Our regular column offers advice on ethical issues facing solicitors



Q Firm A acts for the husband in connection with matrimonial proceedings in which the wife is represented by firm B. The parties have agreed on a consent order, although some pension issues still need to be resolved. The fee-earner in firm A is now moving to firm B, although she will not have any involvement in the wife's retainer. Can firm B continue to act?

A Although the fee-earner from firm A will have no further involvement in the matter, she will have material confidential information. Since the parties' interests are adverse, the fee-earner will be putting confidentiality at risk through continuing to act, unless the firm can protect the other party's information by putting an information barrier in place in accordance with practice rule 16E(5) or (6). Unless the husband consents, it is almost certainly impossible for the firm acting for the wife to continue to represent her (see practice rule 16E(6) and the associated explanatory notes).



Q Firm A acts for a husband in connection with his divorce and all ancillary matters under which an agreement to sell the matrimonial home has been reached. Firm B is acting for the wife in connection with those proceedings. Firm C is acting for both husband and wife in the sale of the matrimonial home. Firm A has now discovered that it is also acting for the buyer. Can it continue to act for both parties?


A The first point to decide is whether firm A has a conflict of interests (see practice rule 16D(2) for the definition of conflict). The matters are related because they involve the same asset, namely the house, (see practice rule 16D(2)(c) for the definition of 'related matter'), so the next consideration is whether firm A can fulfil its duties to act in the best interests of both the husband and the buyer.
On the face of it, both the buyer and the husband want the same outcome, that is to say, the conclusion of the sale and purchase, and firm A could act as there is no significant risk of conflict. Conflict could only arise if, for example, the husband told his solicitor that he did not want the sale to go through, or he wanted to delay it as long as possible. If that were the case, the firm could not act in the best interests of both clients. Since neither of the exceptions to the duty not to act would apply in this instance, the firm would have to cease acting.



Q A solicitor acts for a wife in connection with divorce proceedings. There is a consent order, under the terms of which the jointly owned matrimonial home is to be transferred to the wife in return for a small capital payment to the husband, and the wife must use her best endeavours to have the husband released from the terms of the mortgage. The wife has now agreed with her son that she will continue to live in the property, but the property should be transferred to the son, who will take out his own mortgage on the property and pay the father the sum due to him with the existing mortgage being redeemed. The wife and son want the same solicitor to act for both of them in achieving this. Can he do so?

A No, because there is a conflict between the interests of the wife and her son. Although the parties want the same result, their interests in obtaining it are not the same and this is not, therefore, a situation where the 'common interest' exception would apply (see practice rule 16D(3)). In view of the obvious disadvantages to the wife, this is not a case where it would be advisable to proceed on the basis of a limited retainer.



Q A solicitor acted some time ago for a client in bidding for a contract, although the client was unsuccessful at the time. The solicitor's firm has now been asked to act for a new client in connection with a bid for the same contract that is now open to tender. The solicitor takes the view that he had acquired information from the former client that would be material to the new client if the solicitor were to act. The solicitor has reason to believe that his former client may also be putting in a new bid. Can the solicitor's firm accept the retainer?

A Since the solicitor is not currently acting for the other client, there is no question here of a conflict (see the definition of conflict in practice rule 16D(2)). However, since the solicitor has material confidential information, he has to consider whether his firm would be in breach of its duty not to put confidentiality at risk if it were to act for the new client (see practice rule 16E(4)).

If the solicitor has reason to believe that the former client will be putting in a further bid, then the clients' interests are adverse (see practice rule 16E(4) and the explanatory notes to the rule on adverse interests), and the firm would only be able to act by putting in place an information barrier with the consent of both the former client and the new client.

The solicitor would have to consider whether the structure of his law firm is such that an information barrier would be suitable. The firm would also have to agree to vary the duty of disclosure to the new client. If the former client refused consent, the firm cannot act for the new client (see practice rule 16E(6) - a firm can only act without the former client's consent if it was already acting for the new client before it became apparent that the solicitor had confidential material information, which is not the case here).

If the former client decides to ask the solicitor to act in relation to putting in a new bid, there would then be a conflict of interests between the two clients if the solicitor were to accept the instructions.

The solicitor may be able to act for both under the exception set out in practice rule 16D(3)(b). This exception applies where clients are 'competing for the same asset'. However, the solicitor would have to comply with the conditions applying to the exception, and would also have to put in place information barriers with the agreement of both clients.



This column is compiled by the professional ethics guidance team at Law Society Regulation. Send questions for publication to Austin O'Malley, Law Society Regulation, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch