Functional Conflicts Survey Results Blog!

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RION Corp. – Conflicts Analysis Survey Results                       March 2, 2015

PURPOSE & OBJECTIVES

Our Founder and President has worked in the legal industry for 10 years. As a Conflicts Analyst, he found himself frustrated with the tools available, as well as the wide variety of conflicts procedures at different firms where he worked. He set forth on a quest for a better conflicts analysis tool, as well as an industry standard.  He founded RION Corp. (RION stands for Real-time Intake Optimization for New business.,) in June 2014, and proceeded to develop a software product in line with the best practices he learned and knew to be successful. The issue still stands that there is no standardized process for conflicts, and we decided to take a survey of the conflicts community through LinkedIn.com to establish a baseline to begin forming a framework that all law firms can use to improve efficiency and accuracy of conflict checks globally. 

METHODOLOGY

We used a ten-question survey and distributed it electronically (via SurveyMonkey) to our contacts and groups involved in Conflicts Analysis around the world. The survey was open from January 11, 2015 to February 28, 2015; and we gathered 52 responses from 3 countries. We analyzed our results using IBM SPSS Statistics v22, and Microsoft Excel.

FINDINGS

FIRM STATISTICS:  Roughly twenty percent of attorneys at a given firm will need a conflicts check each day.

On average, a conflicts staff member will process approximately 11 checks per day (we know a check can vary broadly on how much time it takes), and we can see that if there is an influx of checks, for example with a lateral hire, additional stress will be experienced by the staff.

We also notice that as the size of the firm increases, the coverage of conflicts staff per attorney decreases:

# of Attorneys	0-100	101-300	301-600	600+
# of Conflicts Staff	3	1.62	1.57	1.44

PROBLEMS:  We noted that the only firms to report over-staffing (less than 5% of all respondents) had over 600 attorneys. We also found that firms of this size had the most consistent reports of “loose” adherence to conflicts procedures. Unfortunately, firms of this size can also have the most to lose from poor quality conflicts checks. The high cost of poor conflicts procedure adherence was outlined recently for one firm in the Washington Post, who lost a client that paid $12M in legal services, and paralegals had spent over 20,000 hours on the case – only to find out that a paralegal had accidentally left off two entities while compiling a list of potential conflicts before accepting the business. They ended up representing both the plaintiffs and the defendants in a lawsuit about false advertising.

POLICY ADHERENCE: Our survey permitted respondents to anonymously comment about the requirements at their firm, and how frequently they adhered to the requirements. The findings indicated that in times of high demand, the staff must deviate from the procedures in order to maintain timeliness in conflict reporting. Of the procedures we surveyed, the findings of procedure adherence (from high to low) is as follows:

 

Adherence to Conflicts Requirements*
97%	Use of Conflicts Software
83%	Searching 3rd Parties
82%	Engagement Letter required to open a new client matter
76%	Use of Workflow Tool
74%	Perform Corporate Family Tree Search
74%	Search Executives
73%	Conflicts Attorney clears Conflicts
70%	Checks against anti-money laundering, sanctions data bases
67%	Run Credit Checks on new clients
63%	Corporate Family Tree Searches for Lateral Hires
57%	Maintain client relationship library

* We anticipate more research in this area in future survey initiatives.

STAFFING:  Firms with less than 100 attorneys say they routinely utilize other departments to handle high-demand for conflicts checking. One third of all firms report being understaffed, and of those a majority see value in outsourcing conflicts in periods of high demand. A majority of firms with more than 300 attorneys (who report adequate staffing) concur with the concept of outsourcing in periods of high demand. Three quarters of firms with over 300 attorneys who report themselves as understaffed also see value in outsourcing conflicts checks in periods of high demand.

The resounding report from firms of every size, regardless of their staffing status (understaffed, overstaffed, adequately staffed), is that while the prospect of outsourcing may be useful in an ideal world, it seems there are several concerns about moving in this direction including:

·      Firm-specific needs (procedure)

·      Time for training

·      Skill level

·      Executive Buy-In

·      Ethics

·      Access to internal conflicts checking systems and data by an outside vendor

It seems there may be room for an outsourced option once these kinds of concerns can be addressed. The outsourcing vendor would have to prove itself in outstanding ethical quality, and must provide a level of conflicts checking that exceeds expectations at every firm. This would require an agreeable standardized process for conflicts analysis.

 

SOFTWARE: We noticed that Elite and Intapp are the most popular, and the firms that seem to be moving from one program to another prefer to move-in with these two. Intapp has a strong standing in second place; collectively these two hold the market at 62% of implemented or about to be implemented in conflicts departments. 

 

A total of seven software products were reported including 6% proprietary implementations.

OUTSIDE RESEARCH: The majority of outside research resides with Dun & Bradstreet (over 35%), Lexis Nexis takes a strong second place with 21%. The other contenders for top 5 include Hoovers (19%), and The Internet and Google tied at 17%.

The full list of reported entities includes is 28 sources. We note that some of these entities are specific to type of law or region of practice, but may be worth considering to add robust practice your firm’s conflict checking procedures:

Rank	Entity
1	Dun & Bradstreet
2	Lexis Nexis
3	Hoovers
4	Internet
5	Google
6	Bloomberg
7	OneSource/Avention
8	Westlaw
9	Bureau van Dijk
10	Pacer
11	Acuity
12	Captial IQ
13	10K Filings
14	Courthouse News

15	Knowledge Management (SAP)
16	Thomson Reuters
17	Accurint
18	Global Data
19	Edgar
20	TLO
21	OFAC
22	ABA
23	Corporations Canada
24	BC Registry
25	Open Corporates
26	Courtlink
27	Monitor Suite
28	Amber Road

AUDIT PROCEDURE: We asked if firms are permitted to reopen matters for the purpose of audit. The results were pretty clear: a full half said yes. 21% reported that they don’t handle audits this way, and 15% said they handle it some other way. Some firms bill to one internal number to track time spent on client/matter audit.

CONCLUSIONS

·      Procedure Adherence: When conflict checks are in high demand, adherence to procedures suffers.

·      Staffing: When conflicts checks are in high demand, a majority of firms would consider using an outsourced option; though there are concerns about the adequacy of this option.

·      Software: 7 brands reported, majority held by Elite and Intapp (62%). 6% noted a proprietary system.

·      Outside Research: D&B and Lexis Nexis are most frequently used.

·      Audit Procedure: Half of firms are advised to reopen matters temporarily for auditing purposes.

We found a few trends within firms that point to the beginning of a standardized process for conflicts checking. We noticed that when conflicts departments are in high demand the accuracy of the checks goes down, and that outsourcing is one option that is interesting but deserves more research.

RECOMMENDATIONS

•       It is the recommendation of RION Corp. to establish a standard framework for conducting conflicts of interest research at law firms.

•       We have plans to create regionally based chapters for discussing and agreeing on a standard for the industry: C.A.S.E. (Conflicts Analysis Standardization Effort)

•       After this framework is established, we will insure our software product and outsourced staffing options for conflicts are aligned and fine tuned to be the gold standard in this industry.

CONFLICTS ANALYSIS STANDARDIZATION EFFORT (CASE)

For more information on CASE, please join the RION Corp mailing list for updates.

Thank you for reading our report. If you have any questions please contact:

Cori Blackburn: cori.blackburn@rioncorp.com

Ryan Vago: ryan.vago@rioncorp.com