IN THE COURTROOM The Question Of Conflict Of Interest Posted by on Jan 15, 2008, 03:49

The problem to be considered in this article relates to the question of what is generally known as 'conflicts of interest'. Naturally, any treatment of this question would need thinking and reflection. However, before proceeding it is necessary to clarify a matter of terminology. It may be that little actually hangs on this point, yet its merit lies in its effect as a means of focusing the ensuing discussion. It is argued that the term 'conflicts of interest' is something of a misnomer. Rather, it is suggested, a more appropriate way of describing the matter under consideration is to speak of conflicts of duties.

 Whilst it is accepted that there are times when a lawyer will have a financial interest in maximizing the number of clients (even if their interests conflict), there must be a presumption that the duty of the professional to the client will be at the forefront of his or her concerns. It is hoped that this is not too starry-eyed a view of the legal profession. To abandon the assumption that the vast majority of lawyers look to the welfare of their clients before their own would be effectively to deny that there is a legal profession as such. With this in mind, it is argued that the potential for conflict actually arises when the interests of two or more persons, other than the lawyer, conflict. And given that the lawyer's relationship is founded on a duty to his or her client, so it is the issue of a conflict of duties.

 One of the purposes in the unfolding argument will be to demonstrate how it is that this change of focus impinges on the general debate about conflicts. There is of course one simple and unambiguous response that might be made to the problem of real or potential conflicts of duty. That is to place an absolute prohibition preventing any lawyer, or firm of lawyers, from ever acting for more than one party in any transaction whatsoever. This approach would at least achieve the objectives of clarifying the situation and of relieving the pressure on those who are called to exercise their judgment in these matters.

However, there seems to be something counter-intuitive about the idea of a total prohibition. Why should this be? In beginning to answer this question it is important to note that a blanket prohibition seems to fail to take account of the views of clients. That is, in its effort to determine that which is fair and proper in the conduct of the legal profession someone (perhaps members of the self-regulating profession itself) would have acted as the arbiter of the ‘good’ of others. To be sure, there is a need for someone to consider these issues and ultimately, to decide.

 However, it is not self-evident that anyone other than the parties concerned ought to determine the extent to which prima facie duties of lawyers to clients ought to be discharged. All of this is to suggest that any move towards prohibition ought to be tempered by acceptance that more than one party has the capacity, and perhaps the right, to instruct the same solicitor in the same matter.

This, of course assumes that the various parties have concluded that it is in their interests so to instruct. At a relatively uncontroversial level this makes allowance for the development of class-actions in which one lawyer acts for many persons. And using the same principle, it means that in matters which are not obviously contentious, such as with the sale or transfer of property, there is at least the theoretical possibility that one lawyer will act for different parties to the same matter. The possibility of the development of a conflict between parties to an otherwise amiable transaction is, of course, there. Some might argue that the fact of this possibility is enough to suggest that lawyers not be able to act for more than one party to a transaction, even with informed consent. However, it is important to see whether this principle can be applied consistently when considering the practice of lawyers. For example, if the possibility of a conflict is thought to disallow the practice of representing more than one party to a transaction, is this same possibility also to be considered as relevant when deciding whether or not to take instructions from competitors who operate within the same jurisdiction, industry and market?

There is always the possibility that existing or future clients will find themselves at odds with each other. The fact that they have previously sought advice from the same lawyer will have little bearing on the issue of whether or not they develop a conflict. Likewise, if a lawyer were to act in good faith for more than one party to a transaction, there is neither a greater nor a lesser likelihood of a subsequent conflict developing. Thus, the issue would seem to return to that of whether or not it is consistent with the duty to the client for a lawyer to act, with informed consent, for more than one party. It has been argued that to do so is consistent with this duty.

However, in allowing for this possibility, it is important to stress the need for the lawyer always to be conscientious in advising clients whenever there is a possibility of a conflict developing. The onus is on the lawyer at all times to make this information available to clients so that their choice of a representative is informed by up-to-date and relevant information. This position, which some lawyers will find unsettling, arises because of the principle that lawyers are bound to follow their clients' instructions - providing   it is within the law. There are a number of problems with a view which implies that lawyers ought to suspend their sense of judgment about right and wrong in support of their clients achieving their stated end. Put at its most extreme, this is exactly what some do advocate (always remembering the limits set by the Law).

 This is not the place to address this issue. However, to hold to this position, in its weak or strong form, also commits one to the proposition that the client may instruct the lawyer to help achieve an end that, despite the lawyer's best advice, is contrary to the client's interests. It is clearly the case that much of the concern about conflicts arises because of a fear that the lawyer will be unable to fulfill the fiduciary duty to the client. That is, in acting for more than one party in a matter, the lawyer's effort and skill will be diluted in a manner that leads to the disadvantage of all. In the most extreme of cases, where an adversarial situation exists, the absolute prohibition against one lawyer acting for both parties is based on what seems to be the well-founded assumption that it is not possible for the lawyer to honour the duty to both.

In this situation, it is argued; even the consent or instructions of the client are insufficient reason for acting for both sides. Apart from any concern for the interests of the client, the reason advanced in support of the prohibition is based on the prescription that "ought to imply can". That is, one cannot be under a moral obligation to do the impossible (or to avoid the inevitable). It is not that it is impossible to act for more than one party when each of them is in open conflict with one or more of the others; rather the assertion is that it is impossible adequately to fulfill the duty to each. It is an impossibility of this kind which is thought to settle the matter. Whether or not it really is impossible for one person to make all their skill available to mutually contending parties is an interesting question that, in another place, ought to be pursued. For the purpose of this article it would seem to be a defensible proposition - especially given legal doctrines such as the presumption that, as the principal, the client is in possession of the same knowledge as his lawyer.(to be continued)