Conflict of Interest for a law firm: Some examples

This article shares some rulings made by Ethical Committee of Law Institute of Victoria published in Law Institute Journals and available in the Ethical Rulings Archive Law Institute’s Website.

Where an expert is a past and current client of a law firm a possible Potential Conflict of Interest can be avoided by Informed Consent

(R5008 – November 2021)

In this matter the Committee ruled that there may be a potential conflict of interest, but it can be avoided with disclosure by the law firm.

The expert was a past and current client of a law firm, and the expert had been asked by a different law firm to provide an expert report in an unrelated matter in which the expert’s law firm acts for another party, the law firm will not be conflicted from continuing to act in the unrelated matter provided that the expert provides informed consent.

The informed consent will address any duty of loyalty or confidentiality the law firm may owe to the expert.

The Circumstances

A law firm acted for one of the respondents in a VCAT proceeding involving a building dispute. Another respondent to the proceeding was granted leave to provide a report from an expert (Expert). The Expert was a client of the law firm in an unrelated matter and the law firm had previously acted for the Expert in other unrelated matters. Both the law firm and the Expert stated that the law firm was not in possession of confidential information of the Expert. The Expert was prepared to give consent for the law firm to act in the VCAT proceeding. The law firm sought guidance from the Ethics Committee as to whether or not it was conflicted and, if so, whether it should cease to act in the proceeding.

The Ruling

In the opinion of the Ethics Committee and on the information presented:

Provided that the Expert gives informed consent to the law firm continuing to act in the VCAT proceeding for one of the respondents, thus addressing any duty of loyalty or confidentiality, the administration of justice does not require that the law firm withdraw from the case.

The law firm should disclose to VCAT that the Expert is a past and current client of the firm.

Potential Conflict of Interest for a law firm to act in a Family law matter where the same law firm acted for another client in subpoena application in the same matter.

(R5005 – September 2021)

In this matter the Committee ruled that there is a potential conflict of interest where a law firm acts for a client in circumstances where it has previously acted for another client in the same proceedings in relation to an earlier subpoena application. A law firm in this circumstance may be required to cease to act for the client should a conflict of interest subsequently arise.

The Circumstances

A law firm acted for a mother in Federal Circuit Court of Australia family law proceedings and in separate Children’s Court of Victoria proceedings. The law firm had previously acted for an organisation in the same family law proceedings in objecting to a subpoena served upon the organisation by the father of the child. It was noted that the subpoena was withdrawn by consent but that it might be re-issued. The law firm later accepted instructions to act for the mother in the family law proceedings. The father asserted that the law firm was conflicted in acting for the mother. The Independent Children’s Lawyer acting for the child was of the same view.

The Ruling

On the information presented the Committee opined that;

There is presently no relevant confidential information of the organisation which has been identified that could give rise to a conflict of interest.

Should a conflict of interest subsequently arise based on a duty of loyalty owed by the law firm to the organisation as a previous client, then the law firm may need to cease to act at that point, unless the fully informed consent of the organisation is provided.

The law firm should advise its client of the potential for it to be required to cease to act if a conflict of interest based on a duty of loyalty arises subsequently.

Answer to a Commercial tenancy law Question by a solicitor in a seminar:

(R5007 – October 2021)

In this matter the issue was different than to common litigation matters.

The solicitor wanted to know if the solicitor was not conflicted in continuing to represent their client in the mediation before the Small Business Commissioner. Because the solicitor delivering a seminar provided a post-seminar answer to an attendee’s

Query. The Committee opined that no solicitor-client relationship will come into existence in circumstances where no confidential information is conveyed.

The Circumstances

A solicitor presented a seminar to lawyers on questions relating to new emergency legislation and regulations, and their application to commercial leases. At the conclusion of the seminar, attendees were invited to email the solicitor with any further questions.

An attendee (attendee) at the seminar emailed the solicitor a question concerning the applicability of certain regulations to a particular factual scenario regarding a commercial lease to which the solicitor replied.

The solicitor later acted for a tenant in a commercial lease dispute listed for mediation before the Small Business Commissioner. The solicitor was subsequently contacted by the attendee who advised that the attendee owned the company that was the landlord in the mediation in which the solicitor proposed to act for the tenant.

The solicitor sought an Ethics Committee ruling as the attendee alleged that the solicitor had a conflict of interest on the basis that the solicitor had provided a post seminar answer to the attendee’s question regarding that company which contained confidential information.

The Ruling

In the opinion of the Ethics Committee and on the information presented:

Given the circumstances, no solicitor and client engagement ever came into existence between the solicitor and the attendee or their company.

Potential Conflict of Interest of two law firms where one law firm is father’s law firm and the other law firm is daughter’s law firm.

(R5001 – JULY 2021)

In this matter the Committee ruled that the law firm will be conflicted in acting against a former client in separate proceedings where there is a real and sensible possibility of the misuse of confidential information gained from a separate proceeding.

The Circumstances

A law firm had offices in both regional Victoria (regional office) and Melbourne (Melbourne office). The regional office of the law firm acted for a client who was the father in estate planning, transfer of property and other matters (father’s law firm).

The father’s law firm acted for the father in circumstances where his daughter filed in VCAT an application for an administration and guardianship order based on the father’s alleged lack of capacity. The daughter was represented by another law firm (daughter’s law firm) in the VCAT proceedings.

The Melbourne office acted for the daughter in her own family law proceedings at the time the VCAT application was made. The daughter did not alert the solicitors representing her in the VCAT proceedings to the potential conflict of interest involving her father’s law firm until almost 12 months after the VCAT application was made. At this time, the Melbourne office ceased acting for the daughter in family law proceedings.

The daughter’s law firm requested a ruling from the Ethics Committee regarding whether the father’s law firm was conflicted in continuing to act in the VCAT proceedings. It also requested a ruling regarding the entitlement of the daughter to recover a duplication of legal costs in the family law proceedings from the father’s law firm.

The Ruling

The father’s law firm conflicted in acting for the father in the VCAT administration and guardianship proceedings on the grounds of a real and sensible possibility of the misuse of confidential information of the daughter, particularly in relation to the getting to know the factors of which the father’s law firm would be aware of in the absence of effective information barriers.

Originally published on 31 March 2022 at LinkedIn.

Basharat Ahmad Jatt

Barrister & Solicitor

Principal

Jatt Lawyers

Melbourne, Australia


Disclaimer

This article is general information for the community and not legal advice. For legal advice please contact with particular facts of your case.

The author is an Australian Lawyer of Pakistani origin. Anyone looking for an Urdu, Punjabi, or Hindi speaking lawyer in Australia can confidently contact Jatt Lawyers.

Legal support for Australian Muslims for inheritance and family law issues in Australia is the common practice area of Jatt Lawyers.

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