the common thread. Here are some highlights from the session:

Law firm policies, practices, and priorities

Misiewicz shared that, with conflicts waiver requests being only one of many things on his plate on any given day, he’s looking for law firms to make his client experience as easy as possible. How? Consistency – especially in the procedural aspects of waiver requests:

  • Designated Contacts – less is more; your client’s work is easier with a regular point of contact
  • Communications – it is helpful for your client to be speaking with someone fluent in conflicts
  • Format – follow the terms enumerated in your client’s services agreement

Not surprisingly, law firms’ uniformity with these operational procedures helps clients turn around waiver requests more quickly. Likewise, the “messiest” requests sometimes go to the bottom of the list because of the extra time and analysis required. The reality is that conflicts waiver requests are not intuitive. Firms without transparent end-to-end processes cannot expect all of its lawyers to know how to make their waiver requests smoother for both the client and the law firm. Some sort of centralization or consistency is important, and the pattern of a law firm’s requests reveals whether there is some level of centralization at its firm and to what degree.

Addressing the complexity of conflicts

In addition to other changes, COVID has influenced the types of matters law firms are taking on. One example is an uptick in pre-bankruptcy work – like distressed loans or restructuring – matters in which a waiver may be required if a law firm’s client has an interest, and another of the law firm’s clients seeks representation.

Clients and their law firms are managing intricate conflicts and fuzzy scenarios as well. Is the issue at hand a conflict under the applicable Rules of Professional Conduct? Or does it fall short of that yet give either party pause? What are the implications down the road after the client grants the waiver and the law firm commences the proposed work for its other client?

Let’s say the transaction is spicier than a routine transaction. The law firm doesn’t raise this with the waiving client at the outset, and the transaction or negotiation fails six months into the work. How do the applicable rules, conflicts waiver terms, and the terms of the waiving client’s outside counsel guidelines then kick in? At a minimum, such developments mean an awkward situation. Worst-case scenarios include a damaged client relationship and the law firm’s withdrawal from the matter. Because none of the governing terms will permit the law firm to represent its other client in litigation against the waiving client should the matter go south.

In-house counsel recognizes that law firms have other clients. They do not want to impede a law firm from being engaged by other clients. However, they must carefully review and consider waiver requests for matters which are perhaps less amicable than a vanilla transaction – and ask that their law firms do the same. It’s vital to the relationship that both parties take a harder look at a transaction which on its face looks vanilla, but is not. This step preserves both parties’ best interests, risk mitigation successes, and working relationships.

Debating the pros and cons of different approaches to risk

The topics of centralization, ad hoc and distributed approaches, and evolving staffing models proved to be of considerable interest to the panelists and attendees. As Kennard pointed out, the risk of decentralization is that you don’t know what you don’t know. It exposes a law firm to the types of risks that come from clearing conflicts in a vacuum.

Decentralization inconsistently applies checks and balances that may not take into account the broader firm. Consider this scenario, which could be happening on any single day, in any firm, regardless of its size. Also, consider the potential for unfortunate outcomes if the firm is decentralized:

  • A lawyer and a practice group are working to onboard a lateral who’s bringing several clients
  • Marketing is helping an attorney in a different practice area work on a significant RFP
  • The RFP includes outside counsel guideline terms with show-stopper implications for the new lateral hire’s portable clients

Why centralization matters

A centralized model is the best way to protect a law firm from such risks because it employs an established, consistent methodology using firm-wide checks and balances. Centralization streamlines conflicts, and the benefits extend to conflicts subprocesses such as the firm’s client waiver requests.

With centralization, staff members perform analysis that keeps the big picture in mind. As the panel agreed, from a law firm perspective, a centralized conflicts team becomes the subject-matter expert on conflicts clearance, unlike a lawyer who may need to clear conflicts only periodically.

Staffing under this model is a gift that keeps on giving. Centralized conflicts career paths offer job satisfaction and professional development opportunities that can encourage longevity. It’s to a firm’s advantage to retain institutional knowledge and develop people armed to help the firm transition through changes, like adding new conflicts procedures for new practice areas.

Making a case for investment and change

Despite the compelling reasons that motivate firms to move to a centralized model, many firms struggle with staffing decisions or buy-in to support change. In a poll on their views of a centralized conflicts staffing model, 33% of webinar participants were not yet centralized and said they’d like to adopt the model. But not surprisingly, those respondents were split between those without management budget or buy-in and those unsure of the best way to design and implement it.

