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Ethics Committee rulings

Every Issue

Cite as: Jan/Feb 2010 84(1/2) LIJ, p.66


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

Family

Conflict of interest

(R4620 August 2009)

If a practitioner has performed substantive work for joint clients X and Y over a long period of time, but had only ever taken instructions from X, then the practitioner may still be precluded from acting against Y in any future matter, as a duty of loyalty may be said to be owed to Y.

The husband’s firm alleged that the wife’s firm had a conflict of interest in acting for the wife in family law matters as a result of the wife’s firm acting in a conveyance for a farming property in 2003-04, where the husband was the client. The farming property is now also one of the disputed assets between the parties.

The wife’s firm claimed that it held no confidential information regarding the husband as it had never met the husband and all instructions for the conveyance had been provided by the wife.

The husband’s firm also alleged that as the wife was previously an employee secretary of the firm she had engaged, the firm had a strong professional and social relationship with the wife. As a consequence, the firm would know of the husband’s personal characteristics and his strengths and weaknesses in the form of “getting to know you” factors.

The Ethics Committee was requested to provide a ruling as to whether a conflict of interest existed.

Recommendation

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

  • As the retainer with the former client appears to have involved the performance of substantive work over a long period of time (as distinct from mere preparation of a transfer of land document), then notwithstanding that:
    1. it is unlikely that there is any relevant confidential information (due to all instructions and information having been provided through the former client’s wife); and
    2. the practitioner never met the former client in a professional capacity (as distinct from any social meeting);

in the view of the Committee, particularly as the current matter is a family law matter, the practitioner has a conflict of interest due to either a duty of loyalty being owed by the practitioner or an independent observer perceiving that the proper administration of justice would not be done if the practitioner continued to act.

Commercial

Conflict of interest

(R4625 September 2009)

A conflict of interest does not apply if there is no relevant confidential information from the previous retainer that could be material to the current matter.

Firm X acted for two directors of Y Pty Ltd (Y) in relation to an alleged breach of director’s duties against a third director and employee of Y. The third director of Y was separately represented by Z.

In 2008, Y retained a practitioner (A) to act in a dispute with another unrelated company (the previous retainer). A’s firm had recently been purchased by Z, resulting in A becoming an employee of Z.

A subsequently transferred the current dispute represented by Z to a colleague who operates at a different office location but still under the Z group.

X submitted that the previous retainer with A prevented Z from acting against Y in the current dispute. Z stated that X had failed to explain how the previous retainer with A was related to, or could be “material to”, the contested issues in the current dispute between the directors of Y (as per r4 of the Professional Conduct & Practice Rules 2005).

Recommendation

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

  • Z does not have a conflict of interest in acting for the third director as against the other two directors of Y in the current dispute as there appears to be no relevant confidential information from the previous retainer that could be material to 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/Practicing-in-Victoria/Ethics, 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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