INTRODUCTION
Having in the previous chapter examined the way other professions approach conflicts of interest, this chapter will explore another comparative dimension, namely the way in which legal professions in other jurisdictions manage conflicts.
Given that modern businesses and the modern law firm operate in a global market, it is vital to consider conflicts from an international perspective.[261] Lawyers have become transnational in their work, with many firms having overseas offices to cater for clients’ needs. In many jurisdictions the legal profession has undergone a similar transformation to that experienced by solicitors in England and Wales, with the creation of ‘mega’ firms catering for large corporate clients.[262] As the Supreme Court of Canada has pointed out, such changes bring in their train an increased likelihood of conflicts of interest:The legal profession has changed with the changes in society. One of the changes that is most evident in large urban centres is the virtual disappearance of the sole practitioner and the tendency to larger and larger firms. This is a product of a number of factors including a response to the demands of large corporate clients whose multi-faceted activities require an all-purpose firm with sufficient numbers in every area of expertise to serve their needs... Merger, partial merger and the movement of lawyers from one firm to another are familiar features of the modern practice of law. They bring with them the thorny problem of conflicts of interest.[263]
The same difficulties are found in other sophisticated legal markets. For example, it has been observed that following a spate of recent mergers there are now only a few Australian firms able to offer the kind of service required by large corporate clients:
The problem in the [Australian] marketplace is that there are so few major players that these problems of conflict are bound to crop up.[264]
Concentration of expertise within a comparatively few large law firms brings with it the prospect of a proliferation of conflicts of interest.
As one US commentator has obsereved:Clients are attracted to firms with particular expertise—for defending environmental pollution or particular kinds of product liability claims, handling large bankruptcies, enforcing intellectual property rights, and the like. But many of these speciality clients will necessarily have adverse interests—whether because they are trying to pass off liability on the other, to assert an entitlement or right or priority over the other, to preclude the other from encroaching on its technology, or merely because they are cutthroat competitors entrusting proprietary business confidences in their lawyers. In short, when legal markets tap into established social networks... responsibilities can be expected to collide.[265]
These conflicts of interest need somehow to be managed and controlled.When considering the range of responses within the legal profession to conflicts of interest, the United States provides an obvious starting point. The subject has received far greater academic attention there than in the United Kingdom,[266] with several studies having been commissioned into the effect of conflicts on law firms.[267] Moreover, within today’s global business arena two legal frameworks predominate, namely English law and New York State law.[268] Commonwealth countries such as Canada, Australia and New Zealand are also natural choices for comparison as their legal systems are based on English law. They too have been forced to re-examine the rules governing conflicts of interest following changes in the delivery of legal services.
European nations are likewise having to address issues relating to fiduciary duties, confidentiality and codes of conduct.[269] As the UK moves towards fuller economic and political integration with its European neighbours this raises the prospect of a more closely aligned regulatory regime governing all areas of legal practice. Indeed some headway has already been made in this direction.
The Council of the Bars and Law Societies of the European Union (CCBE), of which the Law Society is a member, has drafted a Code of Conduct for lawyers. Its purpose is to have ‘a statement of common rules which apply to all lawyers from the Community whatever bar or law society they belong to in relation to their crossborder practice.’[270] Any solicitor who has ‘professional contacts’ with other lawyers practising in member states of the European Community is directed by the UK Law Society to observe the rules codified in Articles 2 to 5 of the CCBE Code of Conduct.[271] Moreover, under the terms of the Code, if the Law Society amends its rules of professional conduct it is obliged to take account of the rules in the Code ‘with a view to their progressive harmonisation.’[272]In the remainder of this chapter I will explore in greater depth the regimes governing conflicts of interest in the US, in Canada, Australia and New Zealand and in Europe. I will first examine how the American Bar Association has responded to the problems generated by conflicts of interest, analysing the ‘model rules of professional conduct’ which it has adopted. Then I will consider how Canada, Australia and New Zealand have dealt with the same problems. Finally I will review the CCBE Code to see whether its rules on conflicts offer a viable alternative to the UK model.