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    February 1st, 2009

    Time and time again we hear the same old rumours
    Conflict doing this,
    Conflict doing that…

    Words and music by Conflict.

    Discovering you have a conflict of interest on a file can be more than just embarrassing. It can have ethical, professional and financial implications. It can damage your relationship with your client when they realize the file must be moved. It can also result in the loss of a substantial amount of future work that may have come your way (an economic loss of opportunity). With all of this at stake, it is surprising that conflicts are not afforded, to paraphrase Rodney Dangerfield, more respect.

    There are three distinct parts to unearthing conflicts before they become a problem. These are:

    1. Awareness
    2. Procedure
    3. System

    Taking each in turn:

    Awareness: This is recognizing that you are responsible (legally and professionally) with the task of determining whether or not you and your firm may have a conflict of interest at any point in time, but particularly whenever taking on a new client. There are several types of conflicts:

    1. Conflicts of interest between clients
    2. Conflicts which arise when acting for two or more clients
    3. Conflicts arising as a transfer between or merger of firms
    4. Conflicts between lawyer and client
    5. Conflicts which arise as a result of new case law and/or changes to Rules and Regulations.

    Procedure: Every firm should have a written office manual which outlines the process to be followed to discover a conflict of interest. Unfortunately, no procedure or system has yet to be devised that will uncover every conflict of interest. Having a written procedure to follow at least ensures that you go about the process of discovery in a systematic and consistent basis. Furthermore, the steps that were taken should be recorded in order that the procedure undertaken can be demonstrated, should it become necessary to do so.

    System: Relying on the lawyer’s (or legal assistant’s memory) never was a reliable and dependable system to uncover a conflict of interest. Furthermore, having a written or increasingly, computerized conflict checking database will only discover conflicts between clients and only if names have not changed. This database check will not necessarily uncover conflicts that arise as a result of the exercise of legal judgement.

    For example, s. 2 of Chapter 7 of the Professional Conduct Handbook (PCH) for British Columbia states:

    “2. A lawyer must not perform any legal services for a client with whom or in which the lawyer or any-one, including a relative, partner, employer, employee, business associate or friend of the lawyer, has a financial or membership interest that would reasonably be expected to affect the lawyer’s professional judgement.”

    Many lawyers do not have a written retainer agreement which outlines the steps to be taken in the event that they are working for two or more clients and a conflict arises between them. Such a situation typically results in the law firm being unable to act for any of them when a conflict arises.

    Furthermore, there appears to be considerable confusion as to what is a “simple conveyance” in accordance with Appendix 3 (Real Estate Transactions) to the PCH. It is respectfully suggested that this Appendix be reviewed periodically in order to keep awareness at the forefront of a lawyer’s mind.

    Lawyers should call the Practice Advice Department at the Law Society of British Columbia if they desire an objective and disinterested opinion as to whether or not they are in a conflict of interest.

    There is one thing that is certain and that is no firm wishes to have rumours on the street that they were in a conflict doing this or a conflict doing that and had to get off a file as a result.

    (this post is based on a column originally published in PracticeTalk in the Canadian Bar Association – BC Branch’s newsletter BarTalk)

    This entry was posted on Sunday, February 1st, 2009 at 12:02 am and is filed under Firm Governance, Issues facing Law Firms, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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