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Ethics Committee Rulings

Every Issue

Cite as: March 2011 85(3) LIJ, p.72

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

Family

Conflict of interest
(R4673 – October 2010)
In family law proceedings where there may be a conflict of interest, a lack of “relatedness” between the conflicting matters will not necessarily negate the perception of a conflict.

The husband and wife engaged separate lawyers in a family law matter. Back in 2003, the wife had consulted her husband’s current lawyer regarding child support issues with a former partner. The wife stated that she consulted that lawyer for over an hour and received advice from him.

Recently, the wife’s relationship with her husband broke down and the parties were trying to negotiate a domestic property settlement.

The wife was “uncomfortable” with her former lawyer acting for her husband in the family law matter and sought the Ethics Committee’s guidance as to whether he should excuse himself on the basis of a conflict of interest.

The wife’s former lawyer rejected the assertion that there was a conflict. He said the husband was present at the initial meeting with the wife regarding her child support issues and that he did not have any further insight about the wife’s affairs than the husband.

The wife’s former lawyer also said no insight had been obtained as to the wife’s personality, that contact with her had been minimal and occurred almost eight years ago. He further suggested that the 2003 conference related to a previous relationship of the wife, and was not related to the matter that was currently on foot with her partner.

Ruling

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

Provided that the husband was present at the 2003 meeting it is unlikely to be a conflict of interest.

If the husband was not present, the lawyer should cease acting, as there may be a perceived conflict of interest.

Trust accounts

Undertakings
(R4672 – October 2010)
Undertakings are personal and must be obeyed unless you are released from them.

Firm X was retained to prepare the documents for the sale of a property owned by a mother and her three adult daughters (not all of whom got along). The property was sold and settlement scheduled for early 2011. Firm X acted for the eldest daughter while Firm Y acted for the mother and the two other daughters and originally held all the deposit money.

The mother later went to live with the eldest daughter and left Firm Y and retained Firm X. Firm X then sought a transfer of the mother’s deposit money. Before transferring the deposit money Firm Y sought an undertaking from Firm X to ensure that the mother’s portion of the balance of the deposit which Firm Y held in its trust account would be held by Firm X on behalf of the mother. Additionally, the undertaking provided that the money would not be distributed to anyone unless written consent was provided by all three daughters and the mother or by an order of the court. Firm X gave the undertaking.

The mother’s portion of the deposit money was then transferred to Firm X. Firm X stated it gave the undertaking to Firm Y pursuant to an authority from the mother and the eldest daughter that provided their agreement that no funds should be released without the authority of all four parties.

Since that time the eldest daughter and the mother changed solicitors again and the eldest daughter retained Firm Z. The eldest daughter sought to revoke her previous authority that she had given to Firm X and wished for her mother’s share of the deposit money to be released. Firm X refused to release the money as it stated that on the strength of the mother’s and the eldest daughter’s authority, Firm X had provided an undertaking to Firm Y, from which it had not yet been released.

Ruling

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

Firm X is obliged to preserve its original undertaking as provided to Firm Y, unless released from it in accordance with the original agreements, or by court order.



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.

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