SU

MM

ER

20

19

Peer to PeerI L T A ’ S Q U A R T E R L Y M A G A Z I N E

This article originally appeared in the Summer 2019 issue of the International Legal Technology Association’s (ILTA) Peer to Peer Magazine and is reprinted with permission.

Article Reprint:Rethinking Conflicts — Leveraging Risk Management Insights Within the Firm

20

Rethinking Conflicts

BY E R I C M O S C A

O ver the past four years, we’ve

seen a seismic shift in conflicts

management, as firms migrate

from legacy systems. The 2018 ILTA

Technology Survey found that adoption of

modern conflicts management solutions had

grown by 50% year over year and by 650%

over the previous three years.

Even as firms embrace advanced

conflicts software, they have been much

slower to adapt their staffing approach

and processes to a more centralized

conflicts clearance model, exposing them to

unnecessary risks and inefficiencies. There

are many reasons for this organizational

stasis, including challenges in making the

business case to lawyers who may be reluctant

to change the way the firm clears conflicts.

In this article, we’ll explore several ways

that firms can advance their transition to a

more robust, more efficient, centralized model

for intake and conflicts.

Create a Comprehensive PlaybookDocumenting the firm’s conflicts policies

and procedures in a comprehensive

playbook is valuable for lawyers as well as

the administrative resources charged with

managing risk. A playbook helps to ensure

that processes are documented and followed

consistently. It improves efficiency by reducing

time spent asking and answering the same

questions repeatedly. Documented procedures

also define the roles and responsibilities of the

risk and conflicts team and set a baseline for

how to measure its success.

We recommend taking a layered

approach to documentation — crafting

different content for different audiences

including clients, lawyers and conflicts staff.

For lawyers, a well-written playbook

can be a useful reference. Many firms simply

assume that lawyers will generally “know”

what types of clients it will and won’t accept

and why. However, publishing general

guidelines and stock language that lawyers

can use when navigating potential ethical and

business conflicts with clients can remove

Leveraging Risk Management Insights Within the Firm

PE

ER

TO

PE

ER

: IL

TA

’S Q

UA

RT

ER

LY

MA

GA

ZIN

E

|

S

UM

ME

R 2

019

21

uncertainty and help to set expectations

appropriately: whether it’s to say that “our

firm represents employers, not individual

employees”; “we will not automatically

represent all entities within a corporate

family tree without further exploring

potential conflicts”; or “when clients dictate

that counsel will not represent competitors,

the client must identify and communicate

who is regarded as a competitor.”

For the conflicts team, a well-

documented playbook can help to supplement

training and improve overall performance.

Having clearly documented guidelines

enables conflicts staff to work more efficiently,

leverage automation within conflicts

management systems, and onboard new hires

more quickly.

A powerful tool within the playbook

is decision trees, which enable the conflicts

team to visualize the steps they need to take in

clearing conflicts or escalating for additional

review and approvals.

Align Client Matter Evaluation Criteria With Business StrategyTry as we may, the reality is that it simply isn’t

humanly possible to mitigate all risks to the

firm. It also isn’t efficient for the firm to apply

the same level of scrutiny to each and every new

matter. Most firms aim to be more responsive

to key clients, and unnecessary delays —

particularly in opening new matters with a low

level of risk — can be costly for the firm.

This is why it’s essential to ensure that

your client matter evaluation criteria and

processes are aligned with the firm’s business

strategy and priorities.

In some cases you may be able to reduce

the number of steps required during a

conflicts check. For example, if your firm has

a policy of only representing the named entity

and never representing other companies in

a corporate family tree, you may be able to

minimize the need for corporate family tree

research. Known clients presenting similar

work can have standing conflicts searches

which are “refreshed” instead of performed

from scratch. Of course, there will always

be exceptions — but if those exceptions are

clearly documented you can ensure that they

won’t be overlooked.

On the other hand, if your firm is

prioritizing certain types of work (e.g. “patent

litigation in the pharmaceutical industry”)

which could trigger business, commercial or

subject matter conflicts, you need to ensure

that your conflicts evaluation processes are

designed to support this with the appropriate

level of due diligence, and the right types

of research and review (e.g. “keyword

searches”).

