Title: PROFESSIONAL PRACTICE
1PROFESSIONAL PRACTICE
- Dr Arthur McInnis
- Handout E
2Professional Practice
- Fiduciary Duty and Conflict of Interests
- Chapter 7 on Fiduciary Duty is about
Solicitor-Client Conflicts - Chapter 9 is about Client-Client Conflicts
- 5.07, 5.08, 5.16
3Fiduciary Duty and Conflict of Interests
- 5.07 - A solicitor must not act, or must decline
to act further, where there is, or is a
significant risk of, a conflict of interest. - 5.07(1) - For conflict of interest between a
solicitor or his firm and a client see Chapter 7. - 5.07(2) - For conflict of interest between
clients see Chapter 9. - 5.16 - A solicitor owes a fiduciary duty to his
client see Chapter 7.
4Fiduciary Duty and Conflict of Interests
- Governing Principle - Ch 7
- A solicitor owes a fiduciary duty to his client.
- He must act with absolute openness and fairness
to client. - He must act in the best interests of his client.
- He must not put himself in a position where his
own interests conflict with his duty to his
client. - The fiduciary duty is implied in the retainer.
5Fiduciary Duty and Conflict of Interests
- One source of duty to avoid conflict is fiduciary
- When is one a fiduciary?
- Trust/entrusts
- Reliance Reading case (1951)
- Any qualifications?
- Fiduciary duty subject to contract - Clark Boyce
v Mouat (1993)
6Fiduciary Duty and Conflict of Interests
- Great representative cases
- Bray v Ford (1896)
- Regal (Hastings) v Gulliver (1941)
- Phipps v Boardman (1966)
- all House of Lords
- all involved solicitors
- all showed nuances
7Fiduciary Duty and Conflict of Interests
- 7.01(1) - covers direct indirect personal
interest - staff and partners/(consultants)
- 7.01(2) - conflicts include relationships
- family
- emotional
- personal
- or from holding
- an office
- appointment
- shares
8Fiduciary Duty and Conflict of Interests
- Read 7.01(2) with 5.08 appointment leading to a
conflict.
9Fiduciary Duty and Conflict of Interests
- 7.01(3) - must not take advantage of a client
- test is conflict or likelihood of conflict
- examples involving solicitor and client
- leasing
- sales
- purchases
- lends
- borrows
10Fiduciary Duty and Conflict of Interests
- precondition to acting in these examples
- taking independent advice
- advice may be legal or otherwise professional
- Note - ethics and common law requirements may
diverge
11Fiduciary Duty and Conflict of Interests
- Sale and purchase
- independent legal advice is not mandatory
- though may be voidable if no full disclosure and
not fair Demerara Bauxite case (1923) - and presumption of undue influence can apply
Wright v Carter (1903) - evidence to rebut presumption varies
12Fiduciary Duty and Conflict of Interests
- Gifts
- inter vivos - if a secret profit then accounting
and restitution the rule Bray v Ford (1893) - in wills - lower standard applies Re A Solicitor
- no presumption of undue influence Wintle v Nye
but solicitor should still rebut to validate gift
13Fiduciary Duty and Conflict of Interests
- 7.01(4) - must not apply pressure on
purchaser-clients to obtain financing from
solicitors lender of choice - 7.01(5) - no interests to be taken in
(prospective) clients publication rights until
conclusion of matter
14Fiduciary Duty and Conflict of Interests
- 7.01(6) - Solicitor/director/shareholder overlap
- consider the conflicts - may have to resign
- 7.02 - full disclosure when you
- have or might obtain
- a personal interest or
- a benefit
- when acting for a client
15Fiduciary Duty and Conflict of Interests
- 7.03 - Solicitors can make profits acting for
clients BUT - they must be disclosed to the client, e.g.
profits cannot be secret and - client must agree to solicitor keeping
- covers
- interest on client accounts
- commissions from 3rd parties
16Fiduciary Duty and Conflict of Interests
- Gifts
- In this Year of the Horse the famous English
saying you should not look a gift horse in the
mouth has special meaning BUT solicitors should
still not forget 7.04 of the Guide.
