Survey Reveals Need for Speed in Conflicts Clearing of Laterals, New Business

Editor’s Note: The authors of this post are consultants to the legal industry.

By Sharon Quaintance and Jennifer Stakes, HBR Consulting

In today’s fast-paced, demanding legal environment, law firm executives are in the hot seat to clear conflicts quickly and accurately. A recent HBR Consulting Conflicts Clearing Survey of 12 members from a cross section of nine AMLAW 100 law firms and three Magic Circle law firms, confirmed the increasing urgency. Competition for high profile lateral attorneys and new business are primary drivers of the heightening pressure for fast and efficient conflicts clearing.

The following are three key findings from the survey, which was conducted at an HBR round table discussion held in October, as well as tips firms can use to improve their current processes. All figures below are based on responses from the 12 attendees, all of whom participated in the survey.

Time to clear conflicts can win or lose business

Failure to deliver prompt conflicts clearance can hurt business. According to the HBR conflicts survey, 58 percent of firms have lost business in the past 12 months due to a conflict clearing delay. In contrast, 75 percent of firms said client reporting suggests they have won work due to prompt conflicts clearance. Aside from the survey, there is anecdotal evidence from several firms indicating that delays in the conflict clearing process at least partially contributed to laterals going elsewhere. At a time when all aspects of a firm are under scrutiny, ability to check and clear conflicts at a fast pace is another indicator of a firm’s general operational effectiveness.

Sluggish conflicts clearance can contribute to unhappy clients

When a firm wins new business, but has a misstep early in the process, a client may quickly develop and continue to hold a negative impression of the firm’s services. So, it should be a concern when 25 percent of survey participants said their clients have reported dissatisfaction at a conflict clearing delay. And some firms – 17 percent according to the survey – experienced both client loss and dissatisfaction due to conflict clearing delays.

A satisfactory client relationship requires more than delivering exceptional legal services. Performance at each phase of the Client Matter Lifecycle, which has multiple stages including pricing, conflicts, new business intake and billing, can leave lasting impressions on prospects and clients that ultimately influence a firm’s reputation and brand.

Firms are using a wide variety of staffing approaches

Firms are staffing their conflicts organizations very differently — a trend confirmed by this latest data. The survey showed a wide divergence in both the number and types of personnel (attorneys v. analysts v. clerks) in the conflicts groups. In fact, the standard deviation for the survey’s attorney-to-conflicts staff ratio was a surprising 23-to-1. There are too many variables to determine conclusively whether more personnel speeds up the clearing process, but in most operational improvement initiatives it takes more than adding resources to improve the end result.

Many of the survey participants have made efforts to maximize staffing effectiveness with most firms (88 percent) having cross-trained resources to clear conflicts in all jurisdictions. In addition, 38 percent of the firms have implemented geographically focused teams with a few firms having some personnel cross-trained in all jurisdictions. All the firms operating globally had at least a few resources dedicated to Anti-Money Laundering (AML). Only a few firms had dedicated 24-hour coverage with a few more having on-call staff support.

Tips for achieving quicker conflicts resolution

To achieve conflicts clearing improvements, firms should consider studying their current metrics to pinpoint problem areas, assess their policies & procedures, and evaluate their process workflows.

1. Use metrics to monitor and refine the process

While most firms have some level of metrics associated with their conflict clearing process, many firms do not actively use these measurements for continuous improvement. Every firm should know at least these performance measures: 1) time to clear conflicts both for new clients and for existing clients with new matters; 2) time to clear an escalated matter; and 3) time to complete defined steps in the conflicts process (e.g., time a conflict is with the requesting attorney before clearance). Effective use of metrics can help clear roadblocks and better assess needs for staffing changes.

2. Implement and enforce clear policies and procedures

Many firms are actively working to close gaps in their conflicts policies and procedures. The evolving global landscape regarding how to address conflicts is all the more reason to have current, comprehensive policies and compliance checking mechanisms. Streamlined procedures for addressing escalated items are particularly critical as these are the matters that often cause significant delays.

3. Understand process workflows

Although many firms have excellent conflicts personnel, the processes used by the teams frequently have not been optimized. It is important to evaluate existing workflows with a focus on eliminating unnecessary steps and increasing automation. This is particularly true before changing related software platforms. To improve approval times, many firms now have different conflicts approval workflows for specific practice areas (e.g., patent prosecution). In addition, firms are employing a variety of methods to handle vetting of laterals in an expedited manner.

In an environment of increasingly conditioned instant digital responses, law firms’ client expectations associated with prompt yet accurate conflict checking are evolving too. As with all parts of the Client Matter Lifecycle, solid communication and data are key to ensuring continued client satisfaction and market differentiation.