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Ethics Committee rulings

Every Issue

Cite as: (2007) 81(7) LIJ, p. 87


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

Litigation – conflict of interest; successive

(R4403 December 2006)

A firm should not act against its former client if it possesses relevant confidential information.

A firm acted for M in property settlement litigation against his former partner F.

Before retaining the firm, M was a client of his former partner’s firm for more than 30 years.

F’s firm acted for M in a number of property transactions and the preparation of his will. One of the properties purchased by M, and in respect of which F’s firm acted, was the subject of a writ issued by F.

M’s firm requested an Ethics Committee ruling in relation to whether a perceived conflict existed with F’s firm acting against its former client.

Ruling

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

1. It would appear that F’s firm may have obtained confidential information. The former client M could reasonably conclude that there was a real possibility information could be used to his detriment.

2. F’s firm may have a conflict of interest in acting for F against M.

3. F’s firm should cease to act in the matter.

Wills & estates – conflict of interest

(R4410 December 2006)

A conflict of interest may arise where a firm acts against the estate of its former, deceased client.

A firm acted for the executor and sole beneficiary of a deceased’s estate. A second firm prepared the will for the deceased in 1985. These instructions were provided to a solicitor who had subsequently retired from the firm about 12 years previously, but whose name remained on the firm’s letterhead as a consultant.

The wife of the deceased undertook the management of the deceased’s affairs under a power of attorney executed after his health deteriorated. In February 2006, VCAT cancelled the power of attorney on the application of a son of the deceased, and an administrator was appointed.

Family Court proceedings for property orders were instituted in April 2006 by the administrator as case guardian for the deceased. The Family Court made orders for the appointment of the case guardian in May 2006 (two days before the testator’s death).

Following the death of the testator, further procedural orders were undertaken in the Family Court.

In July 2006 probate of the 1985 will was granted to the wife of the deceased.

In August 2006 a procedural conference was undertaken in the Family Court, with the firm which drew the will acting for the deceased’s sons. An order was made by the senior registrar to substitute one of the deceased’s sons in the Family Court proceedings in place of the case guardian.

The executor’s firm objected to the second firm acting for the deceased’s sons in the matter on the basis that they were now acting against the wishes of their former client expressed by the will made in 1985.

The second firm held the will file for the deceased until the appointment of the administrator by VCAT.

An Ethics Committee ruling was requested in relation to whether a conflict of interest existed in the second firm acting for the sons of the deceased in a Part IV application and Family Court proceeding, where the firm had originally prepared the will for the deceased 21 years earlier.

Ruling

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

1. There is a likelihood that the firm who drew the 1985 will may hold confidential information concerning the deceased.

2. The estate of the deceased would reason-ably conclude that there is a real possibility that confidential information could be used to its detriment, particularly in light of the fact that the consultant’s name is detailed on the firm’s letterhead.

3. There is an allegation that a further conflict of interest exists with the executor’s firm, but the Ethics Committee notes that there is insufficient information available to make a determination on the matter.

4. The Ethics Committee notes the possibility that the firm may be called as a material witness in the future and create a further conflict.

Family – conflict of interest; successive

(R4414 December 2006)

Where there is a real possibility that confidential information could be used to the detriment of a former client, a firm should cease to act against that former client.

In a family law property settlement the husband’s firm had previously acted for the wife in relation to the proposed sale of the former matrimonial home (owned by the wife’s mother) to the wife. The proposed sale was not settled, and the property remained registered in the wife’s mother’s name. This property formed part of the matters to be determined by the Family Court in the proceedings.

The husband’s firm, in the course of acting for both the wife and her mother in the proposed sale, obtained financial information that might be relevant to the family law proceedings but contended that the wife had an obligation in any event to make full and frank disclosures about her financial affairs to the Court and to each other party.

The Ethics Committee was asked to provide a ruling in relation to whether a conflict of interest existed in the husband’s firm acting against the wife.

Ruling

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

The husband’s firm have a conflict of interest in continuing to act for the husband against their former client, and should cease to act.


The Ethics Committee is drawn from experienced past and present members of the Council of the Law Institute of Victoria Limited 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 ph 9607 9336 or visit http://www.liv.asn.au/regulation/ethics/rulings

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