Date: Tue, 20 Jun 2006 16:22:35 +1000

From: Christopher Archibald

Subject: Lawyer's No Conflict Rules

A leading authority in Victoria is Spincode. It approaches the issue from a question of fiduciary duty.

In short, as I recall the decision, the lawyer is seen as owing fiduciary duties both to act in the best interests of a current client, and not to divulge the confidential information of a current or former client. Those duties might be in conflict with a brief to act for another party (either in the same matter or otherwise), in which case the lawyer's fiduciary responsibility is to withdraw from acting.

Where a firm is involved, partners in the firm are, for want of a better expression, deemed to have the knowledge and duties of each other. So the prospect of a conflict is especially prominent for large firms. Although an individual lawyer may not continue in conflict (without informed consent of the parties), a Chinese Wall can be a solution to overcome the deemed common knowledge and duties of different lawyers.

CMA

-----Original Message-----
From: Barry Allan
Sent: Tuesday, 20 June 2006 4:05 PM
Subject: ODG: Lawyer's No Conflict Rules

I've had a colleague who is into legal ethics raise a question which has so far gone unanswered in a New Zealand context, and am looking for thoughts. We both actually thought there would be a simple and straight forward answer, but haven't seen it. The concern is with a duty upon law firms not to take on competing instructions - not necessarily in the same matter, although that is an obvious context. We have had a case where a firm mounting a hostile takeover used the same law firm as that used by the target, a situation which was saved (according to our court) by the construction of a fairly leaky chinese wall between the two legal teams. Clients would be alarmed if they thought their lawyer's attentions are not fully with them as a result of divided loyalties, and not all divided loyalties lead to measurable outcomes - such is in a contested custody case.

There are various statements made in the cases which accept such a duty, and conflicts of interest are an obvious concern of any rules of professional practice. The question is: insofar as we might recognise such a duty, where might we locate it? Tort seems dubious, as it would involve proof of loss, and here we're talking more in the context of suspicion of pulling punches rather than being able to prove it. If lawyers were actually good about talking to clients about potential for conflicts and how they might be resolved, we might find a contractual duty of loyalty, but it could also provide for a ready exclusion of liability.

My particular stance would be to see the lawyer as fiduciary, which does not seem a big claim to make, although saying that brings with it a duty of loyalty of the sort contended for (or in Lionel Smith's terms, a consequent prophylactic duty) is not exactly a given. By locating this sort of duty within a fiduciary context, we have an appealing strictness of obligation, without any need to test for loss. But, at least in this part of the world, there seems to be very limited support for such an approach.

Any thoughts?

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