New rules regulating conflicts of interest and the duties of confidentiality and disclosure entered into force on April 25 2006. The rules form part of the Solicitors Practice Rules 1990 as Rules 16D and 16E, replacing Chapters 15 and 16 of the Guide to the Professional Conduct of Solicitors.
Rule 16D prohibits legal representation where a conflict exists. A conflict of interest is defined as a conflict, or significant risk of conflict, between separate duties to act in the best interests of two or more clients on the same or related matter(s) (or between solicitor and client). The Rule allows for two narrowly defined exceptions: where different clients have a "substantially common interest" in a matter, and where different clients are competing for the same asset and no other conflict arises. In both instances, informed consent from the clients must be obtained.
Rule 16E requires that the affairs of clients and former clients be kept confidential except where disclosure is required or permitted by law or the client. Specifically, it prohibits representation of a new client if the lawyer or firm holds confidential information relating to another client where that information "might reasonably be expected to be material" and the clients have adverse interests. The rule has limited exceptions. It recognises that confidential information can be protected through use of "information barriers." The commentary to Rule 16E (at 41-45) provides guidelines for establishing such barriers.
Whilst retaining essential client protections, the Rules allow greater flexibility for firms to respond to client needs. Nevertheless, their implementation will likely give rise to an increase in malpractice claims against lawyers or attempts to disqualify firms from acting in the event of a conflict. Any lawyer practicing in the UK wouls be well advised to read the new rules, and their accompanying explanatory notes to ensure compliance. They can be found at www.lawsociety.org.uk/professional/conduct.law
Ania Farren and Peter Griffin