Concurrent Conflicts of Interest and Duty of Frankness in Court, Summaries of Law

Download Concurrent Conflicts of Interest and Duty of Frankness in Court and more Summaries Law in PDF only on Docsity! Concurrent Conflicts of Interest 1. Uniform solicitor’s rules This duty exists both in fiduciary law and in the professional rules (USR 11, also see USR4). 1.1. Fundamental ethical duties USR 4 4.1.1 act in the best interests of the client in any matter in which the solicitor represents the client; 4.1.4 avoid any compromise to their integrity and professional independence 1.2. Conflict of duties concerning concurrent clients USR 11 a. Must avoid conflicts generally: 11.1 a solicitor and law practice must avoid conflicts between the duties owed to two or more current clients, except where permitted by this rule b. Solicitor must not act for two clients in the same/related matter: 11.2 If a solicitor or a law practice seeks to act for two or more clients in the same or related matters where the clients’ interests are adverse and there is a conflict or potential conflict of the duties to act in the best interests of each client, the solicitor or law practice must not act, except where permitted by Rule 11.3 • are there two or more clients? • is it the same transaction/deal? Same or related matter? What is the scope of the transaction? • Indicate their interests are the same and therefore adverse. • is there a conflict? ‘interests are adverse’ consider contentiousness of case (stricter application) Consent exception USR 11.3 11.3.1 The client is aware solicitor/practice is acting for another client; and 11.3.2 The client has given informed consent Informed consent: Dal Pont argues the wording of 11.3 suggests that informed consent alone is not enough to ‘cure’ the conflict: the solicitor must also discharge their ‘duty to act in the best interests of their client[s]’. Even with client consent, lawyers should not act unless, in their judgment, the concurrent retainers do not preclude their ability to filter the ‘best interests’ of each client. • IC = … consent given in the knowledge that there is a conflict between the parties and that the solicitor may therefore be disabled from disclosing to each party the full knowledge which he possesses or disabled from giving advice conflicting with the interests of the other client…(Mouat) [client must be aware that there is a conflict causing this] c. Holds confidential information from client A which is material to client B’s matter USR 11.4 In addition to the requirements of Rule 11.3, where a solicitor or law practice is in possession of information which is confidential to a client (the first client) which might reasonably be concluded to be material to another client’s current matter and detrimental to the interests of the first client if disclosed, there is a conflict of duties and the solicitor and the solicitor’s law practice must not act for the other client, except as follows: 11.4.1 Solicitor may act when each client has given informed consent to the solicitor acting for another client; and 11.4.2 Law practice may act where an effective information barrier is in place [see next page] d. No conflict at first but develops during business/case USR 11.5 o Can only continue to represent one party if: ▪ Informed consent is provided by both parties; and ▪ The duty of confidentiality to the other party is not put at risk 2. Fiduciary duty of loyalty [Note: the duty of loyalty expires on termination of retainer.] a. Introduction On the facts, X/firm may have breached his/her duty to avoid conflicts of interests which aims to foster undivided loyalty between lawyer and client by representing two clients whose interests may be opposed. [Note: application is stricter to contentious matters –] • Representing Z and Q as co-accused in a criminal trial Nangus; Mills • Representing insured and insurer b. Are X and Y in a lawyer-client relationship? (Do this for both parties) Is Y a client? • Lawyer-client relationship is ordinarily established by proof of a retainer • otherwise where evidence shows that a client ‘genuinely believed a retainer existed’ (Grofam; see also Hawksford) If no – enough to attach independent fiduciary duty? • Notwithstanding that there is no lawyer-client relationship, a court may find that X created an impression or expectation of a lawyer-client relationship is sufficient attract an independent fiduciary duty towards Y c. 11.2 Are the parties’ interests adverse? Here X and Y’s interests as respectively _______ and _______ are conflicting because: Rule: There must be a reasonable apprehension of potential conflict, not a mere theoretical possibility [Notwithstanding no reasonable apprehension of conflict, there is a presumption that there is a breach….and therefore there is a duty to check] Examples: o Is it possible that X lawyer possess confidential info concerning client A which is material to client B’s matter? (Hilton) o The terms of the [transaction] most favorable to Z will be different to the terms most favorable to Z ▪ Vendor/buyer // duty found in insurer-insured relationship: Nicholson ▪ Lender/borrower [ in these relationships, representation limited to bare mechanics of the transaction (DP)] o No conflict for unrelated interests: DP o Marks → takeover bid of a company, lawyer had confidential information relating to the affairs of M&S relating to the potential bid. ▪ it is not for the lawyer to decide what is material info; lawyer's duty to Green is to share all information in their interests to know. Bidders would look at everything and decide its materiality. Not a valid defence. o Eiszele → one client made two loans to buy a company (other client). The company was in a poor financial position and the lawyer was in a position to disclose that to the buyer and the company (affecting valuation). [note * the proscription extends to the firm of the lawyer, the larger the firm the greater the prospect of conflict, not sympathised with by the courts: Roadshow.] d. Defences? Unrelated matters o Can argue that the interests are so distant that it cannot be considered conflicting (Australian Liquor marketers) ▪ though the law firm acted for the client in one state and against the firm in another state, the proceedings were truly unrelated and handled by different offices. Duty of Frankness/Candour 1. Uniform Solicitors Rules and General Law 1.1 Fundamental ethical duties USR 4 3.1 A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty. 4.1 A solicitor must 4.1.2 be honest and courteous in all dealings in the course of legal practice; 4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible; 4.1.4 avoid any compromise to their integrity and professional independence; 1.2 Frankness in court USR 19 and general law a. 19.6 Duty to assist the court in the applicable law and procedure 19.6 Solicitor must assist in the administration of justice and inform the court of any relevant authorities or applicable legislation which the solicitor has reasonable grounds to believe to be directly in point, against the client's case. 19.8 Solicitor must inform the court of the matter by letter to the court copied to the opponent or request the court to relist the case for further argument. ▪ Even where judgment after judgment or when decision has been reserved and remains pending ▪ But not if realised after opponent has consented to final judgment: USR 19.7 Also see general law: ▪ A lawyer who knows that the presiding judge is unfamiliar with the law or procedure in a particular case should draw the judge’s attention to all relevant matters (Copeland) ▪ Lawyers should be prepared for court (ERS Engines) ▪ Lawyers should be aware of legal principles and rules of court (Kennedy) and must research thoroughly and not rely on text book readings (Jones) ▪ Must instruct judges to reduce likelihood of errors (Dick) b. 19.1 and 22.1 Solicitor must not deceive or knowingly or recklessly mislead the court 19.1 A solicitor must not deceive or knowingly or recklessly mislead the court. 22.1 A solicitor must not knowingly make a false statement to an opponent in relation to the case (including its compromise). • Deception includes failure to correct opponent's incorrect assumptions as to the true state of affairs. • Mullins → court found by continuing to use the old Reports in aid as info instead of disclosing the cancer facts, the lawyers had intentionally deceived Suncorp as to White's true life-expectancy and the subsequent claim. c. Correcting misapprehension / misleading statements Consider ▪ 19.2 If the court is misled the solicitor must take all the necessary steps to correct the misleading statement as soon as possible after the solicitor becomes aware that the statement was misleading ▪ 19.11 a solicitor must inform the court of any misapprehension by the court as to the effect of an order which the court is making, as soon as the solicitor becomes aware of the misapprehension. Defence ▪ 19.3 A solicitor will not have made a false statement to the opponent simply by failing to correct an error on any matter stated to the solicitor by the opponent. ▪ CF Mullins → it was dishonest to allow Suncorp to proceed in the mediation without correcting their understanding of White's cancer which affected his life expectancy and claim. [think about the overarching purpose in Rule 4] Also see general law: Lawyers must eschew statements or conduct that are: ▪ False documents o Presented a false affidavit to the court Kyle ▪ Half-truths o Chose not to disclose a relevant fact to the court Meek • cf Allens lawyers in James Hardie, where they did not mention JH's intention to cancel the partly paid shares (although unclear where there was fraud before, could have been genuine) o Failed to correct the court when referred to as chief inspector but actually wasn’t Meek o if doubtful as to the veracity of instructions or their potential to mislead, lawyer must verify a client's contentions