Conflicts of interest: when a solicitor cannot act

Loyalty is close to the heart of what a client buys when they instruct a solicitor. The expectation is that the lawyer will act in the client’s best interests and no one else’s, and the conduct rules protect that expectation by being firm about conflicts of interest. The SRA Code of Conduct draws a clear line: there are situations in which a solicitor simply cannot act, and others in which they can only act if strict conditions are met and everyone involved understands and agrees to what is happening.

The rules distinguish two kinds of conflict, and treat them very differently. The first is an own-interest conflict, where the solicitor’s duty to the client collides, or risks colliding, with the solicitor’s own interests, or those of the firm. An example would be advising a client on a transaction in which the solicitor or the firm has a personal financial stake. Here the rule is absolute: if there is an own-interest conflict, or a significant risk of one, the solicitor cannot act, and there is no way to consent around it. The temptation to prefer one’s own interests is treated as too dangerous to manage with safeguards.

The second kind is a conflict between two or more clients of the firm, where acting for one would harm the interests of the other. The starting point is again that the firm should not act. But because commercial life throws up situations where clients with overlapping interests genuinely want the same firm to act, the Code allows two narrow exceptions. A firm may act where the clients have a substantially common interest in the matter, or where they are competing for the same objective, such as two bidders for the same asset. Even then, the firm can only proceed if the clients give informed consent in writing, effective safeguards are put in place to protect each client’s confidential information, and the firm is satisfied it is reasonable to act for all of them.

Confidentiality sits alongside all of this and can bite even after a matter has ended. A firm holds confidential information about its clients, and a duty not to act for a new client whose interests are adverse to a former one where the firm holds relevant confidential information from the earlier retainer. This is why firms run conflict checks before taking on work, screening a prospective instruction against their existing and past clients, and why a firm will sometimes decline a lucrative case: the information it already holds makes acting impossible.

For clients, the value of these rules is quiet but real. They are the reason a solicitor will occasionally say they cannot help, or must stop, even when it costs the firm a fee. Rather than a bureaucratic obstacle, the conflict rules are a guarantee that when a solicitor is acting for you, they are not quietly serving someone else’s interests, or their own, at the same time.