Legal Ethics: Analysis of Conflict of Interest in Litigation Scenario

This report provides a detailed analysis of a legal ethics case concerning a conflict of interest scenario. The case involves two law firms representing opposing parties in separate but related legal matters, raising questions about the misuse of confidential information and breaches of solicitors' conduct rules. The report examines the Australian Solicitors Conduct Rules, particularly those related to the duty of honesty, confidentiality, and avoiding conflicts of interest. It references relevant case law to determine whether a conflict of interest exists and the potential consequences for the solicitors involved. The analysis considers the time elapsed between the cases and the materiality of the confidential information. The report concludes that a conflict of interest likely exists, recommending that the concerned party apply for an injunction or report the matter to the Commissioner of Office of Legal Services.

LEGAL ETHICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Overview of the factual scenario.................................................................................................1
Australian Solicitors Conduct Rules...........................................................................................1
Application on facts....................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
It is believed that the barristers do not believe in adopting ethics in their conduct, rather it
what they essentially do. Ethics could be characterized as the hallmark of the legal professions,
in pursuance to which the solicitors are under a more strict obligation to abide by it. Furthermore,
there does not exist any forum which is able to effectively enforce these ethics over and above
the acceptance of individuals and expectation among the peer group (Hazard, Hodes and Jarvis,
2014). It is also believed by many that if ethics are merely reduced to specific rules, it shall result
into a regime of spiritless compliance, as against the requirement of skilful evasion.
Overview of the factual scenario
Hades instituted a case before Supreme Court for breach of duties, against Chesire and
Bellman. In the instant case Hades was represented by Cordelia Flak Lawyers, while both the
defendants were represented by Yorrick Kane Lawyers. During the course of proceedings, the
accounts and financial records of Hades were disclosed in the court, in pursuance to which
Yorrick, the defendant's lawyer, became familiar with the same. In the year 2008, Hades claim
was settled through mediation. Further, in the year 2012 another case was instituted by Bowden
Cable against Hades in the District Court. It has been ascertained by the lawyers of Hades that
Bowden is being represented by Yorrick Kane Lawyers, who were also involved in the earlier
insurance case. Daphne Farquitt, the lawyers of Hades, have communicated the existence of
conflict situation to Yorrick Kane as they were aware of the financial records of Hades, disclosed
in the court during the previous court proceedings. Thus, it being alleged by them that
considering the nature of disclosed information, Yorrick Kane can impact the outcome of the
present matter, if it is used inappropriately.
Australian Solicitors Conduct Rules
The paramount duty of a solicitor in respect to these rules is to administer justice. It has
also been stated that this duty as imposed through Rule 3 of ASCR overrides application of any
other duty which the solicitors are under an obligation to abide. Further in pursuance to the Rule
4.1.2 the solicitors are under an obligation to exercise honesty and courteousness is all the
dealings undertaken in their professional capacity (Australian Solicitors’ Conduct Rules 2011
and Commentary, 2013). In the case of Halliwell v. Kraft (1990) the court highlighted the
requirement of standard of conduct which shall be maintained by the lawyers throughout their
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interaction in the professional capacity (Knake, 2011). In addition, Rule 9 imposes the duty to
maintain confidentiality of any form of information which is disclosed to the solicitor during the
course of legal proceedings or related circumstances. In accordance to these rules, the solicitors
are also under an obligation to avoid situation of conflict of duties or interests, which has the
capacity to hamper the loyalty or honesty of a solicitor's conduct. In the case of Spincode Pty Ltd
v. Look Software Pty Ltd (2001) 4 VR 501 it was opined by the court that a solicitor is under a
Duty of Loyalty while dealing with any legal matter (Loewenstein, Cain and Sah, 2011).
Interpretation of this duty has established that a solicitor is under an obligation to not misuse any
of confidential information disclosed by the former clients. Thus, it is essential for solicitors to
undertake every effort to avoid situations of conflict of interest while practising their
professional roles (Crossing Over – The Blurred Lines Of A Lawyer’s Duty Of Loyalty, 2006).
Failure to abide by this duty shall also be considered as a potential contravention of
requirements under Legal Profession Act 2004, which in turn may also initiate disciplinary
proceedings against the concerned lawyer. Moreover, involvement in a conflict of interest
situation is also a violation of the fiduciary duty which is imposed on every solicitor, in addition
to a potential breach of contractual relationship (Avoiding Conflict of Interest, 2010.). In the case
of Farrington v. Rowe McBride & Partners (1985) it was opined by the court that every solicitor
is under an obligation to follow the practice rules, in addition to maintenance of ethical standards
which are imposed in pursuance to the legal capacity. Moreover, the obligation to follow
fiduciary duty is distinct from these requirements which a solicitor shall follow. In pursuance to
the same the solicitor shall either not represent the case or transfer the matter in the event of
conflict of interest (Dal Pont, 2010). However, in the case of Australian Liquor Marketers v.
