Conflicts of interest

 

General principle

Our Member shall not assume a position in which a client’s interests conflict with those of themselves, another Member, a lawyer in the same firm, or another client, unless otherwise permitted by law, applicable rules of professional conduct, or, if permitted, by client’s authorisation.

Explanatory note

Trust and confidence in our Institute, the legal profession and the rule of law depends upon Members’ loyalty to clients. Rules regarding conflicts of interest vary from jurisdiction to jurisdiction. However, the definition of what constitutes a conflict also differs from jurisdiction to jurisdiction, including (but not exhaustively) whether information barriers are permitted at all, and also whether conflict of interest prohibitions cover all the law firm or whether information barriers can help.

Generally, a Member shall not represent a client if the representation involves a conflict of interest. A conflict of interest exists if the representation of one client will adversely affect another client; or there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client, a third person or by a personal interest of the Member.

Notwithstanding the existence of conflict of interest, in some jurisdictions a Member may represent the client if they reasonably believe that: -

  • they will be able to provide competent and diligent representation to each affected client;
  • the representation is not prohibited by law;
  • the representation does not involve the assertion of a claim by one client against another client (represented by the member) in the same litigation or other proceeding before a tribunal, and each affected client gives informed consent, confirmed in writing.

A Member who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not use information relating to the representation to the disadvantage of the former client except when permitted by applicable law or ethics rules.

In some jurisdictions, certain potentially conflicting situations may be permitted subject to proper disclosure to and, to the extent permitted by applicable law or ethics rules, consent by all parties involved, provided always that disclosure may be made without breaching confidentiality obligations.

Without prejudice to additional duties, if a conflict becomes apparent, only after the lawyer’s work has commenced, some jurisdictions may require the conflicted Member to withdraw from the case in its entirety and in respect of all clients concerned; others may require withdrawal from representing one client only, but not all of them. In addition, legal and professional conduct conflict of interest must be clearly distinguished from commercial conflict of interest.

A Member should be entitled to defend the interests of or represent a client in a case even if that client is a competitor or its’ interests conflict with the commercial interests of another present or former client, not involved or related in that particular case assigned to the lawyer.

Also, a Member may defend the interests of or represent a client against another client in any circumstance where the latter, whether in negotiating an agreement, or in another legal action or arbitration, has chosen to place its interests for those cases with another lawyer. However, in such cases, the first-mentioned Member’s lawyer will have to comply with all other applicable rules of professional conduct, and in particular with rules of confidentiality, professional secrecy and independence.

In upholding the interests of clients, a Member must not:

  • allow their own interests to conflict with or displace those of their client;
  • exercise any undue influence intended to benefit themselves in preference to that of a client;
  • accept instructions or continue to act for a client, when the Member becomes aware that the client’s interest in the proceedings would be in conflict with the Member’s own interest.

International implications

The differences in national rules on conflicts of interest will have to be considered in any case of cross-border practice.

The Member is called upon to observe the relevant rules on conflicts of interest when engaging in the practice of law outside the jurisdiction in which the lawyer is admitted to practice.

Every international law firm will have to examine whether its entire organisation complies with such rules in every jurisdiction in which it is established and engaged in the provision of legal services.

A universally accepted framework for determining proper conduct in the event of conflicting or incompatible rules has yet to be developed, although certain jurisdictions have adopted conflict of law principles to determine which rules of professional conduct apply in cross-border practice.