For financial due diligence, one

approach is to set thresholds for when new

matters can progress more quickly through

business acceptance processes versus when

more thorough review is required. For

example, new work at standard rates for

clients with a good payment history might

skip certain approvals.

Some firms are now introducing ways

to help evaluate potential new business much

earlier in the sales process by integrating

their intake and conflicts systems with their

CRM. By creating placeholders within the

intake and conflicts system for prospects, the

business development team (and lawyers

themselves) can assess the attractiveness

of potential clients — not only in terms

of avoiding conflicts, but also examining

financial health and associated risks.

This enables the firm to take a more

informed approach to targeting potential

clients in line with its business strategy,

determining whether to invest time in

responding to RFPs, and preparing for

pitches. Later in the cycle, it can also help

to accelerate the new business acceptance

process and avoid conflicts with clients where

significant business development time and

effort have been expended.

Involve Clients, Prospects and Laterals More Directly in New Business IntakeMany lawyers are accustomed to keeping

their client relationships close to the vest. At

times, this can make things challenging for

others in the firm who need information —

particularly from new clients.

Providing a direct line of

communication between new clients and the

new business intake (NBI) team can help to

accelerate the intake process significantly.

This is already standard practice across many

regulated industries.

Rather than making individual lawyers

responsible for collecting information about

new clients and having the lawyers (or their

assistants) fill out forms to open new matters,

the firm can send the client links to secure

online forms to fill out themselves.

The forms, which link to the firm’s main

intake system, can be designed for maximum

Providing a direct line of communication between new clients and the new business intake (NBI) team can help to accelerate the intake process significantly. This is already standard practice across many regulated industries.

22

risk posture as well as the pros and cons

of agreeing to exceptions, the GC is better

positioned to negotiate vigorously with the

client’s in-house counsel or procurement

teams if needed. Whereas an individual

lawyer might overlook or be tempted to

agree to a “Most Favored Nation” clause, for

example, the GC and risk teams will be able to

argue that this is strictly against firm policy,

or impossible due to prior agreements and

obligations to other clients.

Design Processes for FlexibilityAutomating workflows for conflicts

management and intake makes the NBI

process faster and more efficient, helping to

break down silos of information within the

firm, and reducing the amount of manual data

entry as well as the risk of human error.

However, some firms embarking on

automating intake and conflicts find that

the design and planning phase takes much

longer than expected — in some cases as long

as 15 months to two years. The temptation to

“over-engineer” workflow automation stems

from a desire to program every rule, plan for

every contingency, and automate every step of

the process.

While the intentions are certainly

understandable, in practice, firms can find

themselves overcomplicating workflow

design and/or creating a system that

may prove too rigid to accommodate

future changes to the firm's business. It is

understandably frustrating to go live with an

elegant system that took two years to design,

only to find that it ages poorly and needs to

undergo a significant overhaul within a year

when someone new joins the organization.

Rather than trying to “automate

everything,” we recommend a more flexible

approach that allows for likely real-world

scenarios and allows the risk team to adapt

processes based on how well they work in

practice.

For example, the freedom of the intake

team to re-prioritize, eliminate, or add

approvals based on recent feedback, approver

efficiency. For example, any client information

that has already been captured by the firm

can be displayed — providing the client with

the opportunity to add, edit and correct

information as needed rather than starting

from scratch.

Any information requiring further

clarification can be flagged as part of the

workflow, providing the firm’s intake, risk,

finance and IT teams with the opportunity to

follow up with the appropriate client contacts

to address any issues directly, rather than

having to rely on a single lawyer to broker

information. This can be especially helpful

when conducting AML and KYC checks

requiring detailed financial information,

for example, or discussing security and

information governance requirements.

Similarly, the recruiting and conflicts

teams can provide prospective lateral hires

with a secure web site where they can

provide background information so that

potential conflicts can be evaluated, cleared

or mitigated quickly once the candidate is

employed by the firm.

