7. Conflicts Flashcards
Paragraph 6.1 and 6.2 provide two situations where a conflict of interest may arise:
(a) a conflict between the client’s interests and the solicitor’s interests (an ‘own interest
conflict’); or
(b) a conflict between two or more clients (a ‘conflict of interest’).
In which one of two circumstances can a solicitor never act for a client:
(a) a conflict between the client’s interests and the solicitor’s interests (an ‘own interest
conflict’);
Paragraph 6.2 provides that a solicitor or firm must not act in relation to a matter or particular aspect of it if there is a conflict of interest or a significant risk of such a conflict in relation to that matter or aspect of it, unless:
(a) the clients have a substantially ….. …… in relation to the matter or the aspect of it, as appropriate; or
(b) the clients are competing for the same …….
Common interest
Objective
Current clients
A conflict of interest may arise only between two or more current clients. Where a client’s retainer has been ……. the solicitor no longer owes a duty to act in that client’s best interests, and so a conflict of interest cannot arise concerning the affairs of a former client.
However, the solicitor must still bear in mind the duty of ……. owed to former clients
(see Chapter 6).
Terminated
Confidentiality
A situation may arise where a solicitor has agreed to act for two clients when, at the beginning of the transaction, there was genuinely no actual conflict or any significant risk of a conflict apparent on the facts, but a conflict then arises during the retainer. In these
circumstances, the solicitor ….. continue to act for both clients. Whether the solicitor is able to continue for act for one client will depend on the solicitor being able to maintain client ……. (see Chapter 6).
Cannot
Confidentiality
Where the only conflict between the parties is their ….. business interests then this will not
create any conflict of interest issues.
Example
Isla Cola and Samet Cola are the two main cola distributors in England and Wales.
James, a solicitor, is asked to represent Isla Cola on a purchase of a new IT system for
their factory. James is already representing Samet Cola in the purchase of a fleet of cars
for their management.
The business interests of Isla Cola and Samet Cola will conflict in that they will both want
to sell more cola than the other firm. However, James can act for both at the same time
without breaching the Code as the purchases of the IT system and the cars are not the
same matter.
Wider
A solicitor can act if, on the facts,
there is no …… risk of a conflict arising.
Significant
Exceptions to conflicts of interest:
Para 6.2 a
Para 6.2 b
The substantially common interest exception
The competing for the same objective (or ‘commercial’) exception
Re 6.2 a:
The SRA Glossary defines ‘a substantially common interest’ as a situation where there is a
clear common …… between the clients and a strong …… as to how it is to be
achieved.
Re 6.2 b:
‘objective’ is further defined as
an asset, contract or business opportunity which two or more clients are seeking to acquire or recover through liquidation (or some other form of insolvency process) or by means of an auction or tender process or a bid or offer, but not a public takeover.
This exception is likely, therefore, to be used for ….. clients only.
Purpose
Consensus
Corporate
Conditions for acting
A set of conditions must be met if a solicitor is to be able to act for two or more clients under
either of the exceptions in Paragraph 6.2:
(a) all the clients have given ….. ……, given or evidenced in writing, to the solicitor
acting;
(b) where appropriate, effective safeguards are put in place to protect the clients’ …… ……..; and
(c) the solicitor is satisfied it is ….. to act for all the clients.
Informed consent
Confidential information
Reasonable
Paragraph 6.1 provides that a solicitor must not act where there is an ‘…. ……’ conflict, or
a significant risk of an ‘…… ……’ conflict. This refers to any situation where a solicitor’s duty
to act in the best interests of any client in relation to a matter conflicts, or there is a significant
risk that it may conflict, with the solicitor’s own interests in relation to that or a related matter
(SRA Glossary).
Own interest x2
Where a conflict arises between two clients, either at the beginning of or during a transaction, an alternative to relying on one of the exceptions in Paragraph 6.2 may be to accept a ….. …….
The solicitor could be …. to act only in relation to those areas where no conflict exists, with each client seeking independent advice on the conflicting areas. It is necessary to make clear the terms of the retainer, and that there are defined areas where the solicitor
cannot advise.
Limited Retainer
retained
Acting for buyer and seller- Decide on ….. …..
Acting for joint buyers - Usually …. …. so no conflict
Individual facts
same interest
