By Glenda Carry -
Failing to recognise conflicts, whether they are conflicts between the client’s interests and the lawyer’s, or conflicts between the duties owed to current or former clients, can lead to both ethical breaches and professional indemnity claims. Alertness to potential conflicts and good processes are key to identifying potential conflicts so they can be avoided or managed. This article discusses conflict checking procedures, including integrating technological solutions and the importance of fostering a culture of compliance.
Integrating Technology
A modern conflict checking system should integrate seamlessly with the firm’s practice management tools, enabling real-time access to up-to-date information and reducing the risk of human error.
For transparency purposes, the system should maintain a clear and accessible record of conflict checks, decisions made, and the rationale behind those decisions.
Implementing Effective Procedures
The Four-Step Framework for Conflict Checking
Step 1 Clarify responsibility
Ambiguity regarding responsibility for conducting conflict checks is a common source of risk. Systems must clearly define when, how, and by whom conflict checks are performed. Explicit policies are necessary to avoid misunderstandings between principals and employees.
Regardless of who carries out the conflict check a principal should always be made aware of and approve all new matters before a client is onboarded.
Step 2 Gather relevant information
Who is the client?
The foundational question ‘Who is the client?’ must be answered before commencing a conflict check. Overlooking this step can lead to significant issues. Considerations include:
- Are we acting for the company or a director?
- For the joint venture or a partner?
- For parents, children, or both?
- For siblings or a single sibling?
- For a husband and wife, or one party individually?
If the client is an individual, identify the full legal name including any middle names, any aliases and full address, as well as, depending on their relationship status, the full name and any aliases of their spouse.
If the client is a corporation, carry out an ASIC search and obtain full names of all directors and shareholders.
If the client is a trust, obtain the full name of the trustee and all beneficiaries.
In addition to clarifying for whom we are acting, we also need to identify relevant parties which may give rise to a conflict or potential conflict.
In litigation matters, identify the full name(s) of the other party or parties and any potential witnesses.
In property matters, identify the full address of the property and the full name(s) of the other party or parties.
In criminal matters, identify the full name(s) of victim(s) and potential witness(es).
Lawcover’s Law Practice Checks includes a Conflict of Interest Check which you can access here.
Step 3 Conduct the conflict check
Utilise the firm’s file register, practice management software, and network search tools to conduct thorough conflict checks using the information gathered. Checks should encompass all information held by the practice, including current clients, former clients, interstate and international offices. It may be prudent to email colleagues to ask whether they are aware of possible conflicts which should be considered before taking on a client. The check should also consider whether there may be a conflict or potential conflict concerning the solicitor’s own interests.
Where a conflict or potential conflict arises, it should be brought to the attention of a supervisor/principal immediately. It is ultimately a principal’s responsibility to ensure the legal services provided by the law practice are provided in accordance with the Legal Profession Uniform Law, the Uniform Rules and other professional obligations.[1]
If unsure as to whether there is or may be a potential conflict, consider contacting the Law Society of NSW Professional Support Unit Ethics Line to discuss.
Step 4 Monitor for ‘Conflict Creep’
Conflicts are dynamic and may evolve as matters progress. Interests aligned at the outset may diverge, necessitating ongoing vigilance. For example, in Legal Services Commissioner v Cass [2023] QCAT 32, a solicitor failed to recognise a developing conflict between clients, resulting in disciplinary action.
The solicitor acted for a husband and wife in the purchase of a property. Issues arose between the husband and wife as to how the title to the property should be held. The husband wanted it held as tenants in common and the wife wanted it held as joint tenants. The husband agreed to hold it as joint tenants if the wife’s granddaughter moved out of the property within a specified period. The granddaughter did not move out within the specified period, and the husband gave instructions to the solicitor to register the transfer as tenants in common. The solicitor recommended that the husband advise his wife but did not obtain instructions from the wife before lodging the transfer for registration. In the disciplinary proceedings that followed there was a finding of unsatisfactory professional conduct against the solicitor.
Human Oversight & Fostering a Culture of Compliance
Human oversight remains vital, particularly when interpreting nuanced relationships or assessing the risk of perceived versus actual conflicts. The best systems combine technological sophistication with professional judgement, ensuring both efficiency and reliability.
Law practices must cultivate a culture of diligence, accountability, and transparency. This includes regular training for staff, clear policies for escalation and resolution of potential conflicts, and ongoing review of the system’s effectiveness.