Opening the direct lines of

communication between the client’s

organization and the firm’s new business

acceptance team can help to alleviate the

administrative burden on individual lawyers,

improve the productivity and efficacy of the

central intake and conflicts team, and reduce

unnecessary delays in opening new matters

and starting client work.

Leverage the Office of the General Counsel in Client NegotiationsCentralizing the negotiation and management

of engagement letters and outside counsel

guidelines can significantly reduce future

risks and costs to the firm.

In recent years, many firms have seen

a growing number of clients issue outside

counsel guidelines. Many OCGs specify

requirements that are inconsistent with

the firm’s own policies and procedures

or define terms of business that may be

disadvantageous to the firm. Historically,

some firms have unknowingly accepted these

terms due to largely decentralized processes,

with OCGs themselves literally forgotten in

desk drawers or the electronic archives of

individual lawyers.

The proliferation of OCGs today

presents an important opportunity for the

Office of General Counsel to step in and assist

with client negotiations. Rather than making

individual lawyers responsible for negotiating

each and every requirement, the GC can be

positioned with the client as the “bad cop”

with ultimate authority to agree to specific

terms of business and make exceptions if and

when appropriate.

The Office of the General Counsel will

generally have a broader and more informed

perspective of client terms across the

firm’s business than any individual lawyer.

Armed with an understanding of the firm’s

It is understandably frustrating to go live with an elegant system that took two years to design, only to find that it ages poorly and needs to undergo a significant overhaul within a year when someone new joins the organization.

PE

ER

TO

PE

ER

: IL

TA

’S Q

UA

RT

ER

LY

MA

GA

ZIN

E

|

S

UM

ME

R 2

019

23

info@myrendezvous.net myrendezvous.net

availability, and extenuating circumstances can obviate

frustration with a rigid and inflexible workflow.

Toward a Stronger, More Centralized RoleCentralizing the core administrative functions of conflicts

evaluation and intake management can significantly reduce

risks by providing a level of consistency across the law firm.

Rather than relying on individual lawyers to try to assess

potential conflicts and/or emailing a large group of lawyers

for their input on a lengthy list of search results with little

or no prioritization, a well-considered business acceptance

program can also maximize efficiency by automating

workflows and presenting lawyers with reports that clearly

highlight the key issues that require their attention.

The transition to a centralized conflicts management

model doesn't happen automatically when you implement a

new system. It requires buy-in and support from firm leaders,

as well as a reevaluation of how a more centralized intake

and conflicts function should be staffed. It also requires the

flexibility to adapt policies, procedures and systems quickly

in the future if needed.

Rethinking the firm's approach to risk management

can help to support the transition to a more centralized

model and realize additional value. Documenting conflicts

guidelines for lawyers and conflicts staff can complement

the firm's change management and training programs “on

the ground." Bringing the risk organization closer to the

business development team by integrating the intake and

conflicts systems with the firm’s CRM data can help to

leverage insights from risk management much earlier in the

client matter lifecycle.

The biggest cultural shift for many firms may be

the notion that risk and conflicts teams should be more

client-facing. Establishing more direct relationships and

connections between the firm’s operations teams and their

counterparts on the client side can streamline business

acceptance.

And at a more senior level, elevating the role of the

Office of the General Counsel and involving risk leaders

in more client-facing interactions — particularly when

negotiating terms such as outside counsel guidelines — can

help the firm to reap significant business benefits from a

more centralized risk and conflicts function armed with

insight. ILTA

About the author

Eric MoscaEric Mosca, Director of Operations for

InOutsource, has more than 17 years of

experience in new business intake,

conflicts of interest management and

information governance consulting.

InOutsource is a leading consulting firm

dedicated to resolving the unique

challenges faced by law firms by

streamlining processes, implementing

technology, and transforming data assets

into actionable insights to improve

performance.

Prior to joining the InOutsource

leadership team, Eric held several roles in

law firm operations. Eric is a Certified

Records Manager (CRM), a frequent

contributor to well-known legal

publications, and a regular speaker at

conferences, webinars and workshops

including ILTACON.