When does a conflict between duties to the court and to a client occur?

A conflict can occur in many different situations. Some examples are:

• where a client wants to issue proceedings to extort or blackmail someone;
• where the client's action is vexatious or hopeless;
• where a client refuses to produce a discoverable document; and
• where the client wants evidence to be called from witnesses who would not assist the client's case or damage the opponent's case.

The duties a lawyer owes to the court always override the duties the lawyer owes to their client.

When does a lawyer/client conflict occur?

A lawyer/client conflict will occur if a lawyer's personal interests conflict with his or her duties to their client, forcing him or her to choose between the two.

When does a client/client conflict occur?

There are two types of client/client conflicts:

• existing client conflicts; and
• former client conflicts.

An existing client conflict will arise if a lawyer represents two or more clients who have conflicting interests. In contentious matters, a lawyer must not represent two or more clients whose interests may conflict.

A contentious matter is one where the parties do not agree on what is the best outcome to the matter.

If the matter is not contentious, there is no absolute prohibition against a lawyer representing two or more clients whose interests are not currently, but may potentially be, in conflict, if doing so does not prejudice the interests of any client and each client voluntarily, and being fully informed about the situation, consents to the lawyer acting for the other clients.

However, if there is a change of circumstances and the matter does become contentious, or there is a possibility that one or more of the client's interests may be prejudiced if the lawyer continues to act, the lawyer must stop representing both clients immediately.

A lawyer may receive confidential information from clients during the course of their representation. The lawyer owes those clients a duty of confidentiality in respect of the information. This duty continues even if the lawyer is no longer acting for the clients. This can lead to former client conflicts.

There are three primary situations in which a former client conflict may arise:

• a lawyer acts against a former client;
• a lawyer from an organisation acts against a former client of another lawyer from the same organisation; or
• an organisation acts against a former client of a lawyer previously employed elsewhere but now employed by that organisation.

However, a former client conflict will not always arise in these situations. Several matters must be considered.

1. First, not all confidential information communicated by a client to their lawyer within the course of representation will be relevant during subsequent proceedings involving that same client. The courts will look at whether the subject matter of the former and current proceedings is similar or related and the closer the relationship, the more likely it is that the lawyer possesses information that is relevant to the current proceedings and a conflict exists.
2. Secondly, the courts are concerned with inadvertent disclosure of confidential information; that is, a lawyer subconsciously using information obtained in former proceedings. Whether there is a real possibility of inadvertent disclosure depends on the particular circumstances that are in issue, including the nature of the matter, the characteristics of the relevant information and the channels of communication available. If there is a real possibility of disclosure, a conflict of interest will exist.
3. Thirdly, sometimes confidential information will relate to a lawyer's impression of a client's character, personality and attitudes, and this information can also be used to benefit a current client. This information is more likely to be conveyed the longer the term of representation of the former client.
4. Fourthly, the knowledge of one lawyer may be imputed to other lawyers, disqualifying not just the individual lawyer, but all the lawyers in an organisation. Although most Community Legal Centres are corporate entities, this does not mean they are immune from this principle. Whether or not this occurs will depend on the circumstances of the case in issue, such as the size and structure of the organisation and the nature of the dispute.

If an organisation is quite large and is divided into well defined sections that deal with different types of cases, it may be that knowledge cannot be imputed across the organisation.

In family and criminal cases it is more likely all lawyers will be disqualified because of the sensitivity and highly confidential nature of the information in question.

Examples of conflicts

A current client conflict of interest will commonly arise when a lawyer acts for both the seller and purchaser in the same transaction. For example, if the seller advises the practitioner that the party faces difficulties completing the transaction, but instructs the practitioner not to reveal this problem to the purchaser. The practitioner's duty to keep the seller's affairs confidential conflicts with the lawyer's duty to the buyer to reveal all relevant information in the lawyer's knowledge.

As another example, a business owner goes to a lawyer for advice in relation to his business. The lawyer provides him with advice about the best way to structure his business to take advantage of tax concessions. Several years later the business owner's wife approaches the same lawyer and asks the lawyer to represent her in divorce proceedings. In this situation a former client conflict is likely to arise.

Dealing with intentionally created conflict of interest

There are many documented instances of people intentionally creating a conflict of interest to stop the other people involved in their dispute from having access to legal support.

For example, frequently the perpetrator of domestic or family violence will first seek legal assistance because they have had charges laid against them. This means that the victim in these disputes may not be able to obtain assistance from any agency the perpetrator has approached.

In some regional/ rural/remote (RRR) centres there is only one community legal service, and the victim may then have to deal with representation by phone, or travel to another RRR centre somewhere else.

Some practical tips to avoid conflicts

First and foremost it is necessary to use some common sense in order to avoid conflicts as much as possible. Before taking on a new client the lawyer or organisation providing the legal service should conduct cross checks of current and past files to determine whether he or she, or the organisation, is already representing, or has previously represented, another party to the conflict.

If there is any doubt about whether there is a conflict or the likelihood of a conflict, the lawyer should not act.

A lawyer should certainly refuse to act for one or both of two clients if:

• he or she is given instructions to negotiate on behalf of one or both clients;
• one or both clients seek advice in relation to a transaction and both clients expect the advice not to be disclosed to the other client; or
• he or she receives or expects to receive information or instructions from either client, where either client expects that information or instructions not to be disclosed to the other client.

What to do if you are faced with a conflict

The local networks you set up to assist with the effectiveness of your daily working life can be a great asset.

For example, it can often be difficult to work out whether a conflict of interest arises because it depends on the facts of the case. One thing a lawyer can do when faced with a conflict is to contact one of the Community Legal Centres to seek advice about a particular conflict of interest problem. If they can’t help, they may be able to give a pro bono lawyer contact.

In some circumstances it is possible for a "Chinese wall" to be erected within a firm or organisation. A Chinese wall can eliminate former client conflicts by preventing those lawyers who have information about the former client from communicating that information to the lawyers who are currently acting for a client whose interests conflict with those of the former client. The effectiveness of a Chinese wall depends on many factors, including the time that has elapsed between the matter involving the former client and the matter involving the existing client and the size of the firm.

However, it is very important to note that often the only way to resolve a conflict of interest is to stop acting for the clients involved and advise them to seek alternative legal advice and representation.

Consequences of acting when there is a conflict

A lawyer who acts in a matter where there is a conflict may be subject to disciplinary proceedings under the Legal Practice Act 2003 for unsatisfactory conduct and may also be guilty of professional misconduct at common law. In addition, the Supreme Court has jurisdiction to discipline and control lawyers.