3.4. Conflict of Interest

Recommendation 106 of the Royal Commission into Aboriginal Deaths in Custody:

“That Aboriginal Legal Services recognise the need for maintaining close contact with the Aboriginal communities which they serve. It should be recognised that where charges are laid against individuals there may be a conflict of interests between the rights of the individual and the interests of the Aboriginal community as perceived by that community; in such cases arrangements may need to be made to ensure that both interests are separately represented and presented to the court. Funding authorities should recognise that such conflicts of interest may require separate legal representation for the individual and the community” ^[1]

 

What is a conflict of interest?

Identifying Conflicts of interests are related to the duty of care to clients. That is, you act in your client’s best interest by ensuring that you do not have any conflicts of interest in relation to representing them and acting in their case. 

The NSW Office of the Legal Services Commission outlines the three main areas where conflicts of interest arise in legal cases:

 

Conflict with the lawyer’s own interests

Lawyers must keep their own business interests and investments, and the business interests and investments of their associates (e.g. relatives or business partners) separate from the interests of their clients. For example, a lawyer who advises clients to invest in a mortgage company in which the lawyer has a personal interest might be guilty of professional misconduct. Lawyers cannot borrow money from their clients. While they can make loans to clients there may be ethical problems if they do so in some circumstances. Further, the lawyer must not exercise any undue influence over a client for the benefit of the lawyer and/or their associates. The lawyer is entitled to fair payment for the legal services provided to the client — but no more. This means that a lawyer cannot draft a will for a client where the lawyer or an associate of the lawyer may receive a substantial entitlement. If it is apparent that a lawyer’s interests will be in conflict with the client’s interests, the lawyer must not accept the client’s retainer. Similarly, if a close associate of the lawyer stands to gain from an investment or other transaction by a client then the lawyer should not act for the client in that transaction. A lawyer who has already accepted instructions from a client should terminate the client’s retainer as soon as a conflict of interests is apparent.

 

Conflict with the interests of another client

As long as there is no dispute or disagreement between the parties to a legal transaction, the parties can both instruct the same lawyer. This may be convenient for both parties and it may save them costs. For example, a lawyer might act for the co-executors of a will. However, lawyers should avoid taking instructions from more than one party if there is any potential for a dispute. For example, acting for both the buyer and seller of a property is unwise although permitted. A lawyer can accept instructions from more than one party to any proceedings or transaction only if each of the clients:

·      is aware that the lawyer is intending to act for the others as well

·      understands that the lawyer might not be able to give all of the information relevant to the matter to all of the parties

·      accepts that the lawyer will not give one client advice that is against the interests of another client, and

·      consents to the arrangement.

If it appears to the lawyer, or to any of the parties, that the interests of the parties are in conflict, the lawyer should stop acting for all of the parties. However, a lawyer may continue to act if an effective information barrier has been established.

 

Conflict with the interests of a former client

A lawyer must not act for a new client against the interests of a former client if:

·      the lawyer has confidential information about the former client, which is relevant to the new proceedings, and

·      it is reasonable for the former client to think there is a real possibility that the information would be used against them.

Unless:

·      the former client gives informed written consent to the lawyer acting; or

·      an effective information barrier has been established”[2]

If there is any doubt about whether a conflict of interest exists, the best practice is to refer a client to another service or practice which has capacity to assist them. Some different referral services include:

·      Legal Aid Commission

·      Aboriginal Legal Service

·      Private representation

·      A Community Legal Centre

·      NSW Bar Association or NSW Law Society Pro Bono Scheme

The actual referral process itself will vary depending on the organisation in which you are working and the nature of the client’s issues/needs.