Solicitors have a fundamental duty to act in their client’s best interests and to provide impartial advice. Consequently, a conflict of interest in legal practice occurs when a lawyer’s duty to act in the best interests of one client conflicts with their duty to another client or their own interests.
Understanding conflicts of interest is essential to ensure you obtain fair and impartial legal representation. In this article, we explain the circumstances under which a conflict of interest may arise, the significance of these conflicts and the potential repercussions for your case.
Understanding Conflicts of Interest
The core concern with conflicts of interest is whether a solicitor’s judgment or actions are compromised due to competing loyalties or interests. All lawyers are under a duty to act in the best interests of their clients and must provide unbiased and objective legal advice or representation.
A conflict arises when a legal professional’s personal interests, relationships or obligations interfere with that duty. This means they may not be able to offer you impartial advice or act in your best interests.
These conflicts can be actual, potential or perceived and can stem from various sources, including representing multiple clients with opposing interests, having prior relationships with involved parties or having personal financial interests in the case.
The Concept of Confidentiality and Loyalty
In addition to the requirement to act in the best interests of their client, solicitors must keep any information you share with them confidential. This means they cannot reveal this information to anyone else without your permission, allowing you to be open and honest with your solicitor and ensuring that they can provide you with the best legal advice.
UK law rigorously upholds this duty of confidentiality, and should a solicitor violate this duty, they face significant repercussions, which could include disciplinary action imposed by the Solicitors Regulation Authority (the “SRA”). The consequences may vary from financial penalties to removal from the role of solicitors, depending on the gravity of the breach.
The Legal Framework
The legal framework governing conflicts of interest in the UK is primarily derived from common law principles and the rules established by the SRA.
The SRA Standards and Regulations, the Code of Conduct for Solicitors and the Code of Conduct for Firms provide the legal framework for these rules. These regulations define the professional obligations and standards for legal professionals to recognise and address conflicts of interest, as well as provide thorough guidelines regarding conflicts of interest. Furthermore, they set out the duties of solicitors to prevent conflicts and inform clients of any potential conflicts.
Conflicts of Interest – When Can They Take Place?
A conflict of interest may arise if a solicitor:
- Is requested to represent two clients whose interests are in direct opposition in the same or related matters
- Has a personal connection with a party involved in the case, such as a family member, business associate or close friend
- Has previously represented a party on the opposing side of the current case or a related issue
- Possesses a financial stake in the outcome of a case
- Has conflicting obligations to two different clients
- Holds confidential information from one client that puts another client they are asked to represent at a disadvantage
- Is influenced in their actions by a third party, such as a funder or insurer, in a manner that could jeopardise their duty to their client.
Practical Examples of When Your Solicitor May Identify a Conflict of Interest
Below are some practical instances where a conflict of interest may emerge in legal practice:
Representing Both Parties in a Dispute
A solicitor is approached by both the husband and wife during divorce proceedings and is requested by both parties to represent them in reaching a fair divorce settlement.
The solicitor can’t represent both sides due to conflicting interests. Each person should have their own lawyer to make sure the negotiations are fair and balanced.
Representing Both Parties in a Personal Injury Claim
Both the motorist and passenger in a collision seek the same solicitor, but the solicitor cannot represent both as their interests conflict.
Representing Both the Purchaser and Seller in a Property Transaction
A solicitor has been asked to represent both the buyer and seller in a property sale. However, this scenario can create conflicting duties and responsibilities for the solicitor. This is generally not permitted because of the risk of conflicts of interest unless specific exceptions apply. In these situations, both parties must give their informed consent before the lawyer can move forward with representing both sides.
Previous Representation
A solicitor previously represented a company in a business transaction. Subsequently, they are asked to act for a competitor in litigation against that same company. The solicitor may possess confidential information from the prior relationship that could unfairly advantage the new client, resulting in a conflict of interest.
Personal Stake in a Client’s Business
A solicitor is asked to provide legal advice to a business in which they hold a substantial shareholding or financial stake.
The solicitor’s personal financial interest may affect their guidance, resulting in a conflict between their duty to provide impartial legal advice and their personal gain.
Family Connections
A solicitor is asked to represent one party in a will dispute where the opposing party is a family relative. The lawyer’s personal connection with the other party may jeopardise their capability to act without bias and prioritise their client’s best interests.
What Actions Should Solicitors Take to Prevent Conflicts of Interest?
Solicitors should conduct conflict checks at the beginning of the process to spot and avoid potential conflicts of interest, particularly when taking on new clients or additional work. This includes verifying the client’s name, aliases, and date of birth against a database of current and past clients. However, there is no single definitive test to confirm a conflict; the final decision relies on the solicitor’s judgment in each case.
The Impact of Conflicts of Interest in a Legal Setting
Conflicts of interest within legal proceedings can significantly undermine the fairness, integrity and outcomes of cases, potentially leading to unfair results, loss of trust and legal ramifications.
When a lawyer has a conflict of interest, their advice to their client may be influenced by their own interests, which could lead to decisions that do not serve the client’s best interests.
Improper management of conflicts can also result in serious consequences for solicitors, including sanctions or allegations of professional misconduct.
What Happens If A Conflict of Interest is Discovered?
Upon discovery of a conflict of interest, the solicitor is obligated to promptly inform you and, in certain limited circumstances, may permit you to make an informed choice regarding whether you proceed with their representation.
In most cases, however, they will stop acting for you and suggest that you find alternative legal representation. The solicitor’s firm may offer to transfer the case file to another solicitor or firm, but you are not obliged to accept this and can choose your own solicitor. You also have the option to contact the Legal Ombudsman or the SRA for help and to file a complaint if you are dissatisfied with how your solicitor has handled the conflict.
In situations where the conflict may lead to a possible breach of confidentiality, it is imperative that the solicitor takes the necessary measures to safeguard the client’s confidential information.
Possible Exceptions To The Conflict of Interest Rules
If the conflict involves the solicitor’s own interests, there is a strict prohibition on acting. However, there may be exceptions to the ban on a solicitor acting for both parties in a legal dispute, but only in specific and limited circumstances. This practice is known as ‘dual representation’ and is allowed only when there is a shared interest between the parties and the risk of a conflict of interest is minimal. For example, it can occur when family members are on agreeable terms and have reached an agreement on their arrangement, such as in drafting a mutually agreed-upon will or trust.
However, the solicitor still needs to engage in a discussion with the clients regarding the potential risks associated with the conflict of interest, how it might impact the solicitor’s ability to represent them, and the measures that will be implemented to mitigate these risks.
In some cases, both parties involved in a dispute may choose to waive their conflict of interest and provide their ‘informed consent,’ which means they formally agree in writing for the solicitor to continue representing them despite the conflict. This is based on the understanding that the solicitor will make every effort to stay fair and impartial. However, these exceptions are only permitted under strict conditions and if the solicitor sincerely believes they can still serve the best interests of both parties.
Here To Help
A legal conflict of interest can profoundly affect your solicitor’s ability to represent you effectively. If your solicitor encounters a conflict of interest and is unable to continue to represent you, our team of expert solicitors are on hand to help. Contact us today for a free, no-obligation consultation on 0300 303 2071 or email us.
FAQ
Can a solicitor act for both parties?
Generally, a solicitor should refrain from acting for both parties as this is likely to be a conflict of interest. However, there are certain limited exceptions where it may be allowed, but only under specific circumstances and with the full knowledge and explicit consent of both clients.
What actions should be taken if a conflict of interest is identified?
Upon discovering a conflict of interest, the solicitor should declare the conflict and notify the relevant parties. Depending on the situation, they will either need to cease representation or obtain informed consent from all parties involved.
