COMPETING INTERESTS

For the remainder of this chapter, and in chapter 7, I rely upon the classification of conflict types which emerged from my interviews with solicitors. In each of these categories of conflict the respective parties have different interests.

1. legal rules—the law as laid down by the courts;

2. rules of the profession;

3. client interests—ensuring that clients’ interests are adequately protected;

4. client wishes;

5. commercial considerations.

The last of these, commercial considerations, may be further sub-divided as fol­lows:

i) firm as a whole—the best course of action for the firm in the immediate future;

ii) firm as a whole—in the longer term;

iii) individual fee-earners—immediate interests of the fee-earner;

iv) individual fee-earners—longer-term interests.

Before we examine how firms manage these competing interests, it will be use­ful to consider how firms should conduct themselves in each of the above hypo­thetical situations^[361] in order to comply with the Law Society’s current rules. It is also helpful to bear in mind the client perspective on what constitutes a conflict.

LAW SOCIETY GUIDANCE

1. Direct Conflicts

In relation to direct conflicts involving two existing clients of the same firm, Rule 15.03 states that the firm must not continue to act.^[362] In the commentary to this rule, the Guide states that the firm must cease to act for both clients and may continue to represent one only if it is not in possession of relevant confidential

Glover¹

Finn²

Law Society

Solicitor

Informants

Figure 1.

¹ Temporal classification

² Subject matter classification

The Decision Whether to Act: Procedures and Interests 117

information. Thus, with Tom and Jerry, Partner A should send both Tom and Jerry to other firms of solicitors. He could, however, continue to act for one of them if he had no relevant confidential information about the other. In the case of the rival bidders for Monarchs Forever Ltd, although they are not directly opposing each other, their interests will conflict as both are determined to win the bidding. As with Tom and Jerry, the firm cannot act for both clients because, according to rule 15.01, where the clients’ interests conflict, the firm should not act. This is the case even if the firm informs both clients of the conflict and both consent to the firm’s acting.^[363] In this instance, however, the bidder who first approached the firm will still be allowed to retain its services as there is not the complication of their both being established clients.

2. Common-goal Conflicts

Similarly, where the firm is faced with a common-goal conflict, rule 15.01 will apply. The Guide is clear that a firm should not act for two or more clients where there is a conflict, or a significant risk of conflict, between those clients. Thus, in the case of the parties wishing to construct a motorway, not only may their interests be said to conflict at the start of the project, but there is also a sig­nificant risk of conflict developing later. Therefore the firm in this instance could act for the bank, or the bondholders, or the constructor, but not for all three.

3. Confidential-information Conflicts

With a confidential-information conflict, the rules are slightly different. According to rule 15.02, the firm is prohibited from acting only if it is in pos­session of information which is or may be relevant to the new client. Thus, if BSE Ltd has imparted information to the firm which is relevant to the matter in hand, the firm should decline instructions from Heifer & Sons.

4. Commercial Conflicts and Potential Conflicts

For the remaining scenarios, namely commercial conflicts and potential con­flicts, the Law Society gives no guidance as to what a firm should do. These types of conflicts are not seen as ‘legal’ conflicts but rather as commercial decisions, and as such are matters for each firm to decide. Moreover, potential commercial conflicts (in the sense given above) cannot be judged until the firm is in full possession of the facts.

It can be seen therefore that the Law Society Guidelines are reasonably clear with regard to each type of conflict. This assumes that the only relevant consid­erations are those laid down in the Guide to Professional Conduct. But solici­tors may find themselves under pressure from their clients to act in ways which reflect those clients’ perception of their own broader interests. The clients’ view concerning what constitutes a conflict, and how that conflict should be handled, may have considerable bearing upon the way firms respond to these dilemmas.