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Ethics Committee rulings

Every Issue

Cite as: (2004) 78(4) LIJ, p.81

Ethical dilemmas are part of everyday practice for solicitors. The Ethics Committee of the Law Institute of Victoria Ltd is available to help.

Conflict of interest

Acting for company and directors – ownership of files
Firm A was instructed to incorporate a company, with 50 ordinary shares issued to each of Mr Smith and Mr Jones. Mr Smith, as sole director and secretary of the company, signed a contract for purchase of a business, guaranteed by him personally. The identity of Firm A’s original client (company or individual) is in dispute.

Mr Smith and Mr Jones are now in a dispute. Firm B acts for Mr Smith and Firm A acts for Mr Jones. Firm B sought the original file held by Firm A. Firm A did not maintain a lien over the file but considered that Mr Smith and Mr Jones were equally entitled to it, and that the file principally belonged to the company. Firm B maintained that Mr Smith was entitled to the file, being the sole director and secretary of the company, but confirmed that it acted for him as an individual and not for the company. The Committee was asked:

  • whether Firm A was obliged to deliver the file to Firm B; and
  • whether either firm was in conflict of interest in acting for their respective clients.

Ruling
Firm A is obliged to release the company file to the company or its proper officer.

Firm A is not entitled to charge a fee for the retrieval and/or storage of the file.

Firm A is in conflict of interest in acting on behalf of Mr Jones if Firm A previously acted on behalf of both Mr Smith and Mr Jones in relation to the incorporation of the company and now proposes to act against Mr Smith, a former client.

Firm B does not appear to be acting in conflict of interest in acting for Mr Smith.


Alleged conflict of interest

Acting against former client
Firm A objects to Firm B acting for Mr Green in litigation against a company. Firm A believes Firm B previously acted for the company.

In May 2002 Firm B was instructed by Mr Black, a director, to prepare and witness a deed between the company and Mr Green. The capacity in which Mr Black gave instructions is in dispute. The document was signed for the company by Mr Black and a co-director. Mr Green’s signature was witnessed by a partner of Firm B.

Mr Black is no longer a director. Firm B asserts it has never acted for the company but only for Mr Black personally so it can now act for Mr Green against the company.

Firm A has raised separate concerns about alleged backdating of documents.

Ruling
It is not clear from the information provided in what capacity Mr Black provided instructions to prepare the document. The Committee is satisfied that a conflict of interest may exist and Firm B should cease acting against the company, on the basis of its previous relationship with the company. The instructions related to company matters including drawing up company documents that were signed by the client in his capacity as director, giving the impression that the company was the true client, or an additional client.

Concerns about alleged backdating of documentation is beyond the scope of this Committee and the parties should be referred to appropriate complaints processes.


Release of documents

A practitioner was co-executor of a will and held a medical treatment power of attorney. He was contacted the night before the deceased died by the treating practitioner, the deceased’s son and others. The practitioner advised that he would be taking no action under the medical treatment power of attorney except as a last resort, given the immediate family of the deceased was to meet the following morning.

One of the deceased’s daughters was a named executor but did not apply for the grant of probate. The other daughter lodged a complaint against the treating practitioner, alleging that treatment was inadequate or withheld.

The Medical Practitioners Board (the Board) sought consent of the executors to authorise the hospital to release its medical records to the Board to assist its investigation of the deceased’s treatment.

The solicitor-executor was concerned about the consequences of consenting to the release of records for the daughters between whom there was a widening rift. The solicitor-executor sought directions on whether they were obliged to sign the form of consent and release to the Board details of conversations on the night before the deceased died.

Ruling
The executors are not obliged to sign a form of consent authorising the hospital to release its medical records to the Board.

The executors are not obliged to release their file notes to the Board in connection with the attendances on 11 July 2003.


The Ethics Committee is drawn from experienced past and present members of the Council of the Law Institute of Victoria Ltd with involvement in a wide range of practice areas. Members serve in an honorary capacity and meet monthly to consider requests by solicitors for rulings on ethical issues in legal practice.

Ethics Committee rulings are non-binding and do not have the force of law. However, as the considered view of a respected group of experienced practitioners, the rulings carry substantial weight. It is considered prudent to follow them.

For further information, contact the Legal Ethics Manager on tel 9607 9383.

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