Conflicts of interest is an issue that one of several issues exercising the SRA and, for that matter, can cloud the judgement of a minority of solicitors.

Last year, for example, a Solicitors Disciplinary Tribunal judgment concerned a law firm partner who had acted years earlier in an estate administration for which he was also an executor. He was fined more than £7,500 after admitting causing/allowing a payment out of the estate to himself of £25,000, and £14,000 to his wife, without the knowledge of consent of the other executor or other beneficiaries.

The seven core SRA principles comprise the fundamental tenets of ethical behaviour it expects. Solicitors must be able to recognise when a conflict of interest arises, or where circumstances are such that there is a significant risk of a conflict arising.

This requires a subjective assessment of the relevant client matters, being constantly mindful from the point of being instructed, of your overarching professional duties. Your firm should have effective systems in place so that potential conflicts can be promptly identified, together with suitable training for staff.

And if a conflict issue is identified, what then?

You must (as the Law Society’s practice note on the issue states), “carefully consider whether you are able to continue to act for your client, or whether doing so would involve you breaching one or more of the SRA Principles” or the Codes of practice (eg the fundamental duty to keep client affairs confidential). The potential problem, however, is that keeping certain information rightly confidential could give rise to a further set of issues for the other client.

Could limiting your retainer resolve the conflict issue? Even if doing so was to resolve the issue, limiting a retainer could lead to further challenges, such as ensuring the client/s fully understands the limits to which you can advise and represent them, and the risks to the client; and whether the client/s should take independent legal advice.

Further, without exception you must never act for any client where your own interests, or those of your firm, conflict with the client’s interests (para 6.1 of the Codes). Typical examples are where a client wants to transfer a sum of money to you personally; leave you a gift in their will; or you have a personal interest in the client’s transaction.

Informed consent

Where there is a conflict of interest (or risk of) in relation to more than one client matter, you may be able to continue to act in certain circumstances (if it is reasonable to do so).

Where the clients have a “substantially common interest in relation to the matter or the aspect of it…; or the clients are competing for the same objective” and further conditions are satisfied, you can continue to act. One of those conditions is that all the clients concerned have given informed consent to act.

Unhelpfully, ‘informed consent’ is not defined and requires each client to have the appropriate knowledge and understanding of the situation before they give consent.

Where informed consent is given, it should be clear, given in writing; and the basis on which consent was ‘informed’ clearly documented in case a dispute arises in future.

In our current webinar on professional ethics, Trevor Hellawell MA discusses the live issues relating to conflicts of interest, as well as confidentiality and undertakings. Book webinar. This webinar is also included in the SRA Webinar Bundle. Book the bundle today.