As Freshfields prepares to defend itself before the Solicitors’ Disciplinary Tribunal (SDT) over its decision to act for Philip Green in the 2004 bidding for Marks & Spencer, we examine the new conflict/confidentiality rules in this uncertain area of practice.
The new conflict and confidentiality rules took effect on 25 April 2006. They are currently found in rules 16D and 16E of the Solicitors’ Practice Rules 1990, but in due course, will be housed in the Law Society’s new Codes of Conduct. Together, the new rules replace ss15 and 16 of the Guide to the Professional Conduct of Solicitors.
The guidance issued by the Law Society explains that the new rules “…reflect the fact that clients’ needs, the law and the way in which firms now practice has changed significantly in recent years. Whilst retaining essential client protections they allow greater flexibility for firms to respond to clients’ needs.”
Rule 16D: conflicts of interest
16D(2)(a) repeats that there is a duty not to act if there is a conflict of interest. However, it expressly provides that this duty is subject to a number of exceptions, which are set out in 16(D)(3).
16D(2)(b) contains the new definition of a conflict of interests, which will arise if:
- you owe, or your practice owes, separate duties to act in the best interests of two or more clients in relation to the same or related matters, and those duties conflict, or there is a significant risk that those duties may conflict, or
- your duty to act in the best interests of any client in relation to a matter conflicts, or there is a significant risk that it may conflict, with your own interests in relation to that or a related matter.
Whilst this definition is certainly an improvement, judgement based decisions as to what is a ‘related matter’ or a ‘significant risk’ may result in uncertainty.
Rule 16E: confidentiality and disclosure
16E(2) sets out the duty of confidentiality in terms that:
“You and your practice must keep the affairs of clients and former clients confidential except where disclosure is required or permitted by law or by your client or former client.”
16E(3) sets out the duty of disclosure in terms that:
“You must disclose to a client all information of which you are aware which is material to that client’s matter regardless of the source of the information.”
A number of exceptions, some new and some old, are contained within r16E and will need to be considered carefully when determining compliance.
In general the new rules are to be welcomed and should prove workable for the majority. However, for the minority for whom the exceptions are likely to be most relevant, it may not be such plain sailing. Undoubtedly, this is an area which will continue to see further development and refinement