Serving Two Masters: Conflicts of Interest in the Modern Law Firm

227 Pages·2002·0.646 MB·English

by  Janine Griffiths-Baker

SERVING TWO MASTERS
CONFLICTS OF INTEREST IN THE MODERN LAW FIRM
It is a sine qua non of legal practice that lawyers should not allow themselves to
act for two clients whose interests may conflict. However, this principle is being
placed under increasing pressure, the main reasons for this being increased
demand for specialist legal services, the globalisation of commerce, a dramatic
growth in the size of leading law firms, and significantly greater mobility within
the legal profession.
As a result there is a growing trend, especially within the commercial legal
environment, for solicitors to face conflicts of interest which have no easy solu-
tion. Increasingly, conflicts are being ‘managed’ rather than avoided altogether.
This is a field within which the Law Society’s own rules are flouted on a daily
basis, and in which these rules appear increasingly at odds with the common
law.
Based on extensive interviews with lawyers and their clients, this book pro-
vides the first thorough consideration of how conflicts of interest are handled
within law firms. It will be essential reading to all those who have an interest in
professional legal ethics, including law students, legal scholars, practitioners
and regulators.

Serving Two Masters
Conflicts of Interest in
the Modern Law Firm
JANINE GRIFFITHS-BAKER
School of Law, University of Bristol
OXFORD – PORTLAND OREGON
2002
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© Janine Griffiths-Baker 2002
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This book is dedicated to my aunt,
Murlys Thomas (1905–2001)

