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Chapter 4

Conflicts of Interest

Power Point Presentations: There are 25 content slides in this presentation.

Chapter Hypothetical: (pg. 107) We’re not accusing Denny of insider trading or anything like

that. We are accusing him of neglecting some clients in favor of others so we’re looking for the

student to recognize that every client is entitled to the same duty of loyalty. We cannot be “more

Lesson Objective: How are conflicts created? (pg. 108)

Lecture Suggestion: Silver Chrysler is still the state of the law. It is not the easiest case to read,

however. LaSalle’s opinion is set out more clearly for study. Take your students to your state

rule here (most likely 1.9) where they will see these key words: substantially related and

From a 2008 Texas case: “To show that the matters are “substantially related,” the moving party

must prove the existence of a prior attorney-client relationship in which the factual matters

involved were so related to the facts alleged in the pending action that it creates a genuine threat

that confidences revealed to the party’s former counsel will be divulged to its current opponent.

Engage your students in a conversation about the irony of the presumption that confidential

information has been and will be given contrary to the client’s interests and the duty of

confidentiality that we just covered in Chapter 3. Does the presumption mean that the courts do

not believe that we do our confidentiality duty?

Lesson Objective: What can the freelance paralegal do to avoid conflicts of interest? (pg. 110)

Video Alert: (pg. 110) This is where you should show this wonderful video about my favorite

independent (freelance) paralegal, Donna. This is a do-wrong; do-right video. The first (do-

wrong) segment shows Donna ending up in a bad ethical place. The do-right shows her

preventing the problem by taking control of the conversation with Dante (who tends to talk too

Check Your Understanding (pg. 110) 1. confidential information; 2. adverse interests; 3.

substantially related; 4. presume; freelance paralegal

Lesson Objective: How can my personal life create conflicts? (pg. 111)

Lecture Suggestion: The word “fiduciary” comes up many times. Engage your students in

discussion about a fiduciary they have in their life. A banker? Is there a trust in their family? Do

they, in fact, have a lawyer?

Lesson Objective: Overreaching and Fraud (pg. 111) and Good Faith (pg. 112)

Lecture Suggestion: Ask your students what those terms (“overreaching, “good faith” and

“honest intent”) mean in ordinary language. Now compare that with the definition in the book:

inherently fair terms and the client is advised to get the advice of counsel. See if they can come

up with some hypotheticals involving overreaching and/or fraud.

Activity Suggestion: What if there was something that you absolutely needed to buy from a

Lesson Objective: Witness (pg. 112)

Rule 3.7 gives you the exceptions to the prohibition. See Fernandes (with an s- spelled

incorrectly in the text) v. Jamron, in the Extra Resources on paralegalethics.net

Lesson Objective: Financial interest in the case (pg. 112)

Lecture Suggestion: Funding lawsuits is fascinating! See if your students think there is

anything wrong (morally wrong) with this concept and let me know. I recommend Rancman v

Interim Settlement Fund. You can find it in pdf format on the publisher’s website. The case is a

great explanation of how people get themselves into usurious loan situations. (They weren’t

loans. They were contingent cash advances.) Compare this to Odell v. Legal Bucks, also on the

website.

In Odell, the litigation funder had advanced Ms. Odell $3,000 for her motor vehicle accident

claim. Ms. Odell ultimately settled her claim for $18,000, but found that the terms of her

agreement required her to pay Legal Bucks $9,582, or more than triple the advance that she had

Activity Suggestion: Have your students do this on line research to see if lawsuit funding is

okay in your state.

Lesson Objective: Buying a Claim (pg. 112)

Lecture Suggestion: Note: runners and cappers are explained fully in Chapter 5. A brief

introduction is helpful here but this section is really about buying a claim through lawsuit

funding. Ask the students: Why is it that lawyers can pay the costs of personal injury cases? Or

can they? Some states require repayment. Check your rule 1.8.