17Fiduciary Duty and Conflict of Interests
- - 2 categories of gifts
- insignificant in value
- significant in value
- 7.04 - Solicitors can accept gifts from clients
IF YOU FIRST - tell them they are not obliged to give you
anything when it is insignificant in value, or - require them to be independently advised when it
is significant in value
18Fiduciary Duty and Conflict of Interests
- How is value determined? 7.04(1)
- by reference to clients estate or means
- reasonable expectations of beneficiaries
19Fiduciary Duty and Conflict of Interests
- 7.04 is narrow as
- excludes all gifts given outside solicitor-client
relationship - really only prohibits inviting gifts from clients
- no breadth in extension
- excludes benefits as executors
- BUT is 7.04(3) a sting in the tail?
20Fiduciary Duty and Conflict of Interests
- Conflict of Interests Overview
- conflict is between interests and duties
- premised upon principles of loyalty and
confidentiality - loyalty in SPR 2 and Bar Code 110
- confidentiality in 5.13 and 8.01 Guide
- the common law
- test for conflict - reasonable probability that
one or both principles will be seriously impaired
21Fiduciary Duty and Conflict of Interests
- 9.01 - 9.04
- 4 rules - 2 situations
- 9.01, 9.02 - future/potential client conflicts
- 9.03, 9.04 - present/actual client conflicts
22Fiduciary Duty and Conflict of Interests
- Refusing instructions when
- there is a conflict of interest
- there is a significant risk of conflict of
interest - acquired relevant confidential knowledge you must
disclose - here normally arises when acting for a
client against a former client - contentious or
non-contentious - similar more loosely worded out
for barristers under para 57.
23Fiduciary Duty and Conflict of Interests
- Embarrassment - though not absolute bar
9.02(2),(3). Permissive - contrast NA. - Examples -
- husbands and wives 9.02(3)
- families 9.02(4)
- lenders and borrowers 9.02(5)
- partnerships 9.02(6)
- corporations 9.02(7)
- SFC investigation 9.02(8)
- prosecutions 9.02(9) - mandatory
24Fiduciary Duty and Conflict of Interests
- And 9.03(4) - confidential knowledge again
- Recall 8.03 - duty to pass information to a
client - or - what you know so too will the client
- what you tell the other solicitor his client will
know - if it is likely you will come to know something
that you should pass on then decline to act -
read this point with 5.07 - conflicts and
prospective clients. - Note therefore both information and knowledge
covered
25Fiduciary Duty and Conflict of Interests
- conflict pertains to the clients
- whether firm or the solicitor alone
- exceptions?
- mediation and conciliation in minor disputes
9.01(3)
26Fiduciary Duty and Conflict of Interests
- You act for one client and a second client
arrives whose interests conflict, or appear
likely to conflict - which client do you give up?
27Fiduciary Duty and Conflict of Interests
- Joint Client Problems
- divided loyalties
- same or differing interests
- confidential information
- consent
- possible loss of both
28Fiduciary Duty and Conflict of Interests
- 8.01(24) - Joint retainers are OK but
- duty to explain disclosure to one is disclosure
to all - waiver of confidentiality requires consent of all
- 8.01(25) - Joint clients OK but
- no disclosure information of one on separate
matter to other without consent
29Fiduciary Duty and Conflict of Interests
- Supposed rationale for allowing client consent
- client choice
- expertise of solicitor
- cost savings
- familiarity of solicitor
30Fiduciary Duty and Conflict of Interests
- 9.03 present clients and conflict
- Discussion
31Fiduciary Duty and Conflict of Interests
- Deconstructing 9.03 - or does anything go?
- Excuses in 9.03(1)
- consent
- advice (disclaimer viz nothing confidential)
- relevance - does not concern matter
- no dispute or if dispute then resolved
32Fiduciary Duty and Conflict of Interests
- Excuses in 9.03(2)
- no continuing relationship
- not regularly acting
- recommendation (independent representation)
- (disclosure)
- contentment
- permissive construction of should
33Fiduciary Duty and Conflict of Interests
- Excuses in 9.03(3)
- no contentious issue
- no divergence of interests, rights or
obligations. - involves little or no legal advice.
34Fiduciary Duty and Conflict of Interests
- Excuses in 9.03(4)
- unrelated matter
- no conflict
- no embarrassment
- propriety
- consent
- no relevant confidential knowledge
- no good cause for refusal
35Edmund Burke
- Law sharpens ones mind by narrowing it.