Preface
It is said that ‘no man can serve two masters, for either he will hate the one and
love the other, or else he will hold to the one and despise the other.’1In keeping
with this biblical injunction, it is a well-accepted principle of legal practice that
lawyers should not act for two or more clients whose interests may potentially
conflict. However, in recent times this proscription has come under increasing
pressure, there being four main reasons why a previously unchallenged tenet of
legal practice has come to appear increasingly vulnerable. These are: a signifi-
cantly increased demand for specialist legal services; the globalisation of com-
merce; a dramatic growth in the size of leading law firms; and significantly
greater mobility within the legal profession. As a result of all these factors there
is a growing trend, especially within the commercial legal environment, for
solicitors to face conflicts of interest which have no easy solution. This book
offers what I believe is the first empirically-based account of the way in which
conflicts of interest are managed within law firms in England and Wales.
Although some practitioners and academic writers have highlighted the diffi-
culty of managing conflicts of interest in the modern law firm, the subject has
not previously been the focus of empirical investigation. The difficulty with rely-
ing upon leading cases as a measure of evolving practice is that conflicts of inter-
est are a largely subterranean problem, with the occasional injunction
representing a dramatic failure of the more normal strategies for dealing with
conflicts. In order to establish whether there has developed a significant gap
between the regulatory framework and the way conflicts are managed on the
ground, it was necessary to observe the day to day reality of legal practice in the
large commercial law firm.
This book started life as a PhD thesis, and I had no idea when I began that I
would stumble upon a major disjunction between the rules and the conduct of
major law firms. My research revealed significant tension between the regulatory
framework and the common law, but a more dramatic gulf between both forms
of regulation and the way some law firms actually behave. This ‘gap’ between
rules and behaviour is a common theme of socio-legal research, and over time the
pressure to resolve the resulting tension often proves overwhelming.
The question of how conflicts should be ‘managed’ has taken on increased
significance following the Law Society’s decision to review the rules and prin-
ciples governing solicitors’ professional conduct. Its aim in conducting such a
review is to compile ‘a rule book which reflects both the realities of running a
1 St Matthew 6.24.
viii Preface
solicitor’s practice in the twenty-first century and the importance of protecting
the public interest’.2I hope that this book will contribute to this debate.
The book would not have been possible without the help and support of a
number of people. First and foremost I am deeply indebted to Professor Gwynn
Davis. He has provided much-appreciated advice, guidance and criticism and
has proved an invaluable mentor and friend. This work would have been much
poorer without him. I would also like to thank Professor Roger Kerridge and
Professor Avrom Sherr for their helpful suggestions following the examination
of my thesis.
Thanks are also due to my colleagues Professor John Parkinson, Stephen
Jones, Sam Lewis and Brenda Sufrin for their help and encouragement through-
out the writing of the manuscript. Lorraine Dyer provided invaluable secretar-
ial assistance, and I also benefited from the support of Sue Pettit and other staff
of the University of Bristol law library who located several very obscure articles.
I am likewise grateful to the solicitors, barristers and representatives of com-
mercial organisations who participated in the empirical study.
My debt to other authorities and writers is, I hope, sufficiently acknowledged
in the text. I am solely responsible for the errors which remain.
Finally, my thanks go to my parents for their unfailing support and encour-
agement throughout the project.
JG-B.
Bristol
July 2002
2 Michael Mathews, President of the Law Society, in Taylor, N (ed), The Guide to the
Professional Conduct of Solicitors, 8th edn, (Law Society Publishing, London, 1999) at xi.
Contents
Table of Cases xi
1. INTRODUCTION 1
A CHANGINGPROFESSION 3
THEREGULATORYREGIME 8
REGULATINGCONFLICTSOFINTEREST 10
THENEEDFORANEMPIRICALSTUDY 12
RESEARCHMETHOD 13
OTHERCOMPONENTSOFTHERESEARCH. 15
PLANOFTHEBOOK 16
2. THE REGULATORY REGIME 17
INTRODUCTION 17
SUCCESSIVEREPRESENTATION 18
SIMULTANEOUSREPRESENTATION 43
SUMMARY 49
3. THE MODERN FIDUCIARY: CONFLICTS IN OTHER
PROFESSIONS 51
INTRODUCTION 51
CONFLICTSATTHEBAR: APPROACHOFTHEBARCOUNCILOFENGLANDAND
WALES 55
ACCOUNTANCYCONFLICTS: A ‘MANAGED’ APPROACH 63
FIDUCIARYDUTIESANDREGULATORYRULES: THELAWCOMMISSION’S
FINDINGS 69
SUMMARY 72
4. CONFLICTS OF INTEREST: AN INTERNATIONAL
PERSPECTIVE 75
INTRODUCTION 75
UNITEDSTATES 77
THECOMMONWEALTH 81
EUROPE 90
SUMMARY 92
x Contents
5. DISCOVERING CONFLICTS: PROCEDURES AND DILEMMAS 95
INTRODUCTION 95
OBTAININGINSTRUCTIONSANDTHECONFLICTCHECK 97
THEFRUSTRATEDCLIENT 102
ENSURINGCONFIDENTIALITYFORWOULD-BECLIENTS 103
PROTECTINGCLIENTS’ IDENTITIESFROMCOLLEAGUES 105
EVALUATINGTHEDATA 106
SUMMARY 106
6. THE DECISION WHETHER TO ACT: PROCEDURES AND
INTERESTS 109
INTRODUCTION 109
CLASSIFYINGCONFLICT 114
COMPETINGINTERESTS 116
LAWSOCIETYGUIDANCE 116
CLIENTS’ VIEWSONCONFLICTS 119
THEDECISION-MAKER 120
A CLEARDIVIDE 122
GROUPONE: THEBIGANDBOLD 123
GROUPTWO: THEMINDFULMODERATES 131
GROUPTHREE: THEPIOUSPROVINCIALS 135
SUMMARY 140
7. ACTING IN THE FACE OF CONFLICT 143
INTRODUCTION 143
THEAVAILABLEOPTIONS 144
SELECTINGTHEMEASURES(INTHEORY) 146
SELECTINGTHEMEASURES(INPRACTICE) 148
THECLIENTPERSPECTIVE 158
SUMMARY 160
8. CONCLUSION 163
INTRODUCTION 163
LAWSOCIETYRULESANDLEGALPRINCIPLES: THEDEBATE 163
THEEMPIRICALEVIDENCE 173
POSSIBLEWAYSFORWARD 178
SUMMARY 186
THEWIDERCONTEXT: LEGALETHICSWITHINACHANGINGPROFESSION 189
Appendix 1—METHODOLOGY 191
Bibliography 201
Index 209