Lesson Objective: Gifts (pg. 113)

Lecture Suggestion: My primary point here is that we shouldn’t get all paralyzed by the rules

Video Alert: There is a funny, cute, corney short video on this issue. Zealous Representation:

Gifts to Judges

Lesson Objective: Publicity Rights (pg. 114)

Lecture Suggestion: You can give your students some background on Patty Hearst and/or the

Hearst family. This would make an interesting five-minute essay for students at the end of class:

Lesson Objective: Protecting the Firm’s interests (pg. 112)

Activity Suggestion: Have your students do the research project and find out if charging liens

are permissible in your state. A charging lien entitles the lawyer with the lien to get paid from

Check Your Understanding: (pg. 114) 1. T; 2. F; 3. T; 4. F; 5. this answer is debatable

Lesson Objective: How can intimate relations with a client create conflicts? (pg. 115)

Lecture Suggestion: You understand that this is a joke, right? I’m not really suggesting that this

t.v. show changed the law, but your students will get a kick out of it if you can show them a clip

of his escapades.

In Season 1, Episode 5, we get a look at Arnie Becker’s true colors when he pursues a client who

is divorcing her husband. In the next episode their affair intensifies. By Episode 6, she has

dumped him so he hits on his secretary. In Episode 8, Becker is attracted to opposing counsel in

Video Alert: Video Segment #16 (Conflict of Interest: Relationships with Clients) illustrates a

client/paralegal personal relationship when Client Hutchinson asks Alicia out for dinner. This

video clip is fairly loose in the plot department so you can give your students different scenarios:

What if all of Hutchinson’s matters with the firm are closed? What if the matter that Alicia is

working on is closed but Hutchinson has other matters on-going with the firm? What if Alicia

does want to go out with him? What if she doesn’t?

Lesson Objective: What conflict problems arise because of outside forces? (pg. 116)

Lecture Suggestion: Here’s the duty: independent (free from influence) professional judgment

and complete loyalty to each and every client. Before going any further, make sure we all

Activity Suggestion: On conflicts, here’s some role play you can do in class: client who is not

paying the legal fees and paralegal still responsible for working on the case. When the client

isn’t paying for services, how do we feel about that person? Does it make us less willing to work

on that case? Is our professional judgment compromised?

Lesson Objective: What conflicts are created by representing multiple clients? (pg. 117)

Lecture Suggestion: I’ve given you the classic multiple client categories here. Most make

perfect sense. The one that can be confusing for students is “Insured and Insurer” so getting them

to read a portion of Cumis might help. Do this before you have them read the Johnson case at

the end of the chapter. Another tricky concept may be the Representation of Corporations and

your paralegal students may very well find this problem in their workplace. Start with the idea

that a corporation doesn’t have its own voice. It has to speak through people. These people fall

into categories: directors, officers, employees, shareholders. At the end of this chapter your

Activity Suggestion: Have your students do this research assignment. I think that the Cumis

Counsel concept is confusing so working with cases and codes might be called for.

Video Alert: If you didn’t show this video earlier for “Freelance Paralegals”, you should do it

here. Video Segment #17 shows independent paralegal Donna inadvertently representing both

the plaintiff and the defendant in a slip and fall case.

Check Your Understanding (pg. 120) 1. b; 2. d

Lesson Objective: (pg. 120) Pro bono law providers create conflicts. In Rodriguez v.

Montalvo, 337 F. Supp. 2d 212, 218–19 (D. Mass. 2004), the court disqualified an attorney from

representing a landlord in a dispute with a tenant where the tenant had consulted, on a

But LRIS do not create conflicts because there is no lawyer/client relationship involved.

Lesson Objective: (pg. 122) If I have a conflict of interest, what’s going to happen?

Lecture Suggestion: I unabashedly use this section of the text to lecture students on the virtues

of being forthcoming. We humans are flight animals. It is instinctive to try to hide our “defects”

Lesson Objective: Will my entire firm be disqualified? (pg. 123)

Lecture Suggestion: The answer to that question depends on how quickly and solidly a wall

can be built (if you are in a wall state) the legal community you’re in, and how believable the

Lesson Objective: The Ethical Wall theory (pg. 123)

Activity Suggestion: Time for a state law research assignment here! What does your state law

say about using an ethical wall? Who can use it and under what circumstances? There is a How

To list available on the website for constructing a good wall.

