Conflict of Interest DADA AFA

Definition

According to the United States Law Governing Lawyers definition, conflict

of interest is defined as a situation where there is a substantial risk that the
lawyer’s representation of the client would be materially and adversely
affected by the lawyer’s own interest or by the lawyer’s duties to another
current client, a former client or a third person.

The American Courts have taken a very strict and impenetrable stance
against conflict of interest situation amongst lawyers.

In In re American Airlines, it was held that litigators who violated the

applicable conflict-of-interest standards should be disqualified even if the
conduct of the trial would not be affected adversely if the lawyer were to
remain in the case. It reasoned that unless courts address the
impermissible conflict, it may go entirely unpunished and that, in any event,
enforcing the conflict law is the courts' business.

Application in Ghana

Under section 33 of the GBA Code of Ethics, a lawyer must disclose to his
client any relationship that he may have with his client’s opponent to avoid
any conflict of interest.

Key Determinant

The test is: whether or not the lawyer’s independent judgment is or would be
influenced by another interest. If this is answered in the affirmative, a
conflict of interest has arisen.

It is not that conflicts would not emerge, but the pertinent question would
be when it did, what steps did the lawyer take to remedy the situation.

Examples

Personal interest: representing a client on a matter where the lawyer has

personal interest (other than expectation of getting paid legal fees) eg.
Financial interest/family connection or being a beneficiary under a client’s
will which the lawyer himself has drafted.

The personal interest conflict may spring up where the lawyer owns shares
in a large corporation that a client intends to sue. The situation could
persist where a lawyer has an undisclosed interest in a business in which
the client intends to invest.

In the Colorado Court of People v. Schmad, a personal interest conflict was

evinced when a lawyer failed to advise his client of possible conflict between
her interests and his interests on how personal injury settlement was to be
paid.
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Also, in People v. Wright, the Colorado Supreme Court suspended a lawyer

for, in part, investing a client’s trust funds in a mining venture that the
lawyer represented and in which the lawyer was also heavily invested. The
lawyer failed to disclose his personal investment in the venture to the
clients. The mining venture failed, and the client’s trust funds were lost. The
court found that the lawyer had “allowed his personal interests to affect the
exercise of his professional judgment”.

Use of Information

Using or having access to information in the course of representation which

can be used against a former client creates a conflict and is highly
unethical.

For instance, Lawyer Kissi Agyabeng, formerly Asamoah Gyan’s lawyer

cannot use confidential information communicated to him in the course of
their attorney-client relationship against Asamoah Gyan in future litigation
where they are on opposite sides. More so, such a disclosure would amount
to a breach of legal privilege guaranteed under section 100(2) of the
Evidence Act.

The English case of Davies v Davies illustrates this point.

Davies v Davies concerned an application to restrain a solicitor from acting

for a husband in divorce proceedings. In 1991, the solicitor was approached
by the wife and discussed the state of her marriage. The solicitor was not
retained. In 1997, she instructed a different firm of solicitors and petitioned
for a divorce.

Her husband thereupon retained the original solicitor. Correspondence

ensued in which the wife’s solicitor invited the husband’s solicitor to
withdraw. He protested that he had no recollection of ever seeing the wife
and had never opened a file. An application to remove the husband’s
solicitor was made but withdrawn. Nevertheless, the issue resurfaced in the
context of costs.

The judge held that the application was properly issued because there was a
real risk of disclosure. The Court of Appeal upheld that decision. In doing
so, Aldous LJ observed that “The memory was a complex phenomenon.
Recall may be conscious or subconscious”.

How Conflicts Arise

a. Contentious Matters

When a lawyer/law firm represents two clients in the same dispute or

litigation, it gives rise to a conflict of interest.
Conflict of Interest DADA AFA

A conflict in a contentious matter could result from a law firm with branches
in two different countries representing client A and B against each other.

Example: There would be conflict if the AB & David Africa office in Ghana
issues a writ on behalf of client A against client B represented by AB &
David Africa in their Zimbabwe office.

b. Non-contentious matters

A lawyer acting on opposite sides of a transaction though non-litigious

creates a conflict of interest.

Where the solicitor acts at the same time for two clients with competing
interests, the lawyer in such circumstances is in automatic breach of
fiduciary duty unless he has the informed consent of both clients. The duty
is owed by the firm, so the problem is not solved if a different individual is
acting for each client. This situation is illustrated by the old case of Moody v
Cox

Here, H was a solicitor. C was his managing clerk. Moody contracted to

purchase from H and C, who were trustees, a portion of their trust property
which was a public house in Reading. Throughout the transaction, H acted
(through C) as solicitor both for the vendors (the trustees) and the purchaser
(Moody). C failed to disclose to Moody valuations previously obtained
showing that the property was not worth the price which Moody agreed to
pay. Moody knew that the vendors were trustees.

In an action by Moody for rescission of the contract on the ground that the
solicitor, who was acting for him, had failed to disclose the material facts of
the low valuations. The defendants counterclaimed for specific performance.

The Court of Appeal upheld the trial judge’s decision that Moody was
entitled to rescission. The reason was that H, as Moody’s solicitor, was
bound to disclose to him all material facts relating to the matter, and he was
not relieved of that obligation by the fact that he owed a conflicting duty to
his cestui que trust.

