Law firms now face significant penalties if they don’t disclose and take action on potential conflicts of interest when taking on clients. And that’s on top of the detriment a potential conflict could have on the firm’s reputation.
But the traditionally manual process of reviewing for conflicts is time-consuming as it requires manually entering and searching for a single name that could yield thousands of results, filtering it down to find the exact one, and then performing an analysis to determine if a conflict exists. It also requires a significant amount of time to filter the results into a consolidated report for regulatory and firm review. And as the entire process often requires strong due diligence and is considered a non-billable procedure, it’s strongly prone to human error and delays.
What’s more, timing is crucial to get the conflicts evaluated, not just for regulatory submissions, but also as the potential client is likely to be comparing a number of firms and a delay in securing the relationship could mean a loss to a competitive firm.
Modern conflict management software, however, can expedite the entire conflict review process by quickly and accurately detecting possible exposures to conflict of interest to help support a firm’s profitability while simultaneously reducing its exposure to regulatory risk. These solutions can automate the traditionally manual process of combing the vast amounts of client lists and large case files the average law firm accumulates for potential conflicts of interest and all the common challenges that come along with it.
Here’s 4 common challenges firms face with managing conflicts of interest and how modern conflict of interest software can help:
Executing a Consistent and Reusable Search Strategy
An organization might use any number of searching strategies depending on the information it has about clients, potential clients, contacts, and vendors. For example, name, social security number, business name and address are all possible search queries. By employing robust conflict check software, firms can create usable, comprehensive strategies using any combination of these parameters, resulting in automated, exhaustive searches that can easily be recreated in the event that any questions or concerns arise.
Further, utilizing a solution instead of the expertise of the organization’s staff improves the accuracy of a search, which greatly reduces training time and minimizes risk.
Searching Multiple Data Sources
A typical conflict of interest check involves searching a firm’s client database to determine whether the organization has ever represented clients whose interests were adverse to a potential new client. In addition, it involves examining lists of vendors and other parties whose association with the firm might present an issue.
The manual checking of these disparate sources is labor-intensive and time-consuming — especially for large firms that operate in multiple locations or countries. Using conflict check software can greatly cut down on the time needed for due diligence by automatically reviewing all required data sources much more quickly.
Analyzing Results Prior to Clearance
If any potential conflicts of interest are found, they need to be reviewed to determine whether they actually pose a serious concern. In a robust conflict checking process that involves legal conflict checking software, any flagged results are immediately sent to the conflicts team for review before they’re sent to the party responsible for clearance.
Moving to a Centralized Team for Clearance
A growing number of firms are moving toward establishing centralized clearance teams that are often comprised of non-practicing attorneys. These teams can provide the depth of analysis needed to ensure there’s no conflict of interest at any level, which can be a lengthy, complex process–especially when it pertains to large organizations with national or even multinational interests. Conflict check software can expedite the process for these teams as well by providing reporting on initial findings so they can more effectively prioritize and manage each potential conflict.
For more information on modernizing your conflict management system, contact us today.