Solicitors’ Practice (Conflict) Amendment Rule 2004
(a) This rule sets out provisions for dealing with conflicts of interest other than
those conflicts in relation to conveyancing, property selling or mortgage
related services which are dealt with in rule 6.
(b) This rule applies to a regulated individual and a regulated practice.
(c) Conflicts between the duty of confidence and duty of disclosure owed by an
individual or a practice to two or more clients are dealt with in rule 16E. Continue reading “Detailed new conflict rules commence in England”
The little guy in the centre is Lord Justice Mummery of the English Court of Appeal, an Oxford man shown here awarding some trophies at Oxford. He wrote the lead judgment in Gus Consulting GMBH v LeBoeuf Lamb Greeme & Macrae  EWCA 683 handed down in late May. The American law firm against which the injunction was sought wheeled out Lord Neill of Blanden QC, a former judge, Vice-Chancellor of Oxford, Chairman of the Bar Council, Chairman of the Senate of the Inns of Court, Chairman of the Press Council, director of The Times, legal adviser to the Synod of the Church of England, and Chairman of the Committee of Enquiry into Regulatory Arrangements at Lloyds. About as English as a pork pie, and a one-time member of the Committee on Standards in Public Life to boot. He got a difficult argument across the line.
A law firm discovered that it was acting in a dispute “which involve[d] a consideration of work they themselves did for those clients [7 to 8 years previously] and an attack on the honesty and integrity of their former clients in those very transactions”. Worse, the conflict had been missed when the lawyers who were mounting the attack on the former client joined the firm, bringing the new client with them. But until the conflict was noticed, the month after the lawyers’ move, the new members of the firm had been oblivious to the work previously done by it for the people they were now attacking, and steps were quickly put in place to prevent any access to the former client’s files. The Court refused an injunction sought by the former client enjoining the firm from acting against it, finding the Chinese wall to be efficacious. This is a case which falls squarely within what is governed by the Victorian Court of Appeal’s duty of loyalty to former clients: the taking up of cudgels against a former client in relation to the same or a related matter.
Having read many conflict cases, I strongly suspect cases involving mergers result in injunctions much more rarely than others. Furthermore, the fact that the injunction would have resulted in the loss to the new client of a legal team which had obviously been engaged for 3 years in a complicated dispute must have been a matter of great influence, though it is an entirely hidden factor in the reasons.
So the former client cannot enjoin its former lawyers from taking up the cudgels against it in a related matter. But what is to stop the new client of the firm from suing it for breach of the duty of disclosure (which is the duty which conflicts with the duty to keep the former client’s information confidential in these kinds of cases) when it fails to disclose that which it has undertaken to the Court not to disclose though it is relevant and “goes to the heart of” a key issue in the arbitration?
Continue reading “UK okays lawyers attacking former client’s honesty across a Chinese wall”
Gee do plaintiffs adore sprinkling a bit of fiduciary duty action into their pleadings against solicitors. Their counsel see it as moon dust. A sophisiticated plaintiff (who had been party to separate litigation which eventually culminated in a High Court case about contractual certainty) tried it on in a somewhat novel way in Equuscorp Pty Ltd v Wilmoth Field Warne (No 3)  VSC 164 but bombed out before Justice Byrne. Continue reading “Fiduciary duties and the sophisticated client”
Legal Practitioners’ Complaints Committee v SJB  WASAT 201
It is a serious crime in Western Australia to advertise in a way calculated to cause a person make a personal injury claim. A solicitor ran ads headed “Injured in a road accident and made a claim? If so, read on. [footnote: If you have not made a claim, disregard this advertisement.]” A narrow construction of the provision was adopted, consistent with the seriousness of the offence it created, and no breach was found. But not enough was done to explain “No compensation = No legal fees” and the misleading nature of those words amounted to unprofessional conduct as a falling short of the standard of conduct observed and approved by members of the profession of good repute and competence. Continue reading “WA solicitor guilty of unprofessional conduct in “No compensation = No legal fees” ad”
