Conflicts of Interest Flashcards
What is a conflict of interest?
A conflict of interest exists where there is a substantial risk that a paralegal’s loyalty to or representation of a client would be materially and adversely affected by the paralegal’s own interest or the paralegal’s duty to another client, former client, or third person
What standard of impairment does the conflict rule address?
The RISK of impairment, rather than actual impairment
What paralegal rule addresses conflict of interest?
Rule 3.04
What questions must a paralegal ask when evaluating whether a conflict of interest exists or may develop?
- the duties owed to the client/prospective client
- any duties owed to other clients, former or prospective, or third persons
and any outside, personal or financial interests that may compete with those duties
Under what circumstances is a paralegal permitted to continue to act in a matter despite a conflict of interest?
- if the client/former client/prospective client consents, which must be fully informed and voluntary after disclosure from all affected clients
- and the paralegal reasonably believes they are able to represent each client without having a material adverse effect upon the representation of or loyalty to the other client
How must consent be given?
Under rule 1.02, consent must be given by the client in writing or orally, provided that the oral consent is confirmed in writing from paralegal to client asap
What is the essential element in obtaining a client’s consent?
Disclosure, arising from the duty of candour owed to the client. Must disclose all information relevant to a client’s decision in sufficient time for the client to make a genuine and independent decision, and must reasonably ensure client understands all matters disclosed.
What is the important distinction relating to rule 3.04(3), which allows client to accept the risk of a material adverse effect on a paralegal’s representation/loyalty to a client?
Client consent does not permit a paralegal to act where there WOULD be actual impairment rather than merely the risk of impairment.
What if full disclosure requires the revealing of confidential information?
The paralegal must advise the prospective/client that they cannot act for them due to a conflict of interest, and must withdraw.
Can a client provide their consent in advance to conflict that may arise?
Yes, but the effectiveness of this consent is determined by the extent to which the client understands the material risks that the consent entails. Therefore, generally open ended consent will be ineffective.
Does a paralegal have to advise a client to obtain independent legal advice regarding all potential conflicts of interest?
No, but in some cases, a paralegal in a conflict of interest situation either should or must recommend/require that a client obtain independent legal advice/representation.
What is the role of independent legal advice?
it is limited to providing legal advice that is objective and unbiased regarding a particular decision that the client is facing so that the client understands the nature/consequences of the decision to be made.
What is independent legal representation?
A retainer in which the retained rep has no conflict of interest with respect to the client’s matter and acts as a client’s paralegal or lawyer in respect of that matter.
When must a paralegal refuse to act?
When asked to represented opposing parties of a dispute
What is the bright line rule developed in CNR v McKercher LLP to protect the representation of and loyalty to current clients?
a paralegal cannot act for a client whose interests are directly adverse to the immediate legal interests of a current client without the clients’ consent.
The rule applies even if the work done for both clients is completely unrelated.
Main areas of applicatoin are civil and criminal proceedings.
A paralegal must not act against a former client in a new matter if….
the paralegal has relevant confidential information arising from the representation of the former client that may prejudice that client.
What are the exceptions to the relevant confidential information rule?
- the paralegal may act against a former client in a new matter if the former client consents
- paralegal’s partner/employee may act against a former client in a new matter ifthe former client consents
- ….my act if the paralegal’s firm establishes that it has taken adequate measures on a timely basis to ensure that there will be no risk of disclosure of the former client’s confidential information to the other licensee taking care of the new matter
What information must a paralega advise joint clients?
1/ the paralegal has been asked to act for both/all of them
2/ no infomation received in connection with the matter from one client can be treated as confidential so far as any of the other clients are concerned
3/ if a conflict develops that cannot be resolved, the paralegal canot continue to act for both/all of the clients and may have to withdraw completely.
what happens if a contentious issue arises between joint clients?
The paralegal cannot advise both, but may advise one and advise the other to seek independent legal advice. THe joint clients must agree on who the paralegal advises
In what circumstances is the conflict of interest standard modified?
To serve the public interest and administration of justice, the standard is modified for paralegals offering pro bono and other short term legal services
What is the definition of short term legal services?
Services provided through a short term provider with the expectation that the paralegal will not provide continuing legal services or representation to the client in the matter.
How is the conflict of interest standard modified for short term legal services?
The modification permits paralegals to provide short term legal services without first taking steps to determine whether there is a conflict of interest arising from duties owed to current or former clients.
Confidential information obtained by a paralegal representing a short term client is not….
imputed to other licensees in a paralegal’s firm
What steps do paralegals acting in short term legal services need to take to protect the clients’ confidentiality?
