1. Slicing the Pufferfish: An Update on Risk Management in a Firm in Light of Legal and Business Conflicts Ava K. Doppelt, Esq. Allen, Dyer, Doppelt, Milbrath & Gilchrist, P.A. 255 South Orange Avenue, Suite 1401 Orlando, FL

2. What are conflicts for lawyers?
A conflict of interest exists “if there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own intents or by the lawyer’s duties to another client, a former client, or a third person.”
Restatement (3rd) of the Law Governing Lawyers
Conflicts Involving Parties
Concurrent Clients, ABA Model Rule 1.7
Former Clients, ABA Model Rule 1.9
Prospective Clients, ABA Model Rule 1.18

3. Rule 1.7: Conflict of Interest: Current Clients
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing.

4. Concurrent Clients
Based mainly on duty of loyalty
Prevents a lawyer from acting adversely to a current client on any matter, even if unrelated and even if it would not require use of client’s confidences.

5. Rule 1.9 Duties To Former Clients
(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.
(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client
(1) whose interests are materially adverse to that person; and
(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter;
unless the former client gives informed consent, confirmed in writing.
(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or
(2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.

6. Former Clients
A lawyer has a fiduciary duty to former clients not to disclose their confidences
Prevents subsequent representation only if there is a “substantial relationship” with the previous matter or the lawyer had access to confidential information of the former client that is material to the second client
Based primarily on the duty of confidentiality

7. Rule 1.18: Duties to Prospective Client
(a) A person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client. (b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective client shall not use or reveal that information, except as Rule 1.9 would permit with respect to information of a former client. (c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d). (d) When the lawyer has received disqualifying information as defined in paragraph (c), representation is permissible if: (1) both the affected client and the prospective client have given informed consent, confirmed in writing, or: (2) the lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client; and (i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and (ii) written notice is promptly given to the prospective client.

8. Prospective Clients Who Never Became Clients
A conflict arises if the prospective client discloses “significantly harmful” confidential information to the lawyer, and had a reasonable expectation that an attorney-client relationship would be formed.

9. Subject Matter Conflicts
Arise when the subject matter of a representation for one client is similar to the subject matter for another client, and such similarity inhibits the attorney’s ability to fully and properly represent both clients.

10. Subject Matter Conflicts
In the patent prosecution context, is a firm obligated to represent only a single client in a a particular industry to the exclusion of the entire “related technology area,” based on conflicts?

11. Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N. E
Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N.E. 3rd 199 (Mass. 2015).
Facts: Maling hired Boston office of Finnegan to prosecute patents for screwless eyeglasses. They got 4 patents for him. At the same time, Finnegan’s D.C. office obtained patents for a competitor of Maling’s, Masunaga Optical Mfg. The firm did not inform either client or get their consent. Maling sued claiming he was damaged because of the conflict from Finnegan’s simultaneous representation of both clients. Trial Court: Dismissed for failure to state a claim. Supreme Judicial Court: Affirmed.

12. Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N. E
Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N.E. 3rd 199 (Mass. 2015).
Held: The simultaneous representation by a law firm in the prosecution of patents for two clients competing in the same technology area for similar inventions is not a per se violation of the Rule. Based on the facts alleged in the complaint, Maling failed to state a claim, so the Court affirmed the dismissal.

13. Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N. E
Maling v. Finnegan, Henderson et al. 473 Mass. 336, 42 N.E. 3rd 199 (Mass. 2015).
The mere fact of overlapping technology does not automatically create a conflict. There must be an actual legal conflict between the clients, not just competing economic interests.
But don’t get too comfortable. The Court left the door open that under different or more complete facts, there could be a conflict.
The question is: Does the lawyer have a competing interest or responsibility that will materially interfere with independent professional judgment in considering alternatives, or foreclose causes of action that should reasonably be pursed for the client.

14. Best Practices For Avoiding Conflicts
Maling court cautioned law firms “to implement robust processes that will deter potential conflicts.”
Importance of comprehensive initial and continuing conflict checks.
For: every new client, new matter for existing clients, new or changed parties for existing matters, additional information as it becomes known.
No exceptions
Written documentation of results
GIGO

15. Developing a Robust Conflicts Checking Process
Information to Secure During Client Intake and Throughout Litigation
Identity of client
Patents Prosecuted/Litigated
Identity of related/affiliated businesses
Adverse and third parties in litigation
Inventors
Witness and experts
Assignees/Licensees
Subject matter of representation
Any entity in which an attorney serves as officer or director, or has ownership interest
Key terms/indicators
Identity of prospective client if confidential information was disclosed in consultation
Industry Code

16. Conflict Checking
Don’t rely on information as relayed by client (verify corporate information, spelling of names, names of related entities or parties)
Update as necessary, continuously
For patents, include information in disclosure, not bare title
For trademarks, include mark and logo
No conflict checking procedure is foolproof, but you must be able to prove after the fact that you adhered to a high degree of care, and that your system was reasonable, and comprehensive.

17. Conflicts Waivers
Existing: When a specific conflict arises, unless it’s unwaivable (e.g., opposite sides in a lawsuit), obtain written consent from both clients, specifying that you will have to withdraw if the clients become adverse. Prospective: Get the clients to waive in advance and in writing conflicts that might arise.

18. Inside Counsel Can Help Their Patent Prosecution Firms Avoid Conflicts
Provide your patent prosecution firm with a list of competitors in the field or entities known to be filing patents or conducting research in same technology area
Review the field and update the list periodically

19. Warn about AIA first to file
Importance of engagement letters and termination letters to manage conflicts
Warn about AIA first to file
Retainer letters should ask the client to:
Identify the issue
Identify competitors
Update the list in writing
Monitor patent publications
See sample provisions. (Thanks to Carstens & Cahoon, LLP)

20. AIA Complications

21. Identify the Issue

22. Identify Competitors Up Front

23. Update & List in Writing

24. Monitor Patent Publication

25. Tell us, tell us, tell us

26. THE END