What is a Conflict of Interest?
Conflict of Interest arises when our interest conflicts with another’s to whom we owe a duty. Two basic types of conflict of interest are:
- A person may have a conflict of interest when representing two parties who have conflicting interests with each other.
- If a person in a position of trust a competing personal or professional interest, they should recuse themselves, as they will also have a conflict of interest.
“3.4-1 A lawyer shall not act or continue to act for a client where there is a conflict of interest, except as permitted under the rules in this Section.”
Common law jurisdictions, such as Ontario, use the adversarial legal problem-solving method, you need strict rules of confidentiality and solicitor and client privilege so that the lawyer and the client can talk openly between each other and the lawyer and decide on the best course of action to protect his or her client. The opposing party does the same and when the two cannot agree they take it to court for the Judgement of the court which evaluates the law and facts of each side and reaches a decision.
This adversarial approach often creates acrimony between the disputing parties, especially when one lawyer tries to overreach and obtain a result for their client that a court would not ordinarily grant. Since overreaching is common, there is a need for civility in and out of the court room to ensure that the conflict is resolved with proper procedural rules. In some other jurisdictions, such as the US Federal Court system, Judges may sanction lawyers for overreaching by presenting to the court a pleading, written motion, or otherwise:
(1) Presenting something for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) Making unwarranted claims, defenses, and other legal contentions or by making a frivolous argument to extend, modify or reverse existing law or for establishing new law;
(3) Making factual contentions that have no evidentiary support or unlikely to have evidentiary support after a reasonable opportunity for further investigation or discovery; or
(4) Making unwarranted factual contentions on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
However, the adversarial system is better than the alternative: having a lawyer that you can’t trust to have your best interests in mind. Not everything is black and white and sometimes there are valid arguments to extend, modify or reverse existing law or for establishing new law. How could one person effectively argue for two competing clients? It is hard enough for a judge to remain impartial when parties are unrepresented.
Examples of a Conflict of Interest for Lawyers:
- A lawyer acting for opposing parties in a dispute.
- A lawyer asked to advise a client in respect of a matter in which the lawyer, the lawyer’s partner or associate or a family member has a material direct or indirect financial interest.
- A lawyer may have a conflict of interest when representing two parties who have conflicting interests with each other.
Eg. acting in a joint retainer where the interests of the parties diverge.
- A lawyer cannot act directly adverse to the immediate legal interests of a current client, without the clients’ consent. This bright line rule applies even if the work done for the two clients is completely unrelated. Canadian National Railway Co. v. McKercher LLP,  2 S.C.R. 649
- A lawyer representing both a husband and wife in family law matters will have a conflict of interest in divorce and separation matters.
- A lawyer acting for more than one client in separate but related matters because of the nature of the retainers.
- A lawyer in a close relationship, sexual or otherwise, with the wife (bi or straight) and representing the husband and visa versa.
- A lawyer in a close relationship, sexual or otherwise, with opposing counsel.
- A lawyer representing both a buyer and seller in the sale of land.
- A lawyer may not represent its firm against the interests of its former client.
- A judge or arbitrator hearing a matter who would have a conflict representing either party or has a bias against either party.
- A judge or arbitrator hearing a matter who represented a third party who had a conflict with either party.
- Anyone acting for clients in unrelated matters where the duty of confidentiality owed to one client may be inconsistent with the duty of candor owed to another client depending on whether information obtained by the person during either retainer would be relevant to both clients. Eg. Lawyer, real estate agent, doctor, etc.
- A real estate agent may have a conflict of interest when representing both the buyer and the seller.
- An insurance adjuster will have a conflict of interest if they are rewarded for denying valid claims.
- A doctor will have a conflict of interest when examining persons they don’t consider to be their patients if they are rewarded by insurance companies for providing reports that fail to describe the true nature and extent of a person’s injury.
Independent Legal Advice
Lawyers are required to ensure that parties to a transaction or matter get independent legal advice in a variety of scenarios.
- If a husband and wife insist on having one lawyer write a separation agreement, the lawyer can represent only the husband or the wife, and the other spouse will have to take the proposed separation agreement to another lawyer to get independent legal advice.
Conflicts Between Lawyer & Client