A mid-sized law firm with approximately 45 attorneys was engaged to represent a closely held company in a series of commercial transactions and ongoing M & A advisory matters. Over time, the firm expanded its representation to include several affiliated entities and individual executives, but its conflict checking process was largely manual and inconsistently applied across practice groups. The process failed to capture a pre existing relationship with a minority shareholder in a separate litigation matter. When a dispute later arose between the company’s majority owners and the minority shareholder, the firm proceeded to represent the majority without fully identifying or resolving the conflict.
As the litigation progressed, the minority shareholder alleged that the firm had obtained confidential information during the prior representation that was materially relevant to the dispute. A motion to disqualify was filed and ultimately granted, forcing the firm’s withdrawal at a critical stage of the case. The client incurred significant additional legal costs to transition counsel and claimed that the disruption adversely impacted the outcome of the litigation. A legal malpractice claim followed, alleging breach of fiduciary duty and failure to maintain adequate conflict-checking procedures.
The claim resulted in substantial defense costs and a negotiated settlement, with the firm also absorbing reputational damage and internal remediation expenses. The root cause analysis pointed to fragmented intake procedures, lack of centralized conflict databases, and insufficient attorney training on conflicts protocols highlighting the importance of robust, technology-enabled conflict systems and consistent firm-wide compliance.
