Operating a Conflicts System
When to Perform Conflict Checks
You must maintain an awareness of conflicts throughout the life of the file. You should perform a conflicts check at the time the potential client seeks to engage your firm, and perform follow-up searches after the first meeting when you compile salient information and as an ongoing matter every time new parties enter the mix. For example, midway through a transaction your client informs you that she is planning to get married. In that instance, you should add the fiancé to the conflict-checking system and run a fresh search.
What Happens When a Conflict Arises?
When a conflict arises, the actions you take will depend on the stage you have reached in the matter. If the conflict is identified at the initial search stage, you need to analyze the conflict to determine if it is such that you must not act for the client. If you determine that you must not act, decline to take the file and send a non-engagement letter to the individual. If you conclude that you may act for the client, you must comply with the provisions of the Code of Conduct that apply to the type of conflict you are confronted with.
If you already represent the client, you should promptly contact the client in writing and inform them that a potential conflict exists. In situations with more than one client, all clients must be contacted. What happens next depends, to a certain extent, on the clients. If the clients affected by the conflict give you permission to continue to act, then you may choose to do so. Ensure that these permissions are in writing and keep them on file.
In order for your client to waive a conflict, their consent must be informed. You must explain the conflict to them fully and in clear language, including setting out what the potential consequences of the conflict are. Consider:
describing the scope of the matter and how the conflict relates to it;
explaining the conflict by isolating the parties/events that give rise to the conflict, or might in the future and what the practical and legal implications are; and
discussing the advantages and disadvantages of your continued representation.
You must take all the required steps as detailed in section 3.4 of the Code of Professional Conduct.
It is wise to recommend that the client receive independent legal advice; be certain to document this procedure. Explain to the client that the independent legal advice is to ensure that the client’s consent is informed, genuine and uncoerced.
You might come across a situation where you are not certain whether the degree of relation between your client and another person is a problem. Inform your client of the concern, and ascertain whether they are apprehensive about the relationship. Document your client’s instructions arising from such a meeting.
In some situations, even if the client does consent to your continuing to act, you may foresee the conflict will only deepen over time, in which case you should seriously consider withdrawing. In any event, if you do not reasonably believe that you are able to continue to represent your client without having a material adverse effect on the duties you owe to the client, or to a former client, you may not act.