Conflicts of interest Flashcards
What are the two types of conflicts?
Own interest conflict
Conflict of interest unless:
substantially common interest or
competing for the same objective
What is an own conflict of interest
Any situation where your duty to act in the best interest of any client in relation to a matter conflicts or there is a significant risk that it may conflict with your own interest in relation to that or a related matter
Can you act if there is an own conflict of interest?
You cannot act of there is an own interest conflict
What are some examples of own conflicts of interest ?
A 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 individual
What is the SCI exceptions to conflicts of interests between clients?
The clients have a substantially common interest/ clients are competing for the sabe objective AND
there is a situation where there is a clear common purpose between clients and a strong consensus on how it is to be achieved
What is the same objective that a client could be competing for?
Means an asset, contract or business opportunity which two or more clients are seeking to acquire or recover through a liquidation ( or some other form of insolvency proceedings) or by means of an auction or tender process or a bid of offer BUT NOT A PUBLIC TAKEOVER
What are the conditions for substantially common interest or competing for the same objective test to be satisfied?
These are in 6.2 (i) - (iii)
All the clients have given informed consent, given or evidences in writing to you acting
Where appropriate you put in place effective safeguards to protect your clients’ confidential information AND
You are satisfied that it os reasonable for you to act for all the clients
What does it mean to compete for the same objective?
Where clients are competing for the same goal and if attained by one client, it will be unattainable to the other client
eg a tender process
plus you need to satisfy all the conditions in 6.2 (i) - (iii)
What is the SRA guidance on the conditions?
You and the firm need effective safeguards in place to protect a cleint’s confidential information
Will need separate fee earners acting for the clients
need structural separation in the firm
How can you satisfy yourself that it is reasonable for you to act?
The respective knowledge and bargaining power of the clients is the same and there is not one more vulnerable party
The extent to which there will be negotiations between clients - cannot act then as likely there will be a conflict of interest
Any particular benefits to the clients that results from you acting for both sides eg speed or specialist knowledge
When you carry out a conflict check, what does the search need to be carried out against?
The client name
The client company number and that of its parent or subsidiary
The names of any counter parties to the matter
The names of directors