Tasman Liquor Traders Pty Ltd (13) it was opined by the court that in the event it is established
that the two matters under consideration are not related or the alleged confidential information in
no capacity can impact the decision of matter in hand, the solicitors shall not be restrained to
represent a legal matter in court. On the basis of these judicial pronouncements and applicable
principles, it shall be stated that in the event a solicitor representing the defendant is believed to
have a conflict of interest, then such a lawyer shall be restricted to represent the case by applying
for an injunction in respect to the same (Legal Professional Ethics, 2017).
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Application on facts
In the instant case it is believed by Hades that the financial and accounting records
known to Yorrick Kane are confidential in nature, and thus has evolved a conflict of interest
situation. In light of Mancini v. Mancini (1999) it is imperative for the parties to establish that
the alleged information is confidential in nature and has the potential to hamper the interests of
the parties under consideration. Moreover, another fact which shall be taken into consideration is
change of confidentiality over time. It has been opined by the court in Mancini, it is not
necessary that an information which was confidential in earlier time remains to be confidential
every after passage of time (Schneyer, 2011). Thus, in the event the information is no longer
material to the present case in hand, shall not create a situation of conflict of interest.
In the present case, it can be stated that the situation arises a conflict of interest as there
exists a gap of only 4 years between the two matters, which involves the financial capacity of
Hades. It is important to consider that the legal matter in court is assessing the liability of Hades
to incur a liability for payment of a specified amount to Bowden. Moreover, the alleged
information under consideration is in relation to the financial records of Hades, which has the
potential to be used inappropriately by Yorrick Kane in determining the quantum of damages, if
the liability is established against Hades (Conflict of Duties and Interest, 2011). Thus, in light of
the established rules and the legal principles applied by the court over various judicial
pronouncements, it can be stated there existed a conflict situation for Yorrick Kane Lawyers.
CONCLUSION
In such a situation the decision of Lawyers of Hades were correct in communicating the
concern of conflict of interest, which is apparent from the facts of the case. Moreover, if Yorrick
Kane does not undertake any suitable action to address the conflict, Hades is entitles to apply for
an injunction for restraining the association of Yorrick Kane in the present matter. Though this is
one of the suitable course of actions which shall be pursued by the solicitor's of Hades, they also
have an option to report the matter to the Commissioner of Office of Legal Services for
commencement of a disciplinary action against Yorrick Kane.
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REFERENCES
Books and Journals
Dal Pont, G., 2010. Lawyers' Professional Responsibility.
Hazard, G. C., Hodes, W. W. and Jarvis, P. R., 2014. Law of Lawyering. Wolters Kluwer Law &
Business.
Knake, R. N., 2011. Democratizing the delivery of legal services.
Loewenstein, G., Cain, D. M. and Sah, S., 2011. The limits of transparency: Pitfalls and potential
of disclosing conflicts of interest. The American Economic Review. 101 (3). pp. 423-428.
Schneyer, T., 2011. On Further Reflection: How Professional Self-Regulation Should Promote
Compliance with Broad Ethical Duties of Law Firms Management. Ariz. L. Rev. 53. p.
577.
Online
Australian Solicitors’ Conduct Rules 2011 and Commentary, 2013. [PDF]. Available through:
<http://www.lawcouncil.asn.au/lawcouncil/images/LCA-PDF/a-z-docs/SolicitorsConduct
RulesHandbook_Ver3.pdf>. [Accessed on 14th April 2017].
Avoiding Conflict of Interest, 2010. [PDF]. Available through:
<http://www.gordonandjackson.com.au/uploads/documents/articles/avoiding-conflicts-
seminar-paper.pdf>. [Accessed on 14th April 2017].
Conflict of Duties and Interest, 2011. [PDF]. Available through:
<https://www.vicbar.com.au/uploads//member-publications/Good_Conduct_Guide_Chapte
r_5_Conflict_of_Duties_and_Interest.pdf>. [Accessed on 14th April 2017].
Crossing Over – The Blurred Lines Of A Lawyer’s Duty Of Loyalty, 2006. [Online]. Available
through: <https://www.liv.asn.au/Mobile/Home/Law-Institute-Journal/Article?
NodeID=39184&NodeParentID=39183>. [Accessed on 14th April 2017].
Legal Professional Ethics, 2017. [Online]. Available through:
<http://www.lsc.sa.gov.au/dsh/ch02s01.php>. [Accessed on 14th April 2017].
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