Conflict of interest occurs where the same lawyer is representing both sides in a lawsuit, or previously represented one side. It can also mean that the lawyer has material interest in the outcome of the matter he is pursuing and he may benefit if there is an adverse outcome for his client. Lawyers are encouraged to avoid such situations since in adversarial system of justice, a conflict of interest violates the right of the client to the undivided loyalty of his lawyer. Conflicts may also occur if the lawyer’s ability to represent a client is materially limited by the lawyer’s loyalty to another client, a personal relationship, or other reasons.
A conflict of interest is therefore, a compromising influence that is likely to negatively affect the advice which a lawyer would otherwise give to a particular client or the way in which he will pursue the matter of his client. It is likely to affect adversely either the lawyer’s judgement concerning a client or prospective client, or the lawyer’s loyalty in respect of a client or prospective client, or the lawyer’s safeguarding of interests of a client or prospective client. The reason why avoiding conflicts of interest is considered to be of utmost importance is that if this is not done, the lawyer’s loyalty and independence of judgement as far as that client is concerned will be called into question, and this will undermine the very basis of their relationship, making effective representation impossible.
Conflict may arise with respect to the interests of the lawyer himself, or interests of another existing client. Apart from that, an advocate has an ethical duty not to accept any engagement in a trial in which he may have to give testimony, although there is no rule of evidence disqualifying counsel from giving evidence in a suit in which he is engaged.
Specific manifestation – duty in case of conflict of interest
A lawyer who finds himself in a position of conflict must inform the client of his conflicting duties, and either obtain from that client an agreement that he should not perform his full duties of disclosure or he may be recused of his duty to act for this client. It is of utmost importance that the position of conflict be explained to the client if the case is taken up at all.
An advocate who has at any time advised a party in connection with the institution of a suit, appeal or other matter or has acted for a party, must not act, appear or plead for the opposite party, unless the express consent given of all concerned is obtained, after full disclosure of facts. Thus, the only exception to the ethical ineligibility of a lawyer to represent clients due to conflicts of interest is created when the client himself/themselves grant their express consent to their continued representation by the concerned advocate. However, the client must necessarily be informed of all aspects of the conflict that can be disclosed without breaching confidentiality requirements.
Proposed Rule of Conflict in the Draft Code of Ethics proposed by Bar Council of India
Sections 38-48 of the draft code delineates conflict rules for advocates, banning lawyers acting for two or more conflicted parties unless they have the express permission.
Section 39 of the Draft Code of Ethics require that an advocate shall not advise or represent both sides of a dispute and, except after adequate disclosure to and with the consent of the clients, preferably after receiving an independent legal advice, shall not act or continue to act in a matter when there is a conflicting interest, which gives rise to substantial risk that the advocate’s representation of the client would be materially and adversely affected by the advocate’s duties to another current client, a former client, or a third person including, but not limited to, the duties and loyalties of the advocate or a partner or professional associate of the advocate of the law firm in which such advocate is a partner or associate, to another client, whether involved in the particular matter or not, including the obligation to communicate information.
It is not clear here as to what is to be considered substantial risk of the advocate’s representation of the client being materially and adversely affected.
Section 40 on the other hand, requires an advocate to inform the clients before accepting briefs from more than one client in the same matter that Before the advocate accepts a brief from more than one client in the same matter the exact nature of the conflict, and that no information received in connection with the matter from one can be treated as confidential so far as any of the others is concerned and that, if a dispute develops that cannot be resolved, the advocate cannot continue to act for both or all of them with respect to the matter and may have to withdraw completely.
According to Section 42, where a lawyer holds brief from two opposing parties, if a contentious issue arises between clients on a joint retainer, the advocate, although not necessarily precluded from advising them on other non-contentious matters, would be in breach of this Code if the advocate attempted to advise them on the contentious issue.
Exceptions under the Draft Code of Ethics
Section 43 specifies that an advocate may only act in a matter which is adverse to the interests of a current client if
- the matter is unrelated to any matter in which the advocate is acting for the current client; and
- no conflicting interest is present
The Draft Code of Ethics is a very important step in the direction of establishing clear and effective rules in Indian Bars with respect to conflict of interest and how advocates are expected to act in situations of conflict. Once this draft is approved and becomes operative, a long standing void will be filled.