INTRODUCTION

An examination of the rules governing conflicts of interest would be of ^purely academic interest were not solicitors troubled by such matters in practice. This chapter and the two which follow examine the way in which solicitors in England and Wales attempt to deal with conflicts.

Before a solicitor or firm of solicitors can respond appropriately to conflicts of interest, let alone apply the rules set out in the Guide to Professional Conduct, a potential conflict must first be recognised. With some firms having well over 1,000 fee-earners and several different offices, identifying a potential conflict may be far from straightforward. Knowing for whom a colleague in a different department or office is acting, or has acted, in each and every transaction would seem an impossible task. This is all the more so when you consider that former clients, and clients of solicitors who have left the firm, must also be taken into account. Yet it is of paramount importance that any potential conflict is dealt with early, as discovering one at a later stage could be costly, embarrassing and time-consuming for both firm and clients. Should a conflict come to light well into a case, the firm in question may find itself fighting off an injunction appli­cation from the other party’s solicitors, or even defending a negligence action brought by its own disgruntled client.^[326] The client, for his part, would have to instruct new solicitors and perhaps incur significant expense in acquainting the new firm with all the relevant material. The more advanced the case, the more acute these problems would be.

The matter is further complicated when rule 16.06 is considered.³ As a solic­itor is under a duty to convey to his client all information which is material to the client’s interests, regardless of the source of that information, simply being approached and asked to act in a certain matter can create a conflict situation.

If the above scenario were to occur frequently in practice, clients would understandably be wary of approaching firms of solicitors and, likewise, firms would be in constant fear of being approached by new clients. Perhaps it could be argued that the onus should be on the new client to ensure that the firm of solicitors he is intending to instruct does not act for any of his competitors. This, however, could be a formidable task, depending on the number of those com­petitors. In any event, discovering which firm of solicitors was acting for which competitors might not be feasible, especially given that law firms are under a duty to maintain client confidentiality.

It might be argued that the person or company asking whether a firm would be prepared to act is not really a client in the strict sense, but rather a ‘would-be’ or ‘prospective’ client, who is not owed the same duty of care as an existing client. No guidance is given by the Guide to Professional Conduct as to what to do in such a situation.⁵ The Guide simply states: ‘A solicitor who acquires information on behalf of a prospective client may be bound by the duty of con­fidentiality even if there is no subsequent retainer at law’.⁶ The use of the phrase ‘may be bound’ is unfortunate here as it gives no indication as to when the rule is applicable.

³ N Taylor (ed), The Guide to the Professional Conduct of Solicitors, 8th edn (Law Society Publishing, London, 1999), Rule 16.06, at 331. Hereafter referred to as ‘The Guide, 8th edn’.

⁴ With the example given, insider-dealing regulations would also cover any inappropriate action by the firm but the principle still applies and would be applicable to all areas of practice.

⁵ Similar difficulties are experienced in the United States. See, for example, GC Hazard, ‘Conflict of Two Roles’, (1996) 18 National Law Journal: ‘The rules do not address how much and what kind of information a lawyer can properly obtain from a prospective client, what measures the lawyer is required to take in obtaining the information or what duties devolve upon the lawyer from obtain­ing the information.’

⁶ The Guide, 8th edn, Rule 16.01, note 4 at 324. ters by them. If this is the correct interpretation, solicitors would be bound by a duty of confidentiality to potential clients only where they had gathered information for them. Whilst it could be said that acquiring information on behalf of a prospective client really means being told something about the client’s affairs, the ambiguity in the wording does not assist firms who are faced with a potentially difficult problem.

In practice firms have developed complex procedures for, first, identifying potential conflicts at an early stage and, secondly, ensuring that the firm is not placed in an embarrassing position. As indicated in chapter 1, it is difficult to be entirely confident, on the basis of interviews and questionnaire returns, that the accounts which were provided by my informants fully reflect the range of prac­tices adopted in checking for conflicts. It is possible that some firms exaggerated the extent to which, in practice, conflict checks were undertaken. This is some­thing to bear in mind when considering my informants’ accounts of the strate­gies which they employed in checking whether there was in fact a conflict of interest.