REGULATING CONFLICTS OF INTEREST
It has been suggested that there are essentially two ways in which a regulatory body can address the issue of conflicts of interest: either it can prevent members from acting where conflicts arise, or conflicts can be controlled by means of a range of appropriate measures.[65] The Law Society has, until now, opted for the first of these two approaches.
The rules governing the conduct of solicitors state that a solicitor must not act where the solicitor’s own interests conflict with those of the client, or where a conflict of interests (or a significant risk of conflict) arises between two or more clients.[66] More specifically, and with potential conflicts in mind, the Law Society rules have been drafted as follows:15.01 A solicitor or firm of solicitors should not accept instructions to act for two or more clients where there is a conflict or a significant risk of a conflict between the interests of those clients.
15.02 If a solicitor or firm of solicitors has acquired relevant information about an existing or former client during the course of acting for that client, the solicitor must not accept instructions to act against that client.
15.03 A solicitor or firm of solicitors must not continue to act for two or more clients where a conflict of interests arises between those clients.
15.04 A solicitor must not act where his or her own interests conflict with the interests of a client or a potential client.[67]
The effect of these rules is potentially wide-ranging. It would appear that wherever there is a conflict of interest, or a potential conflict, the solicitor or firm of solicitors must decline to act.
The changes within the solicitors’ profession over the last two decades would suggest that the likelihood of a conflict of interest arising is far greater than previously.[68] This is important not only from the solicitor’s point of view, in that he may lose business, but also from the client’s standpoint, as he may be prevented from employing (or continuing to employ) the solicitor of his choice.[69] Yet there has been little academic study of the operation of the rules relating to conflicts.[70] Those writers who have addressed the issue appear to have accepted that a solicitor cannot act where there is a conflict or a potential conflict.
They add, moreover, that in such a situation a solicitor should not want to act.[71] Others have argued that the rules are too lax and should be tightened further, but in so doing they appear not to have investigated how the rules operate in practice.[72]Only one commentator has observed that modern practice has placed substantial pressure on the rules:
... as the size of law firms increased and different methods of legal practice developed, so pressures were placed upon rules which were not designed for an era of amalgamations and mega-firms. Some firms, for example, are today partnerships in name only. Changes in management structure have caused large law firms to adopt the bodies of partnerships and the minds of corporations and, inevitably, they have had to introduce special mechanisms to comply with professional requirements.[73]
It would seem therefore that whilst some practitioners and academic writers have warned of the risk of conflict which is inherent in the practice of the modern, large commercial law firm, this problem (if indeed it is a problem) has not been the subject of independent empirical investigation.[74]
THE NEED FOR AN EMPIRICAL STUDY
The task which I set myself was to explore the way lawyers deal with a particular set of ethical dilemmas in practice. This is not a study of the entirety of legal ethics, or a study of the sociology of the legal profession. These distinctions were clearly identified by Abel, who observed that
except for a handful of very recent ethnographic studies of lawyer-client interaction... we know little more about what lawyers do than how they allocate their time among different subject matters.[75]
I shall attempt to portray ‘what lawyers do’ in the context of a reasonably well- defined area of difficulty for the modern law firm. ‘Conflicts’ confront practitioners with dilemmas which fall within the broad framework of legal ethics, but very little work has been done in describing the particular nature of these difficulties, or how they are resolved in practice.
There is limited value in making normative statements in the absence of full understanding of the practice environment. Before embarking on a review of lawyers’ ethics, or an analysis of the contribution of rules to an ethically-based practice, it is necessary to have a reliable account of the problems which confront lawyers in their daily work, of the way in which those difficulties are described (or ‘constructed’) by those who experience them, and of the way they are addressed and resolved. Traditionally, legal scholars have relied upon reported cases to give them an insight into the issues of principle that they wished to explore. But it cannot be assumed that leading cases convey an accurate picture of the scale or nature of the dilemmas confronting practitioners. In some fields, arguably including that of ‘conflicts’, litigation will be perceived by one or possibly both parties as a catastrophic failure of their normal procedures and safeguards. One needs a sense of the everyday, as well as the extreme case. This calls for an empirical investigation.
It may thereafter be possible to employ the empirical evidence to help develop an account of legal ethics more broadly, or of the benefits and limitations of professional self-regulation. But without some attempt to examine the way in which regulatory rules and legal endowments are applied on a day-to-day basis, discussion of legal ethics will be impoverished through a lack of adequate con- texualisation.
This is not to say that the way in which ‘conflicts’ are handled in practice is necessarily the ‘right’ or the ‘best’ way. It will be important to consider whose interests are being advanced, and whose compromised, and whether alternative solutions need to be found. Empirical research is not in general supportive of the status quo—rather the contrary. But it is necessary to engage in an empirical study in order to appreciate the complexity of the issues—or, to put this another way, to appreciate the array of competing principles which may have a bearing on different transactions, and thereafter to arrive at a judgement as to which of these principles has to be accorded priority under a given set of circumstances.
The next question is, what kind of empirical research? For the purposes of this study I was conscious that I was breaking new ground in exploring conflicts at the level of solicitors’ practice. In those circumstances it was not feasible for me to attempt some of the more arduous or demanding research strategies.[76] I had to rely, in effect, upon what solicitors and their clients were prepared to tell me. As it happened, once firms decided that they were prepared to talk to me the tenor of the interviews which I secured was not at all defensive. My informants tended, it is true, to defend their own working practices, but they were not inclined to assert that they were operating in harmony with the rules. On the contrary, the picture offered to me was one of quite striking disjunction between the regulatory framework and the way in which some firms dealt with conflicts. In other words, on the basis of an admittedly not especially challenging methodology, representatives of major law firms admitted to me that they broke Law Society rules on a more or less routine basis. As will become apparent, they defended their practice as being necessary and, in context, principled, but it was nonetheless information which, had it been made public, could have been extremely embarrassing for them. So whilst I am unlikely to have secured the whole story concerning the manner in which firms respond to conflicts of interest, I was the recipient of what seemed to me to be a remarkable degree of frankness. This included accounts of acting in the face of conflict which had not hitherto entered the public domain.