Lesson Objective: Changing Jobs (pg. 125)

Lecture Suggestion: This brings us back to Ms. Dillman (discussed in Chapter 3). Her law firm

was simply too big for a potential employer to know ALL of the cases it had in common with the

Lesson Objective: If I want to get a waiver, who has to waive what? (pg. 126)

Lecture Suggestion: I cannot begin to tell you how many lawyers believe that it is their current

client from whom they must get a waiver! So, go back down to the basic duty of loyalty to that

original client and remember that it is that former client against whom your loyalties now lie.

Lesson Objective: If a conflict walks in the door, what should I do? (pg. 126)

Lecture Suggestion: The answer to this question depends on whether or not your firm has your

complete and detailed personal conflict check system integrated into its conflict check system. If

Answers to End of Chapter 4 Review Questions

Critical Thinking

1. Denny violated the duty of complete loyalty to ALL clients when he devoted most of his

time to the client in which he is invested financially. He has a potential conflict of

2. I have really asked two questions here so I’ll be interested to hear from you if your

students get this. There is nothing wrong with a friendship with a client. If someone asks

you out on a date, that may be an invitation to a romantic relationship somewhere down

3. Answers here will vary but you might want to look for items such as “my brother’s

photography company” and “ABC Corp. in which my parents own a lot of stock.” See if

Assignment

1. This is a simple Internet research assignment with a “compare/contrast” writing

component. Conflict check systems come and go. These are some of the ones I know

about now.

Collaborative Assignments

1. Be prepared to find a new job! This is a role-play exercise. Each student is given a role

on a 3 x 5 card (or you can just photocopy and cut out the squares I’ve provided.) Then

either you can be the interviewer or you can have some students interview others. Better

Questions for everyone:

1. Why are you looking for a new job?

2. How do you handle stressful situations?

3. I will be interviewing a dozen people for this job. Tell me what you will bring to this firm

that is different from other candidates.

Student #1: You have worked for a medium sized

law firm (Smith & Jones) for 2 years. You worked

on complex litigation summarizing depositions and

organizing documents. There are dozens of

officers, directors, and key employees of the

GemStone Corporation, your firm’s client. You

have never met any of them. Your firm does a lot

of GemStone work, including a double-secret stock

takeover GemStone is planning of Diamond

Corporation. You have done some legal research

on the law pertaining to the takeover.

Interview Questions for Student #1

1. What experience do you have with complex

litigation?

2. What experience do you have with legal

research?

3. What do you know about antitrust and hostile

takeovers?

4. We represent a number of large corporations.

Can you think of any with which you may have a

conflict?

Student #2: You have worked for The Divorce

Law firm (Divorce, Divorce & Divorce) for 2

years. You have helped in the dissolution of

literally hundreds of divorces, including some high

profile, nasty ones. (One of your clients was Mel

Libson, a famous actor.) Although you like all of

the people at D, D & D, you are looking to get into

a form of litigation that is not so personal and

angry.

Interview Questions for Student #2

1. What experience do you have with angry

clients?

2. Have you ever worked on any high profile

cases? Which ones?

3. Can you provide us with a list of all of your past

clients so that we can conduct a conflict check?

Student #3: You have worked for a bankruptcy law

firm (Baker & Kant) for 5 years. You are an expert

in pre-bankruptcy planning. You have worked on

many bankruptcies and have some experience with

trials in bankruptcy court. You would like to move

your financial expertise to a firm that does

litigation. Your father is a retired police officer.

Interview Questions for Student #3

1. Why do you want to leave the bankruptcy

practice?

2. Isn’t pre-bankruptcy planning just a euphemism

for planning to cheat creditors?

3. Can you provide us with a list of all of your past

clients so that we can conduct a conflict check?

4. We represent many people with personal injury

claims against the police. How would you feel

about that type of litigation?

