Conflict of Interest
What is a conflict of interest?
Chapter 3.4 of The Code of Professional Conduct addresses the different types of conflict situations that may arise in a lawyer and client relationship. Essentially, a conflict of interest prohibits a lawyer from doing the following:
- Acting against a former client in the same or a related matter;
- Acting for both sides in a dispute where the parties are adverse in interest; and
- Acting for a client where a lawyer’s personal interests may interfere with the lawyer’s ability to act for the client.
It is not a conflict of interest when an opposing party or their lawyer takes an action or position that you feel is contrary to your interests.
What can I do if I believe opposing counsel has a conflict of interest?
You may file a complaint with the Law Society, but the Law Society can only discipline the lawyer if they are found to be in a conflict of interest; we cannot remove the lawyer from their representation of their client. If you believe opposing counsel is in a conflict of interest, you may be able to apply to the court to have the lawyer removed. You may wish to consult a lawyer for further advice.
Common Examples of Conflict of Interest
Former Clients
Real Estate/Joint Retainer
Representing family or friends
Lawyer’s Personal Interests
Business Relationship
Debtor-Creditor Relationship
Former Clients
Is it a conflict of interest for a lawyer to act against a former client?
Section 3.4-10 of the Code advises that a lawyer who has acted for a client in a matter should not then act against the client (or against persons who were involved in or associated with the client in that matter) in the same or any related matter, or take a position where the lawyer might be tempted, or appear to be tempted, to breach the sections relating to confidential information. However, it is not improper for the lawyer to act against a former client in a fresh and independent matter wholly unrelated to any work the lawyer had previously done for that person.
Real Estate/Joint Retainers
Can a lawyer act for more than one party in a legal transaction?
In many cases a lawyer may act for more than one party in a legal transaction. As long as the clients’ legal interests are not adverse and both parties are made aware of the joint representation, there is no problem. However, there are many instances where a lawyer cannot or should not act for more than one party because the duty and loyalty owed to one party may, or is likely to, become adverse to the duty and loyalty owed to the other party. If the interests of the parties become opposed, the member cannot continue to act for either party and both parties should get their own counsel.
If the lawyer has a continuing and regular relationship with a client, the lawyer must disclose the relationship, recommend that the newer party obtain independent legal advice, and obtain consent from all parties to the joint retainer. If, following such disclosure, all parties are content that the lawyer act for them, the lawyer should obtain their consent, preferably in writing, or record their consent in a separate letter to each. If, following such disclosure, a party raises an objection, the lawyer shall advise such party that the party is free to obtain independent representation.
Can a lawyer represent both parties in a residential real estate transaction?
Section 3.4-5 of The Code of Professional Conduct allows lawyers to represent both parties in a residential real estate transaction, as long as both parties are aware. Before the lawyer agrees to act for more than one client in the same matter, the lawyer must advise the clients that:
- The lawyer has been asked to act for both or all of them;
- 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
- If a dispute develops that cannot be resolved, the lawyer cannot continue to act for both or all of them and may have to withdraw completely.
Can a lawyer act for both the builder/developer and the purchaser in a real estate transaction in a new home construction situation?
The Code prohibits a lawyer from acting for both the builder/developer and the purchaser in a real estate transaction in a new home construction situation, even if the parties consent. No lawyer may act or continue to act in a matter when there is or is likely to be a conflicting interest.
Representing Family or Friends
Can a lawyer advise friends, family members and their spouse?
Lawyers are allowed to advise friends, family members, spouses and other people with whom they are acquainted. A lawyer is not in a conflict of interest simply because the lawyer is representing a family member or a friend. However, if the relationship is close and the matter acrimonious, the lawyer may be unable to remain professional and objective and, in such cases, it is best that the lawyer not act as counsel.
Lawyer’s Personal Interests
Can a lawyer act when the lawyer’s personal or outside interests conflict with the client’s interests? For example, can a lawyer prepare a document or will that gives the lawyer a substantial gift?
The Code of Professional Conduct prohibits a lawyer from acting when the lawyer’s personal or outside interests conflict with the client’s interests. For example, unless the client is a family member and there is no appearance of undue influence, the lawyer is prohibited from preparing a document or will for a client that gives the lawyer, a family member of the lawyer, or a legal partner/associate a substantial gift.
Business Relationship
Can a lawyer borrow money, lend money or enter into a business relationship with a client?
Lawyers should not borrow money from, lend money to, or enter into a business relationship with a client unless the transaction is fair and reasonable to the client, the client consents to the transaction and the client has independent legal representation with respect to the transaction.
Debtor-Creditor Relationship
Can a lawyer borrow money from or lend money to a client?
The Code of Professional Conduct specifically states that debtor-creditor relationships between lawyers and clients are to be avoided, as they have the potential of creating a conflict of interest between the lawyer and the client. In other words, a lawyer should not borrow money from a client who is not in the business of lending money, and a lawyer should not lend money to the client. Lawyers will occasionally advance necessary expenses in a legal matter that the lawyer is handling for the client, but it is best practice to avoid this by having the client pay in advance for expenses to be incurred, such as expert opinion reports.