Lawyers’ Conflicts of Interest and the problems that come with it

Lawyers’ Conflicts of Interest and the problems that come with it

Lawyers’ conflicts of interests, which arise more often when a lawyer is concurrently representing two or more clients, found in opposing sides. This can cause serious problems of conflicts of interests due to the fact that a lawyer owes a fiduciary duty and trust to both of his clients found in opposition.

Every relationship between a professional, such as a lawyer, and a client is based on trust, however a lawyer-client relationship is unique since its objective is to give legal advice to the client and provide justice in the world. Such conflicts of interests in the legal profession occur more often in the litigation area, rather than the commercial transactions sector, thus the courts are often forced to remind the lawyers that the privilege of confidentiality in communications with their clients exists to benefit the clients and not the interest of the lawyers. Even though, it would not be logical to prohibit a lawyer from representing different clients, one has to be careful and refuse the representation of one client if has opposing interests with one of the lawyer’s clients.

A lawyer owes to his client several duties, which include loyalty, diligence and confidentiality. It is important for a client to be able to trust his lawyer and confide in him and the lawyer’s duty is to handle his client’s matter in the most beneficial, for the client, way. It is the lawyer’s obligation to defend and advance his client’s interests, with whom a fiduciary relationship exists, without this affecting his other clients’ interests. This is why it is vital that a lawyer refuses to represent a client who is in opposition with another current client of his.

There is an important judgment which refers to accountants, but can apply to lawyers as well. This is the judgment held by the House of Lords in Bolkiah v. KPMG AQ. In this case, KPMG was the accountancy firm for Prince Jefri Bolkiah, who was the brother of the Sultan of Brunei and the former chairman of the Brunei Investment Agency (BIA). Prince Jefri was removed from his positions, which were then taken over by partners from Arthur Andersen. The Brunei government wanted KPMG to look into some transactions of BIA, so KPMG created a Chinese wall to protect Prince Jefri’s confidentiality during the investigation. However, KPMG did not contact him to seek his permission to work for the Brunei government in the investigation of the BIA. Thus, Prince Jefri sought an injunction to prevent KPMG from further working on the project. The Court of Appeal reversed the granting of the injunction, but the House of Lords reversed the Court of Appeal’s decision and granted the injunction, holding that this was a case of conflict of a former client. KPMG did not owe a fiduciary duty to Prince Jefri, but it could not disclose any confidential information, which created a similar relationship with that of the litigation privilege between a lawyer and his client.

The Bolkiah case holds some important principles: 1. When there is a clash between fiduciary obligations owed to two clients a professional acts for at the same time, with conflicting interests, this is deemed to be an existing client conflicts. 2. Even when a professional has informed consent to act for both clients with conflicting interests, there are situations where he will be unable to act for both. 3. Even when a fiduciary duty ceases to exist due to the termination of the relationship of the client with the professional, a conflicts of interests can arise since a professional always has the duty not to disclose any confidential information of a former client to a current client who may be in opposition with his former client.

It is impossible in most situations for a lawyer to represent two opposing parties. For instance, a lawyer in a criminal case cannot act both for the criminal and the victim, even under their consent. In the same way, a commercial lawyer cannot represent two leading competing corporations in one sector. Therefore, when a lawyer discovers that there are conflicts of interests, he must cease his representation of at least one of the clients, so that the violation of independence, confidentiality and trust is avoided. These are vital for the freedom of the legal profession and if compromised, then the lawyer’s ability to represent his client will also be at risk. Thus, it is important to maintain the ethical sections of the profession, even if it means turning away from a profitable business deal with a new client.