Notes & Practice on Professional Conduct

A conflict of interests occurs when a legal professional’s obligation to act in the best interests of two or more clients clashes. There are two types of conflicts: “own interest conflict” where the lawyer’s interests conflict with the client’s, and “client conflict” where there is a conflict between two or more current clients.

if there is a conflict between the solicitor’s interests and the client’s interests, or if there is a significant risk of such a conflict, the solicitor cannot represent the client. 

Are there any exceptions to representing clients with a conflict of interests?

Yes, there are exceptions, but strict conditions must be met. A lawyer can represent clients with a conflict of interests if:

1. The clients have a substantially common interest in the matter or objective.
2. The clients are competing for the same objective. 

Additionally, the following conditions must be fulfilled:

• Informed consent from all clients, given or evidenced in writing, is obtained.
• Effective safeguards are put in place to protect the clients’ confidential information.
• It is reasonable for the lawyer to act for all the clients.

What requirements are placed on law firms regarding conflicts of interests?

Law firms are required by Part 2.1 of the Firm Code to have effective governance structures, arrangements, systems, and controls in place. These ensure compliance with the SRA’s regulatory arrangements, as well as other regulatory and legislative requirements. Part 2.5 of the Firm Code requires firms to identify, monitor, and manage all material risks to their business, including those arising from connected practices. Systems and controls must be appropriate to the firm’s size, complexity, and the nature of the work undertaken. They should enable the firm to assess relevant circumstances, including differences in clients’ interests, potential fettering of independent advice, the need for negotiation, power imbalances, and client vulnerability. It is not enough to consider only the relatedness of the matters themselves; the firm must also evaluate whether acting for both clients will affect the advice or steps taken and if it would prejudice the interests of the other client.

How should a firm proceed when a conflict of interests between two clients arises when the firm is already acting for both clients and the exceptions do not apply?

Your firm cannot continue to act for both parties if a conflict of interest arises. However, you may be able to continue acting for one of the clients provided the duty of confidentiality which you owe to the other client is not put at risk.

Gifts;

Generally, accepting gifts from clients should not breach a solicitor’s obligations under the Principles. However, it’s important to consider public perception and the fiduciary nature of the solicitor-client relationship.

• Standard, modest gifts given around Christmas time are unlikely to attract attention and are generally acceptable.
• Special caution is necessary when gifts are more valuable, especially around tenders or during a dispute. Such gifts could be seen as an attempt to influence professional judgment, potentially creating unfair treatment or expectations of preferential treatment.

Q: What factors should be considered in determining the acceptability of a gift under the Bribery Act?

The key factors are intention, value, and timing. There is no specific value limit for acceptable gifts, so common-sense judgment is required.

examples: 

•  A bottle of wine as a ‘thank you’ is usually acceptable.
• An expensive bottle of vintage champagne before an important deal may require closer scrutiny.
• A wealthy client gifting a more expensive bottle of wine as a ‘thank you’ after a deal may be appropriate.
• A struggling business client providing the same wine before a crucial deal for their business would likely be questionable.

Q: What duty does a solicitor have regarding a client’s attributes, needs, and circumstances?

Under Part 3.4, a solicitor has a duty to consider and take account of their client’s attributes, needs, and circumstances. If a client proposes a significant gift under their will to the solicitor, a proprietor or employee of the practice, or a family member, the solicitor must stop acting for the client unless the client seeks independent advice.

financial benefits;

According to the SRA Code of Conduct (Part 4.1), a solicitor must properly account to clients for any financial benefit received as a result of their instructions, unless the client has agreed otherwise.

Q: How should solicitors handle financial benefits received from clients?

When a solicitor receives a financial benefit, they should either pay it to the client, offset it against their fees, or keep it only if they can justify doing so. In the latter case, they must inform the client of the amount or an approximation and obtain the client’s agreement to keep it.

Q: Can a solicitor act for both buyer and seller in a conveyancing transaction?

Generally, a solicitor should not act for both buyer and seller in a transaction involving the transfer of land or the grant/assignment of a lease for value. However, there are exceptions:

• Both parties must consent.
• No conflict of interest should exist or arise.
• The solicitor should not be negotiating the sale as part of their practice.
• The seller must not be a builder or developer selling as such.

Q: What is the duty of confidentiality?

The duty of confidentiality requires solicitors to keep their clients’ information confidential and not disclose it without the client’s permission or a legal requirement.

Q: Does the duty of confidentiality end after the client’s death?

No, the duty of confidentiality continues even after the client’s death. Information such as the contents of a client’s will must not be disclosed except to the executors or with their consent until probate has been granted.

Q: Who is bound by the duty of confidentiality according to the SRA Code of Conduct?

All members of a law firm or in-house practice, including support staff, consultants, and locums, owe a duty of confidentiality to the firm’s clients.

Q: How should the duty of confidentiality be reconciled with the duty of disclosure?

According to the SRA Code of Conduct, the duty of disclosure is limited to information that is material to the client’s matter and of which the solicitor is aware. If the two duties cannot be reconciled, the protection of confidential information takes priority.

Generally, if a solicitor cannot disclose material information, they should not continue to act for the client. There are limited circumstances where they may continue to act with appropriate safeguards in place.

Q: Are there any exceptions to the duty of confidentiality?

Yes, disclosure is allowed if it is required or permitted by law or if the client (or former client) consents to disclosure.

Q: Are details of the client’s personal affairs subject to the duty of confidentiality?

Yes, details of the client’s personal affairs, even if unrelated to their case, are subject to the duty of confidentiality.

Q: When is disclosure of confidential information mandated by law?

Disclosure of confidential information may be mandated by law in situations such as the investigation of certain crimes. In some cases, solicitors are prohibited from informing the client about the disclosure, as in the case of suspected tax evasion under the Proceeds of Crime Act 2002.

What should be considered when outsourcing services to maintain confidentiality?

When outsourcing services such as word processing or telephone call handling, steps should be taken to ensure the provider can maintain confidentiality. This includes obtaining confidentiality undertakings from the provider, conducting compliance checks, notifying clients of the use of such services, and complying with legal obligations such as the Data Protection Act 2018.

Stay tuned for more notes ………