Conflict of Interests

Question 1

What are the two types of conflict of interest?

Answer 1

They are:

• own interest conflict
• conflict of interest

Question 2

What is the general rule in relation to conflict of interests?

Answer 2

You must not act where there is a conflict of interest.

Question 3

What is an own interest conflict?

Answer 3

Where your own interest in relation to a matter conflicts, or there is a significant risk it will conflict, with the best interests of the client in relation to that matter.

Conflict must relate to the client’s instructions to you and not some other matter

Question 4

What circumstances could give rise to an own interest conflict?

Answer 4

• financial interest of yours or someone close to you
• a personal or business relationship of yours
• your role as an employee
• your own conduct as a firm or an individual

Question 5

Are there any exceptions allowing you to act where there is an own interest conflict?

Answer 5

No - you must never act where there is an own interest conflict

Question 6

What is a conflict of interest?

Answer 6

A conflict of interest is where your separate duties to act in the best interests of two or more clients in the same or related matters conflict

Arises also where significant risk of conflict arising

Question 7

Are there any exceptions to acting where there is a conflict of interest?

Answer 7

Yes, there are two:

• substantially common interest exception AND
• competing for the same objective exception

Question 8

What are the requirements for the substantially common interest exception to apply in relation to a conflict of interest?

Answer 8

The clients must have a substantially common interest which requires:

• clear common purpose
• a strong consensus as to how to achieve the common purpose (no negotiation involved

Plus

• all clients have given informed consent, given or evidenced in writing, to you acting
• where appropriate, you put in place effective safeguards to protect your clients’ confidential information
• you are satisfied it is reasonable to act

Question 9

What are the requirements for the competing for the same objective exception to apply?

Answer 9

The clients are competing for the same objective

AND

• all clients have given informed consent, given or evidenced in writing, to you acting
• where appropriate, you put in place effective safeguards to protect your clients’ confidential information
• you are satisfied it is reasonable to act

Question 10

When would two clients be competing for the same objective?

Answer 10

Where two clients are competing to buy a property at an auction or through a tender process

Question 11

What factors should be considered when debating whether you are satisfied that it is reasonable for you to act?

Answer 11

• the respective knowledge and bargaining power of each client - it may not be reasonable for you to act if there is an imbalance between the two
• the extent to which there will be negotiations between the clients - if negotiations will likely be required, greater chance of conflict arising
• Any particular benefits to the clients - would it be in the best interest for you to act for both