Conway v Ratiu  EWCA Civ 1302,  1 All ER 571 (note),  All ER (D) 103 (Nov) (full decision) English Court of Appeal (Auld LJ gave the lead decision with which Laws and Sedley LJJ agreed)
This report is an extract of 10 paragraphs from a defamation case in which, somehow or other, it was necessary to consider the nature of the solicitor’s fiduciary duty to the client. Lord Millett said in the leading modern English authority on conflicts between duties of confidentiality and of disclosure (that is, current client / past client conflicts) that the fiduciary duty terminates with the retainer, leaving only a duty of confidentiality. That is in a sense the principle taken issue with by Brooking JA in Spincode. Lord Justice Auld noted the principle had been wound back in Hilton v Barker Booth and Eastwood (a firm)  UKHL at -, and this proposition from Longstaff v Birtles  EWCA Civ 1219 was cited with approval:
“The source of the [fiduciary] duty is not the retainer itself, but all the circumstances (including the retainer) creating a relationship of trust and confidence, from which flow obligations of loyalty and transparency. As long as that confidential relationship exists the solicitor must not place himself in a position where his duty to act in the interests of the confiding party and his personal interest … may conflict”. Continue reading “Conway v Ratiu: solicitors’ fiduciary duties”
Guss v Law Institute of Victoria Ltd  VSCA 88 (Maxwell P gave the lead judgment, Callaway and Chernov JJA agreeing)
A solicitor’s right to practice was suspended for three years and he was ordered to pay costs of $31,500 for failing to comply with the obligation of ongoing discovery in relation to what was prima facie a privileged copy of a document produced by an expert witness a few days before trial which, had the existence of the copy document been disclosed to the other side, might have put the other side onto a train of enquiry which might have led to relevant evidence. Continue reading “3 years’ holiday for not making ongoing discovery”
Legal Services Commissioner v JAF  VCAT 581 (Cullity, Shattock, Hannebury) Acting for vendor and purchaser; conflict between duty and interest (of solicitor’s associate)
The Full Tribunal were not impressed with this solicitor who acted for the vendor and the purchaser which was a trust of which his wife was a beneficiary, but did the rule they relied on extend to prohibit acting in the face of a conflict between duty and the interest of an associate? Continue reading “Misconduct in acting in face of duty and associate’s interest conflict”
Update, 22 December 2009: I came across this article recently: ‘Using Information: Witnesses Under Obligations of Confidence’ (2002) 22(11) Proctor 16.
AG Australia Holdings Ltd v Burton (2002) 58 NSWLR 464; Bernard Murphy “Witnesses and Confidential Information” Litigation Lawyers’ Section Newsletter, March 2006
Melbourne class action litigator Bernard Murphy was found by the NSW Supreme Court to have engaged in the tort of inducing breach of contract by acting with a reckless disregard as to whether asking questions of a “smoking gun” ex-employee witness was likely to involve a breach of the witness’s confidentiality obligations to GIO. [Update, Jan 2007: compare this case.]
Continue reading “A duty not to tempt witnesses to breach likely confidentiality obligations?”
Law Institute of Victoria v PJR  VCAT 293 (see the associated pecuniary loss dispute decision here)
The Law Institute prosecuted a solicitor for misconduct constituted by simply missing a time limit. That failed, as did most of the other charges. But he was convicted of unsatisfactory conduct in not telling his client for two years that he had missed a crucial time limit, giving rise to a conflict between duty and self-interest. After 3 days of hearings, the solicitor was fined $1,000 and ordered to contribute only a fraction of the Law Insitute’s costs.
Continue reading “Non-disclosure of own negligence founds unsatisfactory conduct conviction”
Law Institute v SHP  VCAT 450
A solicitor was found guilty of unsatisfactory conduct in that he failed to supervise his legal and non-legal staff in relation to an undertaking he signed on behalf of his firm. Charged with misconduct, VCAT instead found him guilty of unsatisfactory conduct (which he admitted) and ordered him to pay a fine of $750 and costs of $9,000 stayed for 3 months. It is suggested in the reasons that although the solicitor’s law clerk knew of the undertaking which was simply enough expressed, and although it was accepted that the solicitor told the clerk to bring it to the attention of an employee solicitor handling a related part of the matter who could be expected to have understood the nature of the undertaking, that was not enough.
Lisa Hannon was for the Law Institute, John Langmead and Erin Gardner for the solicitor.