Conflicts of Interest Toolkit
About the Toolkit
These materials provide practical checklists and precedents that are intended to help lawyers to recognize, deal with and avoid conflicting interests. These documents complement and supplement the in-depth legal discussion and analysis that is in the final Report and recommendations of the Task Force.
What are conflicts of interest?
A conflict of interest is an interest that gives rise to a substantial risk of material and adverse effect on the representation. A conflicting interest can arise when:
- a lawyer’s self-interest conflicts with the performance of a client retainer (a conflict of duty and interest),
- a lawyer’s duty to another client conflicts with the performance of a client retainer (a conflict of duty and duty),
- a lawyer’s duty to another client impairs the lawyer’s relationship with a client and thereby impairs client representation (a conflict of duty with relationship).
What is it about a conflict of interest that is so bad? The answer is quite simple. Conflicts can impair effective representation of a client. It is fundamental to the lawyer-client relationship that a lawyer be free of conflicts other than those willingly accepted by the client. And if a client has reason to question the representation provided by his or her lawyer, the very functioning of our legal system is called into question.
Further, the consequences of a conflict of interest for the lawyer can be severe and costly. They can include:
- disqualification from representation of one or more clients;
- forfeiture of fees charged; and the inability to charge for work in progress and other time invested;
- a damage claim which may include punitive damages;
- embarrassment and cost in time and money of defending a malpractice claim or investigation.
The courts may disqualify a lawyer to protect a client’s confidential information, which must be preserved whether or not there is a conflict of interest.
Checking for, identifying and avoiding conflicts of interest and ensuring that a client’s confidential information is protected need to be a part of every lawyer’s practice. In fact, every time you have a new client or a new matter for an existing client, and throughout the course of any active matter, you should be on the lookout for the existence of a real or potential conflict of interest and alert to the possibility that confidential client information you have about one client may bar you from acting for another.
The file management systems used by law firms usually catch conflicts, and most lawyers instinctively recognize a conflicts issue when it actually arises. Unfortunately, lawyers, in a rush to please a client, could get into trouble if they miss the early warning signals of a conflict.
The requirements for successfully managing conflicts of interest are quite basic: be aware of your obligations; exercise good judgment; and effectively communicate and document the decisions you make and actions you take when dealing with conflicts of interest. The guidelines, checklists and precedents in this Toolkit are designed to assist you in achieving this objective.
Acknowledgement of Sources
Like most other lawyers working on drafting endeavours, the members of the CBA Task Force on Conflicts of Interest have drawn on the work others have done before us. We felt it better to rely on experience and tested approaches, knowing that our work will in turn be adapted and used by others who will follow us. We express our gratitude to everyone who directly and indirectly contributed to this resource. In terms of information and precedents for professional conduct matters, and in particular for dealing with conflict of interest issues, there was a wealth of material from the work of some people we would like to specifically acknowledge, including:
- The comments and precedents that came from various CBA member lawyers and law firms;
- Resources on the Law Society of British Columbia’s website (www.lsbc.org);
- Resources on the LAWPRO (www.lawpro.ca) and practicePRO (www.practicepro.ca) websites, including the Managing Conflict of Interest Situations booklet by Karen Bell;
- Practice Management Advisors from various state and provincial bar associations; and
- an informal work group of Toronto law firm risk management counsel.
We greatly appreciate the assistance we received from three expert colleagues in the United States:
- Anthony E. Davis, Hinshaw Culbertson LLP;
- William Freivogel (www.freivogelonconflicts.com); and
- Professor Gary A. Munneke, Pace University Law School.
We would also like to recognize and thank Blakes (Toronto and Montreal offices) who were instrumental in the standardization and translation of this Toolkit.
The information, checklists, and model agreements and letters provided in this resource are for your consideration and use when you draft your own documents. They are NOT meant to be used “as is”. Their suitability will depend upon a number of factors, such as the current state of the law and practice in each area of law, your writing style, your needs and the needs and preferences of your clients. The model documents may require modifications to correspond to current law and practice. The information and documents provided in this Toolkit are not intended to report, establish or create the standard of care for lawyers.
© 2008 by the Canadian Bar Association. All rights reserved. Lawyers and law firms may use and adapt these contents and documents for the operations of their practices and firms. Otherwise, no part of this publication may be transcribed, reproduced, stored in any retrieval system or translated into any language or computer language in any form or by any means, mechanical, electronic, magnetic, optical, chemical, manual, or otherwise, without the prior written consent of the Canadian Bar Association.