The spectre of conflicts of interest has raised its ugly head again in recent weeks, with news that the interminable disciplinary investigation into two senior Freshfields Bruckhaus Deringer lawyers is likely to be hanging over the firm even longer than first thought.

Unfortunately for Freshfields, there has been little sustained focus on its rivals' handling of conflicts in the three years since the Law Society launched its initial investigation into the City giant. In fact, there have been notably fewer public examples of firms getting into scrapes over conflicts.

It was perhaps inevitable that firms would become more cautious the moment a conflict knocked Freshfields off Philip Green's £9bn bid for Marks & Spencer (M&S) in 2004.

The year before the incident, firms including Allen & Overy (A&O), DLA and Herbert Smith had all been caught up in conflict rows. A&O had acted for two clients on a bid for Safeway, DLA was berated by Alchemy Partners for acting on both sides of a deal and Herbert Smith raised hackles at Chancery Lane when it acted both for and against the Law Society on separate contentious matters.

Post-M&S, firms have been more rigorous in their conflicts-checking procedures, as could be seen early last year when both Freshfields and A&O overhauled the way they accept mandates.

Managing conflicts, not making it up

Likewise, it is fair to say advisers have become more sophisticated in terms of managing and balancing potential legal and commercial conflicts, at times allowing them to push the envelope without actually tearing the paper.

The introduction last year of modernised conflict of interest rules also gave firms clearer guidelines to work with and advisers successfully lobbied for greater scope to secure early client consent to accept multiple roles through engagement letters. Another reason for the improvement in behaviour is the buoyant transactional market. There have been far fewer situations where firms have been so desperate for work that they have been tempted to bend the rules.

Of course, the current wave of deals has brought issues of its own, thanks to the level of auctions and competitive M&A putting more pressure on advisers to manage instructions or risk repeatedly conflicting themselves out. Such concerns can be seen at Linklaters, which this year tightened up its standard engagement terms to give it more scope to get non-exclusivity agreements.

That is not to say firms have completely stopped getting into conflict situations and the Solicitors' Regulation Authority (SRA) is certainly preparing itself for future investigations.

The SRA is attempting to gain new powers to speed up the disciplinary process by negotiating early settlements with solicitors. This would give it greater scope to chase complaints without the need to see them through to a disciplinary tribunal.

In addition, there has been talk of the regulator looking at settlements with firms, rather than just individual lawyers. This would seem sensible if the SRA is ever to seriously police City law firms. In such situations, pinning the blame on individual partners is very difficult and, arguably, counter-productive in terms of holding institutional behaviour to account.

In this context firms would have to be more vigilant than ever against a new form of regulation – one that could investigate procedures and group decisions.