Ethical Minefields: Navigating conflicts of interest in legal practice

Conflicts of interest are also a pervasive and complex problem in the practice of law. The problems raise serious ethical issues for lawyers, who, as guardians of the system of justice, are expected to maintain the highest levels of integrity, loyalty, and professionalism. However, the complexity of human associations, business dealings, and multifaceted features of legal representation make for conflicts testing these ideals.

Legal professionalism and the loyalty requirement

This principle provides that the lawyer shall act in the best interest of the client, not with any conflicting interest which may interfere with the lawyer's professional judgment. Loyalty ensures a lawyer's commitment to the client is the highest to be fostered in the trust and confidence within the lawyer-client relationship. Personal, financial, and professional conflicts of interest that lawyers should handle with due concern and care; any neglect may have a severe after-effect not just to the clients but also to their own career designation.

A typical textbook example of conflict of interest arises in the case of R v. Kearney [2017] NSWCCA 135, whereby the barrister was engaged in serious criminal proceedings defending two co-accused. He first believed, upon taking instructions from both defendants, that each might be suitably represented without prejudice to either. Shortly afterwards, there came a time when it became clear to him that each party's evidence would contradict the other’s. This placed the barrister in a catch-22 situation where he was directly in a conflict of interest with his clients. In the final analysis, the court held that the barrister breached his duty of loyalty, and as such his practising certificate was revoked. The case is a prime example of how issues relating to conflict of interest feature in the legal process.

Another important principle of ethical legal practice is the duty of confidentiality

Lawyers have a duty to preserve the confidentiality of their clients. This is both necessary to ensure confidence and to enable clients to speak frankly to lawyers. Where a lawyer has prior knowledge of a client's confidential information, however, and that could pose a risk of disclosure or misuse in a second representation, conflicts arise. The rules of the practice of law require lawyers to examine potential conflicts of interest, considering especially whether undertaking a new matter will put at risk the confidences of a previous client. An example is found in the case of Gilbertson v. Barrett [2006] NSWCA 325, where a solicitor had acted for a client involved in a property dispute.

The lawyer thereafter accepted employment adversely to the former client in a related matter and an actual conflict of interest then arose. The court held that the solicitor's previous knowledge of the client's matter could well have some bearing on the representation against the new client, which will amount to a breach of confidence. The solicitor was therefore disciplined which further emphasises the significance of giving regard to conflict issues.

In an attempt to navigate through such ethical predicaments, the profession has instituted some rules and regulations that it expects its practitioners to follow to the letter. Rules usually encapsulated in an act regulating the practitioners' conduct, stipulate what is expected of legal practitioners with regard to conflicts of interest.

In Australia, the Australian Solicitors Conduct Rules provide a framework for identifying and managing conflicts of interest for lawyers. These rules emphasise that solicitors must conduct a thorough conflict check before accepting new clients, particularly in situations where there is a risk of dual representation or competing interests. In the same way that accountants have to adhere to a code of ethics for their profession, lawyers have to do the same and undertake continuing education to stay updated on the dynamics that continually change regarding their ethical concerns in practice.

CPD for lawyers is essential in ensuring that lawyers are abreast of their ethical duties, especially regarding conflict of interest. Regulatory bodies within the legal professions in Australia today require lawyers to undergo a specified number of hours of CPD every year with a key emphasis on subjects such as ethics and professional responsibility.

Failure to handle conflicts of interest properly can have serious consequences

Apart from discipline, which can range from suspension to disbarment, lawyers may also be held civilly liable for harm or injuries to clients brought about by the lawyer's unethical conduct. There are also cases in which the client seeks to vacate a judicial result based on ineffective assistance of counsel because of conflicts of interest. Such findings not only bring a blemish on the advocate's reputation but may cause heavy financial losses too. Besides legal implications, conflicts of interest tend to dent the public trust in the legal fraternity.

Where the lawyers fail in the performance of their duties, the consequence is a loss of faith in the entire judiciary.

Clients trust lawyers with their interest in a manner no other professional does, and a breach of such trust has repercussions that extend into the larger society. Just like the accounting profession which is guided by the code of conduct for accountants, the practice of law has been expected to maintain high levels of integrity and professionalism. In light of such principles, lawyers need to develop an increased sense of responsibility toward the management of conflicts of interest. This would mean being more alert to identify such conflicts of interest, establishing mitigants for the associated risks, and holding open communications with one's clients. The lawyer should also have frequent discussions with colleagues regarding any moral issues arising; this would create a supportive environment of responsibility within the firm itself. The legal profession should always be in continuous development regarding the set rules about conflicts of interest. Lawyers need to move with a society that is constantly shifting the sands of its tolerance level and adding new layers to their professional conduct. It means going back to tradition, revising training, and instilling a culture of ethical consideration within firms.

Conflicts of interest can potentially be huge ethical dilemmas that face the lawyer. The duties of loyalty and confidentiality are cornerstones, enabling lawyers to make sure their duties are well discharged and retained in societal confidence in the operation of the profession. If done well, vigilance and commitment to continuing education will successfully help one navigate this ethical minefield with integrity and professionalism. Australian examples show the consequences can be catastrophic, not only for the individual lawyer concerned but for the system of law itself. If the legal profession is going to ignore the conflict resolution area, then it needs to revert to its commitment to the pursuit of ethics, inculcating responsibility and integrity which will serve the clients' and society's interests better.