Conflict of interest in legal profession – A need for regulation

Conflict of Interest

The nature of the legal profession is such that the client confides in a lawyer with utmost trust and confidence. The lawyer shares with his client not just a legal or contractual relationship but also a fiduciary one. It is a cardinal principle of the profession that the lawyer should put the client interest above his own. One of the duties in furtherance of this principle is that which relates to “Conflict of Interest”. Conflict of Interest is the influence on a lawyer that exists and which can negatively affect the client or the advice that a lawyer would otherwise give. In simple words, it is the personal interest of a lawyer in a particular matter which clouds the judgment that he requires to further his client’s interest. It is an advocate’s ethical duty to inform the client of his interest and not to accept any engagement which he may have an interest in.

The legal framework that exists in relation to “Conflict of Interest” is as follows:

Bar Council Rules on An Advocate’s Duty towards the Court

The Bar Council of India rules prescribe important provisions with respect to Advocates duty in relation to conflict of interest. The Rules consist of specific “Rules on an Advocate’s Duty towards the Client” which includes the following key rules:

Rule 4 makes it mandatory for an advocate to make a full and frank disclosure to his client if he has connection with the parties of the suit or any interest that he may have and which may affect a client’s judgment to engage him. Rule 23 clearly states that an advocate who has advised a party in connection with the institution of a suit, appeal or other matter or has drawn pleadings, or acted for a party, shall not act, appear or plead for the opposite party in the same matter. The rule in its nature is wide enough to mean and include that any kind of involvement of an advocate in a matter will restrict him from appearing or pleading for the opposite party in the same matter. However, the rule is only limited to matters related to “suits” and may not relate to general advisory services. Rule 5 entrusts a general duty on an advocate to uphold the interests of his client by all fair and honorable means. Further, Rule 9 and 10 of the Rules restricts an advocate to represent any establishment in which he is a member or to appear in matter in which he has a pecuniary interest. Rule 15 states that an advocate should not misuse or takes advantage of the confidence reposed in him by his client.

Need for further legislation:

The above rules appear to have been framed keeping “Representation” of the suits in mind. However, given the general practice followed by various law firms, wherein more than one advocate is involved in a matter, there exist a need to address issues related to conflict of interest which may be perceived by any of the advocates in a law firm. To give effect to the purpose for which the above rules are drafted, a necessity to change the rules to expand their ambit and scope of application is of paramount importance.

Duty on a Law Firm:

The duty is not only limited to an advocate to disclose to a client any conflict but also on law firm to cast a similar duty on their associates and partners as well. The law firms are required to put in place a corporate governance system which is to be followed to avoid any scenarios leading to conflict in interest. The law firms should incorporate a check system to ensure that any existing lawyer of a firm shall not be involved in a matter that he may have an interest in. Further, a code of ethics for non-litigating lawyers who may be involved in advisory services in relation to any matter or otherwise is the need of the hour. It is the duty of every legal entity and lawyer to protect the interest of a client and hence the practice to perceive any conflict of interest should be taken seriously by the law firms since the same adversely affects the interest of the clients.

Client Awareness:

Just like a lawyer/law firm recognizes the need to inform the duty imposed on them with respect to confidentiality, they should further disclose to the client that he/she has a right to know if there exists a conflict of interest. For stringent implementation of the duty casts on the lawyers, a written declaration stating that there exists no conflict of interest should be given to the client and submitted to the court. Where there exists a conflict of interest, a statutory duty is imposed on the advocates to inform the client about the same. Only once the client is aware of an existent conflict of interest, can he guard his interest in relation to the same.

Other challenges faced by Law Firms:

Partners and Associates leaving one firm for another is a common scenario. However, the effect of the same has not been analyzed vis-à-vis conflict of interest. There exists no legal framework regulating the effect of a partner or associate leaving a law firm even though the duty that they perform is a fiduciary one. It is of paramount interest that certain obligations shall be imposed on the advocates when they resign from a particular law firm with relation to the matters that they were involved in. The Indian Legislature or Judiciary has however failed to recognize the same.

The Ontario Superior Court of Justice enumerated in D. Robert Findlay Law Office Professional Corporation Vs. Werner et al,2015 a number of guidelines concerning a lawyer’s professional obligations when leaving a law firm.

In summary, the guidelines provide that:

• The client’s rights are paramount.
• The client has the right to choose legal representation and to change that legal representation at any time.
• There is nothing improper for a departing lawyer to contact a client to tell them they are leaving; however, contacting the client for the purpose of solicitation sis not permitted.
• The law firm and the departing lawyer have a joint and individual duty to keep the client informed.
• The client must be told in a timely manner that the lawyer with whom he or she has been dealing is leaving the law firm. Further, the client must be told of the options for continued representation by i) the law firm; ii) the departing lawyer; or iii) a new lawyer chosen by the client;
• A client who chooses to follow the departing lawyer should confirm his or her wishes in writing.
• The departing lawyer should consider providing an undertaking to the law firm to protect the firm’s account.

Similar guidelines with respect to the obligations that should be imposed on a departing lawyer should be adopted at least by the Bar Council of India. The non adherence to such guidelines can cause harm not only to the client but also to the law firm and its reputation. It is further unfair that a departing lawyer can take advantage of the information entrusted upon him during his tenure at a law firm.

Jeremy Bentham had rightly stated that the power of a lawyer lies in the uncertainty of law. However, law should not be so uncertain that it entrusts power in the hands of lawyer to hamper the interest of his client. More importance to “conflict of interest” and need for legislation/ regulation regarding the same is the need of the hour.