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Ethics Committee rulings

Every Issue

Cite as: December 2009 83(12) LIJ, p.69


Ethical dilemmas are part of everyday practice for solicitors. The LIV Ethics Committee is available to help.

Wills & Estates

Conflict of interest; successive
(R4607 June and August 2009)
A social relationship between a lawyer and a former client will not (of itself) preclude a firm from acting against that former client in the future. However, a past retainer in which some of the “getting to know you” factors are established by the firm can preclude the firm from acting against the former client in a future matter.

A firm had a 19-year relationship with the husband before his death. It acted for the husband in a variety of matters including the drawing and completion of a family law agreement with his current wife. The particular lawyer at the firm who conducted this work was a cousin (X) of the husband.

In 2003-05 the firm acted for both the husband and his wife in a civil dispute for unpaid interior design work for their Toorak home. Two other employee lawyers had the carriage of this matter, although it appeared that X had several conferences and attendances on both the husband and wife.

The firm now acts for the four executors of the testator’s estate. X, the cousin of the now deceased husband-client, is an executor, however a different lawyer at X’s firm is acting for the executors.

It was anticipated that the wife would pursue a family maintenance claim and is represented by another firm. The wife objected to the executor’s firm acting on the basis of a conflict of interest and breach of a duty of loyalty. The wife also claimed to have known X socially as well as the lawyer representing X and the other executors.

The executor’s firm requested the Ethics Committee provide guidance as to whether:

  • the firm’s past relationship as solicitors for both the husband and wife in the civil matter preclude the firm from acting for the executors; and
  • whether the previous social relationship between the wife and X or other lawyers at the firm would preclude the firm from acting for the executors.
Recommendation

In the opinion of the Ethics Committee and on the information presented:

  • The firm has a conflict of interest in acting for the executors of the estate in the action anticipated to be brought by the wife pursuant to the relevant provisions of the Administration and Probate Act 1958.
  • The firm has relatively recently represented the wife in a civil litigation matter over a two year period. Although this may not be described as a “same or related matter”, there is a risk that confidential information (such as the “getting to know you factors” as described in Yunghanns & Elfic) may be disclosed and used to the detriment of the wife, a former client of the firm, in contradiction of the professional ethical duty set out in r4 of the Professional Conduct & Practice Rules 2005.
  • The social relationship with the executor’s lawyer as described by the wife in her submission to the Ethics Committee would not, of itself, preclude the firm from acting for the executors.
  • The social relationship with X as described by the wife in her submission to the Ethics Committee would not, of itself, preclude the firm from acting for the executors.

The firm requested that the Ethics Committee redetermine this matter and both parties provided further submissions. In August, the Ethics Committee considered this further material and determined:

Recommendation

In the opinion of the Ethics Committee and on the information presented:

  • The Committee reaffirms its previous ruling from June 2009; and
  • The Committee does not consider the individual involvement of X or the now ex-employee solicitors to affect any conflict that the firm itself has in these circumstances.

Property

Conflict of interest; act against former client
(R4618 August 2009)
For a Professional Conduct & Practice Rules 2005 r4 conflict of interest to arise, the former clients must be the same.

A firm had concerns as to whether it should continue to act for its current client, the landlord in a lease dispute against a tenant company.

The directors of the tenant company were former clients of the firm, having previously retained the firm as a husband and wife team seeking a conveyance of their matrimonial home. There had been no further retainers with the firm post the conveyance which was successfully completed in 2003.

The directors of the tenant company alleged a conflict of interest, stating that they had previously disclosed confidential information (including their personal financial situation) in the earlier retainer.

Recommendation

In the opinion of the Ethics Committee and on the information presented:

  • There is no apparent conflict of interest in firm acting for the landlord in the current matter.

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, however, as the considered view of a respected group of experienced practitioners, the rulings carry substantial weight. It is considered prudent to follow them.

The LIV Ethics website, www.liv.asn.au, is regularly updated and, among other services, offers a searchable database of the rulings, a “common ethical dilemmas” section and information about the Ethics Committee and Ethics Liaison Group.

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