Insights from Lawcover: avoiding conflict

Conflicts can arise in a number of scenarios, and may include conflict with a solicitor’s own interests, conflict concerning former clients and conflict of duties concerning current clients.  Fundamental to avoiding conflicts is identifying who is the client.

Lawcover deals with a significant number of claims alleging conflict. Many of these claims arise due to the solicitor’s failure (at an early stage) to turn their mind to identifying their client.  When this simple yet important step is carried out as part of client onboarding, it clarifies to whom the solicitor owes their duties and is the foundation for identifying potential conflicts.

With cost being a significant factor for many people purchasing property, it is not uncommon for parents to assist with funding part of the purchase price by way of gift or loan. Where the arrangement remains undefined and undocumented, questions can arise at a later stage as to whether the funds were a gift to one or both parties or were loaned, and on whose behalf the solicitor was acting. Solicitors are encouraged to exercise caution when acting in these circumstances.

In a recent Lawcover claim, the solicitor acted on the conveyance of a property where part of the purchase funds was provided by one of the purchaser’s parents.  Several years later the purchasers separated, and a dispute arose about whether the monies were a gift or loan from the parents.  The parents alleged the monies were loaned and, in addition to acting on the conveyance of the property, the solicitor acted for them on the loan. The parents alleged the solicitor was negligent in not advising them to secure the loan by way of caveat or at least a written agreement.  The solicitor’s file was light on documentation and did not contain any evidence that the solicitor had turned their mind to identifying whether they were or were not acting for the parents.  Further, the solicitor’s file did not contain any evidence that the solicitor had discussed or even considered the potential for conflict.  It didn’t help that the parties were family friends of the solicitor, and many of the meetings and conversations took place in the presence of all parties at the parents’ family home.

Had the solicitor identified at an early stage on whose behalf the law practice was acting and advised the other party/parties to obtain independent legal advice, allegations of conflict would likely not have arisen.

Having appropriate onboarding procedures which include client identification and conflict checking and following the procedures consistently in all cases (and especially when acting for friends and family) is paramount to avoiding allegations of conflict of interest.  Even the simple step of confirming who is – and perhaps who is not – your client will assist in highlighting potential conflict issues.

Lawcover’s Law Practice Checks and the Law Society’s Compliance Review Toolkit assists solicitors in implementing sound conflict procedures which will in turn protect you and your practice.

Glenda Carry is the Legal Risk Manager at Lawcover