In his work trying to help firms change their risk models, Madden noted that many firms looking to centralize are considering significant investments into technology. There are several key vendors in the legal technology market, particularly when we look at onboarding clients and new business intake. But where the investment lies in the technology, it’s not necessarily inexpensive.

Making a case for investment is about bringing the benefits to the attention of senior management. In a partner-driven firm, it isn’t easy to justify a significant expenditure that erodes into partners’ capital. Thus, making a case requires being able to demonstrate what kinds of benefits a product can offer.

Embed intelligence in the onboarding process

One good example, which many firms are going in the direction of, is being able to embed third party technology within the client onboarding process. Manual data retrieval processes are quite a heavy administrative burden during the onboarding process. A lot of those tasks can be reduced through process automation and deriving better value within that process. For instance, firms can embed system access to corporate tree and beneficial owner’s data through third-party providers like BvD (Bureau van Dijk) and D&B (Dun & Bradstreet). That can build a strong business case for investment.

The goal is to leverage information, but in a very seamless way so you can easily surface that information to people throughout the process. And the technology these days is a lot more flexible and adaptable to change in business needs.

Another example is outside counsel guidelines. Firms may spend many hours over the course of a year trying to straighten out and understand that process. If it can be embedded within the client onboarding process, it’s a lot more straightforward and easier to understand, and you develop consistency. And there are suitable technologies that allow firms of all sizes to manage that process very efficiently and as part of their client onboarding process.

Ensure the benefits are extendable

Madden emphasized that if there’s one question at the top of a firm’s agenda, it’s this: Will the investment enable us to leverage additional information and make a process a lot more efficient?

The answer very much depends on the kind of business process and the journey of that process regarding partner approvals and administrative steps. Certainly, modern tooling is designed to be geared to how a firm operates and adds efficiencies.

Consider today’s reality of working from home. If you’re working on a paper-based system, how can you push paper from somebody’s house to somebody else’s? It’s challenging. So, a cloud-based solution is an online solution that makes it easier to keep things business-as-usual.

Looking at the bigger picture in terms of downstream effects, taking the outside counsel guidelines example, let’s go a bit deeper on building it into client onboarding. Now you can capture that information at the right points in the process, and it can help further down the line of the client/matter life cycle. And we’re certainly starting to see a lot of firms and realize those benefits.

Elevate staffing for bottom line benefits

Firms trying to make the case to invest in changing their risk models are also considering staffing changes. As Kennard advised, when making a case for investing in centralization and staffing, it’s essential to show attorneys how such changes will streamline business acceptance. For instance, centralization is designed to help the firm take on as much work as possible while protecting the firm and forging stronger client relationships.

It’s equally essential to raise management awareness of the bottom-line advantage to the firm of staffing investments. Centralized conflicts staffing reallocates the non-billable, time-sensitive conflicts and risk work from attorneys who are juggling billable client priorities.

Panel’s Conclusion

Investing in technology, your risk model, and your staffing strategy is critical for the operational success of your business processes. And what it really comes down to when a firm is looking to mitigate risk around legal and ethical conflicts, client relationship issues, or regulator-required compliance is its end-to-end business processes.

Speaker Panel Information:

  • Patrice Kennard is a senior risk consultant in the client development and intake group at Wilson Allen who advises clients on procedural best practices in conflicts and business acceptance. Patrice’s background, in addition to law firm human resources and staffing experience, includes 15 years as head of new business and conflicts for an international law firm through its growth from 5 to 12 offices.
  • Mike Madden is a senior business consultant in the client development and intake group at Wilson Allen who advises and assists clients with various software and consultancy services from practice management finance systems to intake software. Mike’s background is predominantly in-house legal, with more than 10 years of experience working at all sizes of international law firms, mainly in the capacity of business transformation, process reengineering, and project management.
  • Michael Misiewicz is a vice president and assistant general counsel in the legal department at JPMorgan Chase who serves as the legal department’s professional responsibility Counsel. Michael serves this role in a very large legal department which in many ways operates like a large law firm, handling many of the functions that a law firm’s internal general counsel handles. Michael’s background includes prior experience in the new business / conflicts space from two different large law firms.