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Legal Malpractice Issues

Splitting hairs: Attorney conflicts of interest among clients, part 1

by | Jul 22, 2022 | Conflict of Interest |

A lawyer has an unflinching duty of loyalty to their clients. That duty only has teeth when the attorney’s allegiance is not torn between two or more clients with adverse interests. In that situation, legal counsel cannot advocate freely and without reserve for one of those clients without breaching the duty of loyalty and care to the other client (or sometimes a former client).

While there are multiple ways a lawyer can have a conflict of interest that should disqualify them from representing a particular client, one common scenario is that an attorney or law firm may not represent two clients in litigation against one another. This is usually true also even if one of those clients has different counsel in the common litigation, but by the original law firm in other or related matters. Issues can arise not only of loyalty, but also of candor, confidentiality and misuse of one client’s private information to the benefit of the other.

Law firm conflict checks

Automating a process traditionally performed manually, standard practice today for U.S. law firms is to use specialized software designed to identify potential conflicts of interest across its current and former client base and current and past opposing parties. Before a firm agrees to take a case or undertake a legal matter for a potential client, it should use such a program to check for possible conflicts of interest.

Normally, if the software or attorneys uncover a conflict, the firm should not represent the new client or may approach the existing, conflicted client and the potential client to see whether they each would consent in writing to dual representation after fully understanding what could be at stake if they consent to representation despite the conflict.

The Swiss verein model and conflicts

With the advent of massive global law firms and international attorney affiliation networks, it was just a matter of time until this scenario took off on steroids. Enter the April 28, 2022, case of RevoLaze LLC v Dentons US LLP in which an Ohio appeals court affirmed a jury award to RevoLaze of more than $32.2 million to compensate it for losses associated with its law firm Dentons US’s alleged failure to disclose a major conflict of interest concerning The Gap, Inc. (Gap), a client of Dentons’ Canadian office.

On its website, international law firm Dentons identifies itself as the world’s largest law firm with more than 200 offices in over 80 nations. The firm is organized as a legal entity under Swiss law called a verein that “loosely translates to an association,” according to the court’s opinion.

RevoLaze owns key patents for a laser abrading process that fades blue jeans and is cheaper, faster and better than previously available methods. Dentons US represented RevoLaze in patent matters before the International Trade Commission (ITC) and in U.S. District Court in Ohio against multiple alleged infringers, including Gap. In the same time range, Gap alleged that Dentons non-U.S. offices had 14 open matters for it as a Dentons’ client, including at Dentons Canada.

In part 2 of this post, we will describe the conflict-of-interest issues in this important case. (Dentons US has requested that the Ohio Supreme Court grant jurisdiction to hear the case on appeal. As of this writing on July 22, 2022, the Supreme Court’s docket for RevoLaze LLC v. Dentons US LLP does not yet show whether the court will consider the appeal.)