They must take reasonable steps to ensure the short term client’s confidential information is not disclosed to other members of their firm
When does a short term client become a client of the paralegal’s firm, versus just a client of there paralegal?
When the paralegal and st client agree that the paralegal may use the resources of the paralegal’s firm, including other paralegals, for the benefit of the st client.
when is a paralegal disqualified from acting for a short term client?
When the paralegal has actual knowledge of a conflict of interest.
When a transferring paralegal possesses confidential information relevant to a matter respecting the former client that may prejudice the formerclient….
The paralegal’s new firm must withdraw from representing its client in the matter unless:
1/ the former client consents to the new firm’s continued representation
2/ the new firm has taken reasonable steps to prevent disclosure and advised the former client of the measures taken
What constitutes a transaction bw paralegal and client?
- lending or borrowing money
- buying or selling property or services having other than nominal value
- giving or acquiring ownership, security or other pecuniary interest in a company or other entity
- recommending an investment
- entering into a common business venture
Are paralegals permitted to enter into transactions with clients?
In certain circumstances, and only if the transaction is fair and reasonable to the client
Are paralegals permitted to borrow from clients?
no, except where the client is a regulated lender or related person
What is a regulated lender?
- bank
- trust company
- insurance company
- credit union
- finance company that lends money in the ordinary course of business
Who is considered a related person?
- a spouse, child, grandparent, parent, or sibling of the paralegal
- a corporation that is owned or controlled directly/indirectly by the paralegal, or that is owned or controlled by a related person
What must a paralegal do in a permissible paralegal-client transaction?
- disclose the nature of any conflicting interest or how and why it might develop later
- require or recommend that the client seek independent legal advice or representation
- obtain the client’s consent to the transaction.
When must a paralegal require that the client seek independent legal advice/representation?
- if the paralegal lends money to a client who is not a related person, must recc independent representation
- if the paralegal lends money to a client who is a related person, must recc independent advice or representation
- if a corporation, syndicate or partnership borrows money from a client of the paralegal, and either the paralegal or p’s spouse has substantial interest in the corporation, must recc independent representation
- in all other cases, must recc independent legal advice or reprensentation as the situation reasonably requires.
Once the correct advice or representation has been acquired, the paralegal must obtain…
The client’s consent, confirming receipt of disclosures of any conflicting interests and any independent advice or representation that is required.
How should a paralegal document independent legal advice when given?
a) provide client with written certificate which states that client has received independent advice
b) obtain the client’s signature on a copy of the certificate
c) provide the signed copy of certificate to the licensee who wishes to transact business with the client
What if client declines to obtain independent legal advice?
Paralegal should obtain the client’s signature on a document indicating their decline
Can a client pay for legal services by transferring a share, participation or other interest in property/enterprise?
Other than non-material interest in a publicly traded company yes, but the paralegal must recommend that the client receive independent legal advice before accepting the retainer.
Paralegals must not personally guarantee/provide security for debts where a client is a borrower or lender unless….
1/ the lender is a regulated lender as defined in Rule 3.06 and is directly/indirectly providing funds solely for the paralegal or related person
2/ the transaction is for the benefit of a non-profit or charitable institution where the paralegal as a member/supporter of the institution is asked to provide a guarantee
3/ the paralegal has entered into a business venture with a client, the lender requires personal guarantees from all participants in the venture, and BOTH of the following have occured:
- the paralegal has complied with the RUles regarding avoiding conflicts of interest w respect to transactions w clients and
- the lender and the venture participants who are/were clients have independent legal representation
Are paralegal’s permitted to act for family members or people they are intimately involved with?
Yes, but conflicts of interest may arise when emotional or psychological influences affect the paralegal’s ability to represent the client’s interest over their own
Does a personal conflict of interest impute to the paralegal’s firm?
no, other members of the paralegal’s firm may represent the person, contrary to the other conflict of interest rules relating to paralegal firms
What is a paralegal prohibited from doing in relation to an accused person released from custody?
A paralegal must not:
- act as a surety for the accused
- deposit w the court the paralegal’s own money/firm money to secure the accused’s release
- deposit w the court any other valuable security to secure the accused’s release
- act in a supervisory capacity to the accused.
what is the exception to the prohibition of paralegals providing security for accused?
If the accused is in a family relationship w the paralegal and the accused is represented by the paralegal’s partner/associate. The paralegal still must consider the likelihood of any personal conflicts of interest
When dealing with an unrepresented person the paralegal must take both of the following steps:
- ensure that the unrepresented person is not proceeding under the impression that their interests will be protected by the paralegal; and
- make clear to the unreppd person that the paralegal is acting only for their clients interest and therefore their comments may be partisan.
the paralegal should confirm these steps in writing to avoid any confusion