Student #4: You have worked for a criminal

defense law firm for 2 years and have assisted in

the representation of hundreds of people. Your list

includes several famous people including

______________ (insert famous person here).

Interview Questions for Student #4

1. I read in your resume that you have worked for

the Steve Getimoff Law Firm. Did you work on

the defense of ______________ (insert famous

person here)? Have you ever thought about writing

a book about your experience on that case?

2. I would like to look at a list of cases you have

worked on so I can check it against our conflict

check system. Did you bring a list with you?

Review Questions

1. Duty of loyalty and duty of confidentiality are the two big ones.

3. Personal relationships with clients bring up the “fiduciary relationship” concept.

4. The multiple client duos begin on page 117: seller/purchaser; insured/insurer;

husband/wife; debtor/creditor.

5. Stock, other investments, owning a home, owning a car, owning, well, just about

6. This answer is on 115-6. “Emotional detachment” and “sound judgment” are what we’re

looking for here.

7. It could be resolved amicably and informally with a promise; it could be resolved by

8. Keep an accurate on-going personal conflict check system; choose new employers

carefully.

10. Instantly build a wall; get all of the facts; contact the other side and try to make a deal.

Under no circumstances should anyone try to hide a conflict.

Notes about the Cases for Consideration

Case #1: In re Complex Asbestos Litigation

This is a favorite case of mine because it involves so many aspects of what we’ve been learning

Questions:

1. Can you explain the difference between “confidential information” and “attorney/client

privileged information”?

2. What do you know about public records and their effect on the duty of confidentiality?

3. What can you tell the court about the status of the SEAR forms information as “confidential”

and the effect of possession of confidential information on the conflict of interest?

4. What are the lessons to be learned from this case?

Answer:

Vogel makes several key errors in his attempt to leave Brobeck for the Harrison firm:

a. He would have been better off trying to get a new job with a firm that didn’t do plaintiff’s

asbestos cases.

Harrison makes several key errors in hiring Vogel

1. He did not insist on a written conflict waiver.

3. He did not tell Vogel he needed a conflict waiver from the Bjork firm, as well.

5. Arguing that the duty of confidentiality doesn’t apply to paralegals didn’t help.

The court makes a few errors, also.

1. The issue at issue is the duty of confidentiality, not the attorney/client privilege (the court

discusses this at page 132 at the top, on page 134 at the beginning of the Cone of Silence

section.)

Case #2 – Johnson v. Continental Casualty Co.

1. What was it that triggered Johnson’s necessity for a lawyer in addition to his representation

by his insurance carrier’s lawyer (Thomas)? In other words, why did Johnson have to hire

Comfort?

Answer: Johnson felt it necessary to hire another lawyer to defend him after reading the

2. Explain a “reservation of rights” letter. What did it mean when Johnson’s insurance company

sent him this letter?

Answer: Reservation of rights seems to be a difficult concept for many people. The

3. Why does a reservation of rights letter create a conflict of interest?

Answer: A conflict is created because the insurance company has a financial incentive to

4. Johnson’s lawyer relied on California law, but the case was in Washington. What is the

difference between the law in California and the law in Washington? What was it about this

difference that caused Johnson to lose this case?

In the News

Hopefully your students know the background for this news article about Bernie Madoff.

1. The article says that Madoff’s lawyer’s parents invested $900,000 with Madoff (all of

which he lost) and that money would have gone (in trust) to the lawyer’s sons. The

lawyer himself (Sorkin) had no personal beneficial interest in the money. #2 Sorkin

represented two accountants linked to Madoff in a defense to an SEC claim. #3 Sorkin

actually invested money with Madoff. “It is not know how much money Sorkin made or

lost in that investment.” Really?

2. Were I the judge, I think I would have allowed this representation, but there is a good

argument that Sorkin has a vendetta against Madoff for costing his family nearly $1

million.

3. Answers will vary here. You could have the students look at this case again after

studying the section in the text about “the unpopular client” early in the next chapter.

Video Case Studies