- Ordinarily (in New South Wales) after termination of a lawyer’s retainer, there is no ongoing duty of loyalty owed by the law firm to the former client.
- Whether a law firm can act in a new matter against the interests of a former client depends upon whether the law firm possesses information confidential to the former client; in circumstances where the information might also be material to the new matter.
- One of the key considerations is whether the law firm has established an effective ‘information barrier’ to prevent the disclosure or misuse of the former client’s information.
It is not uncommon for a law practice to be instructed to act in a new matter – against a former client, or in circumstances where the former client has an adverse interest.
This situation can obviously arise in a litigation context, but may equally be generated out of commercial or ‘non-contentious’ business.
(From the outset, it is necessary to note an important distinction. We are using the expression ‘former client’ to identify a client for whom the law practice has previously acted, but does not presently act; that is, all of the former client’s files maintained by the law practice have been closed. The situation of conflicts between current, existing clients is a more complicated issue – and is not dealt with in this article).
So, when is the law practice entitled to accept the new instructions and when must it decline to act? This is an area of law which has undergone some change.