Conflicts of interest 

A conflict of interest arises whenever a lawyer's duty to one person is, or may be, inconsistent with a duty owed to another person, or with the lawyer's own interest. Conflicts are not simply awkward business situations to be managed quietly; they go to the heart of the loyalty a lawyer owes, and the professional conduct rules treat them as requiring a considered response rather than being left to informal judgement alone.

Conflicts between current clients

The most direct kind of conflict arises where a lawyer, or the lawyer's firm, acts for two or more current clients whose interests are, or may become, adverse to one another in the same or a related matter. This can arise where clients are on opposite sides of the same transaction or dispute, or where advising one client fully and frankly would require using or disclosing information that damages another current client. The underlying difficulty is that a lawyer owes each current client full loyalty and full disclosure of relevant information, and it is often not possible to give both clients everything they are owed at once.

Conflicts between the lawyer's own interest and a client's

A conflict can also arise between a lawyer's personal interest and a client's interest — for example, where the lawyer has a financial interest in the outcome of the matter, a personal relationship with an opposing party, or stands to benefit from advice given to the client in a particular direction. Because the lawyer is meant to bring independent, unclouded judgement to the client's matter, a material personal interest of this kind threatens the client's ability to rely on that judgement, even where the lawyer is acting in entire good faith.

Conflicts involving a former client

The third main category involves a former client. A lawyer who has acted for a client acquires confidential information and an understanding of that client's affairs that does not simply evaporate once the retainer ends. A conflict of this kind arises where a lawyer is later retained by a new client in a matter that is the same as, or related to, a former client's matter, and where the new retainer would put the former client's confidential information at real risk, or would otherwise be adverse to interests the lawyer was previously required to protect. The key question is usually whether there is a real and sensible possibility that relevant confidential information will be used against the interests of the former client.

Responding to a conflict

Once a conflict is identified, a lawyer or firm generally has a limited set of responses available.

• Fully informed consent — a conflict can sometimes be managed where each affected client is given full and frank disclosure of the relevant circumstances and freely consents to the lawyer continuing to act. Consent obtained without adequate disclosure is not effective, and some conflicts are considered too serious to be cured by consent at all.
• Information barriers — sometimes described as ethical walls, these are structural arrangements within a firm designed to prevent confidential information moving between different lawyers acting for clients whose interests conflict. They can be an appropriate response to some former-client conflicts, but Prince Jefri Bolkiah v KPMG [1999] 2 AC 222¹ shows they depend on being a genuinely effective, structurally established safeguard, not an arrangement improvised for the particular matter.
• Declining or ceasing to act — where a conflict cannot be adequately managed by consent or an information barrier, the lawyer or firm must decline the new retainer, or cease acting for one or more of the clients involved. This is often the safest response, and is required wherever the conflict is one that consent or a barrier cannot properly resolve.

Why this matters beyond the individual client

Conflicts rules protect more than the immediate parties. They protect the reliability of the lawyer–client relationship generally, and they protect the administration of justice where a conflict could compromise the fairness or integrity of contentious proceedings. This is one of the reasons the rules do not simply leave the question to private negotiation between clients — the public interest in trustworthy legal representation is also in play.

Applying this in a problem question

1. Identify precisely which duties are said to conflict — current client against current client, lawyer's own interest against a client's, or current client against former client.
2. Ask whether the conflict is real, or only theoretical, by examining the actual overlap in the matters and the information involved.
3. Consider whether fully informed consent has been, or could be, obtained, and whether this particular conflict is capable of being cured by consent at all.
4. If consent is not appropriate, consider whether an effective information barrier could adequately manage the conflict.
5. If neither response adequately resolves the conflict, conclude that the lawyer or firm must decline or cease to act, and explain why.