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Ethics Committee rulings


Every Issue

Cite as: (2008) 82(4) LIJ, p. 77

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

Commercial – Conflict of Interest; Professional Mobility

(R4481 November 2007)

Professional mobility may create a conflict of interest where lawyers are appointed from firms acting for opposing parties, even when those lawyers had no direct involvement.

An allegation of conflict of interest was raised by the defendant’s firm in a litigated matter issued in the Supreme Court. The Ethics Committee was advised that two practitioners from a firm previously retained by the defendant and in several matters, were now employed by the plaintiff’s firm.

The plaintiff’s firm submitted that neither practitioner had had any direct involvement in the defendant’s matters, but had acted for the plaintiff in drawing the commercial agreements that were the subject of the current proceedings.

Ruling

In the opinion of the Ethics Committee and on the information presented it would appear that a conflict exists and the plaintiff’s firm should cease to act for the plaintiff.

Litigation – Conflict of Interest

(R4513 December 2007)

A conflict of interest does not arise when there is no solicitor-client relationship or specific confidential information that could be misused.

Separate proceedings were instituted by two employees who alleged “misleading and deceptive conduct” by their former employer in negotiations for their recruitment. Each employee was separately represented, but the employer retained the same firm to defend both proceedings.

One of the plaintiff’s firms alleged that a conflict of interest existed. It was submitted that there was some similarity in both proceedings and the potential for the employer’s firm to obtain confidential information from one proceeding that could be used to the detriment of the employee in the other.

Recommendation

In the opinion of the Ethics Committee and on the information presented the employer’s firm does not have a conflict of interest in acting for the employer in relation to the two separate matters.

There appears to be no real or sensible possibility of the misuse of confidential information as the subject matters for the two proceedings involve discrete issues.

The employer’s firm has never had a solicitor-client relationship with either of the employees, and there is a lack of specificity in relation to alleged client confidential information that could create a conflict.

Property – Conflict of Interest; Concurrent

(R4470 August 2007)

In the absence of confidential information it is possible for a firm to act against a former client in the same matter.

A firm had acted for parties to a joint venture agreement, and the purchase of property required for the development. A dispute arose and the firm continued to act for one of the parties against its former client.

The firm denied any conflict of interest and claimed they acted for both parties jointly, and did not obtain confidential information about their former client as a consequence of that retainer.

The Ethics Committee was requested to provide a Ruling as to whether:

  • The firm held a conflict of interest by acting against their former client, and
  • If the firm continued to act, the likelihood of disadvantage to their former client?

Ruling

In the opinion of the Ethics Committee and on the information presented the firm does not appear to be in conflict by acting against their former client.

If the firm continues to act for their client, the Ethics Committee does not consider that their former client will be disadvantaged, as no information confidential to the former client has been identified pursuant to Rule 4, Professional Conduct & Practice Rules 2005.

If it becomes likely that a conflict will arise, the Committee notes that the firm may be prevented from continuing to act in the circumstances set out in Rule 13.4, Professional Conduct & Practice Rules 2005.

Wills & Estates – File Ownership; Release of Files

(R4469 August 2007)

An executor is entitled to receive the parts of a joint will file that relate to the testator’s matter only.

A firm acted for a couple and prepared their wills. The wills were executed in mid-2005 and the husband died in early 2006. Probate was granted in 2007. An issue arose in respect of the residuary estate, as a potential Part IV claim is anticipated following the future death of the widow. As a result, the firm ceased to act for the estate.

The executor’s firm requested the will file. The firm refused to provide it without authorisation from the widow. An Ethics Committee ruling was sought on:

  • Whether the firm should release the file in its entirety to the executors; or
  • Separate the file and provide only those parts that related to the deceased to the executors; or
  • Refuse absolutely to provide any part of the file without the authority of the joint owner of the file.

Ruling

In the opinion of the Ethics Committee and on the information presented the firm should release documents in the file in accordance with Rule 7.5, Professional Conduct & Practice Rules 2005.

The firm should separate the file and divide the contents as files for husband and wife. This may require blacking out portions. The firm should retain only those documents which are the solicitor’s own documents.


The Ethics Committee recommends the widow be given reasonable notice by the firm of the provision of the file to the executor.

The Ethics Committee is drawn from experienced past and present LIV Council members who serve in an honorary capacity. Ethics Committee rulings are non-binding, but as the considered view of a respected group of experienced practitioners, they carry substantial weight. It is considered prudent to follow them.

The LIV ethics website, http://www.liv.asn.au/regulation/ethics, is regularly updated and, among other services, offers a searchable database of the rulings.

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