What is a Conflict of Interest?

A conflict of interest is a situation where you are unable to provide your client with undivided loyalty.

Consider the following:

  • You have helped set up several asset structures for your client to minimize tax liabilities. You now wish to represent his wife in their divorce proceeding.
  • You defended a client in a criminal case related to an assault of person X. Person X now wishes to retain you to bring a civil suit in relation to that same assault.

In each of these situations, you would likely have learned confidential information while acting for your first client. Should you then represent the second client in the proposed manner, you would have prejudicial knowledge of the other party’s confidential information. You would not be able to represent the interests of the second client without failing to fulfill the duty of loyalty and confidentiality you owe to your former or existing client.

The Code of Professional Conduct establishes the general rule with respect to conflicts of interest:

Duty to Avoid Conflicts of Interest
3.4-1 A lawyer must not act or continue to act for a client where there is a conflict of interest, except as permitted under this Code.

Commentary provided in the Code further explains that the general principle underlying this rule is that lawyers owe their clients a duty of loyalty. The lawyer-client relationship is one that is based on trust. It is a fiduciary relationship. The duty of loyalty also gives rise to the duty to commit to a client’s cause, the duty of confidentiality and the duty of candour.

The combination of these duties can give rise to conflict of interest. For example, the duty of confidentiality can conflict with the duty of candour in a manner that is irreconcilable without informed client consent. Regarding confidentiality, the Code states:

Confidential Information
3.3-1 A lawyer at all times must hold in strict confidence all information concerning the 
business and affairs of a client acquired in the course of the professional relationship and 
must not divulge any such information unless:

(a) expressly or impliedly authorized by the client;
(b) required by law or a court to do so;
(c) required to deliver the information to the Law Society, or
(d) otherwise permitted by this rule.

This rule requires a high level of confidentiality for lawyers. Commentary 5 to the Code advises that this obligation extends to keeping confidential the mere fact that the lawyer has been consulted or retained by a person.

Regarding the duty of candour, the Code states:

Honesty and Candour
3.2-2 When advising a client, a lawyer must be honest and candid and must inform the 
client of all information known to the lawyer that may affect the interests of the client in the matter.

You will note that the duty of candour requires a lawyer to inform their client of “all information known to the lawyer that may affect the interests of the client in the matter.” There is no exception for information that is confidential to another client of the lawyer. Therefore, if you accept or find yourself in circumstances where satisfying your duty of candour to one client requires breaching your confidentiality obligations to another, you are faced with an irreconcilable conflict unless you are able to obtain client consent to the needed disclosure.