Client Based Examples

a. Corporate Client

In respect of corporate clients, the conflict may arise not from the corporate
client itself, but from the shareholders or the people behind that corporate
client. For instance, if a law firm is representing Bank of Ghana and they
are being sued by the Director who is also the client of that law firm, a
conflict of interests is triggered.
Conflict of Interest DADA AFA

A corporate client conflict situation arose in the seminal case of Bolkiah v

KPMG

Prince Jefri had been the chairman of the Brunei Investment Agency (“BIA”),
for which KPMG had provided auditing services for many years. Between
1996 and 1998, KPMG also acted for Prince Jefri in respect of a major piece
of litigation, in which his assets and their whereabouts was a relevant issue.
That litigation was settled in 1998. Shortly thereafter, KPMG was asked by
BIA to assist in an investigation as to various transactions, and to assist its
lawyers in tracing and recovering assets belonging to it.

Some of the confidential information provided by Prince Jefri to KPMG was

or might be relevant to the new investigation. KPMG decided that no conflict
of interest arose but nevertheless created an information barrier to protect
the confidential information in its possession relating to the affairs of Prince
Jefri.

Despite the existence of this Chinese wall, Prince Jefri applied to the court
for an order restraining KPMG from acting for BIA on its investigation. The
injunction was granted, discharged on appeal and finally restored by the
House of Lords.

Lord Millett highlighted that the solicitor’s only duty was a continuing duty
to preserve the confidentiality of information imparted during the
subsistence of the solicitor-client relationship.

b. Government

Acting for the government and the private sector entity on a contentious
matter could create a conflict of interest, unless the parties have consented
to the representation.

Just this passing month(May, 2019), Huawei Technologies Co. lawyer

James Cole’s prior work at the U.S. Department of Justice created conflicts of
interest that should disqualify him from defending the Chinese company in a
case of alleged bank fraud and sanctions violations. He is said to have been
privileged to information concerning Huawei which he cannot disclose. As
deputy AG, Cole supervised and participated in the investigation that has
caused the conflict.

Work examples

a. Sales Agreement

A lawyer acting for a buyer and a seller at the same time amounts to a
conflict of interests within the meaning of section 33(1) of the GBA Code of
Ethics. An instance was demonstrated in the case of Moody v Cox where the
solicitor presented both the purchasers and buyers and failed to disclose
material facts to the purchasers.
Conflict of Interest DADA AFA

b. Conveyancing

Acting for the lessor (seller) of the land and lessee (buyer) or directors
in specific transaction invites a conflict of interest.

Preventing Conflict

1. To help determine and prevent conflict, a lawyer must know his/her

clients by collecting basic data on his clients. This information would
be used to run a check when a potential client desires to engage a law
firm.

To be sure that the likely defendant or opponent of the new client is

not already the client of the law firm, a background check is
conducted on the likely defendant or opponent and his/her
information is compared to that of already existing clients.

2. Conduct a background search of the new client. You need to go way

beyond the name on their business card or resume. Look deep into
every connection and area of interest to bring all possible sources of
conflict to the surface. Research nicknames and other aliases,
businesses they’ve worked for or with in any capacity.

This is principally done to detect personal interests which could be

problematic later on.

3. If the in-coming client is a corporate client, diligently search and

enquire if any of its shareholders or directors are clients of the
company. The company might be bringing an action against the
shareholder or director client or vice versa hence the need to
painstakingly find out any connections.

4. Know the nature and scope of the brief and how that may impact
conflict. It is possible that although the incoming client might be on
opposite sides with a current client in litigation, the subject-matter of
the legal work sought by the new client might have no impact
whatsoever on the litigation or have adverse future implications on the
interests of the existing client.

5. Professional Training: Law firms can bring in professional trainers on

a regular basis to help their staff to better understand real-world
conflicts that arise. If your law firm client has the ability to do so, they
should look into bolstering education around conflicts of interest at
the hands of professionals who can walk lawyers through scenarios
and get hands-on perspectives.
Conflict of Interest DADA AFA

Conflict of interest check list

1. Prior to the initial consultation, the potential clients must disclose all
name information, including their other names (i.e., maiden, other
marital, etc.), opposing parties' names, and associated persons'
and/or entities' names.
2. Determine the nature and scope of the proposed matter.
3. All lawyers and staff must disclose necessary information concerning
potential conflicts relating to past clients at prior places of
employment, but not confidential information.
4. All lawyers must disclose personal interest in the new client work.
5. The attorney then performs the conflicts check, reviewing the master
client list, the former client list, and the subject matter list, if
applicable.
6. The Conflicts Search Results Memo must be circulated to all attorneys
and staff for their review and input.
7. Follow up with any attorney or staff member who fails to return the
Conflicts Search Results Memo within 24 hours of distribution.
8. Analyze the results of the circulated memo and of the preliminary and
comprehensive conflicts checks to determine whether there exists a
conflict.
9. If no conflict is found, the new client is entered into the conflict
system and sent an engagement letter.

When a conflict check must be conducted

a. When a potential client communicates his/her decision to hire you.

b. When the client gives you an idea of the scope of instructions.
c. When a client gives the lawyer an idea of the parties involved or to be
involved.
d. After the first consultation and before opening a file.
e. When a new party enters the transaction.
f. During the provision of legal services when the lawyer discovers
information and there is a potential conflict.

Scope of decisions when there is a conflict

1. If a conflict is found and the attorney is not allowed to accept the

representation, send a non-engagement letter explaining the conflict.
(reject the case/work)
2. Inform the client if it arises in the course of legal work.
3. Disclose the circumstances which give rise to the actual or potential
conflict;
4. Disclose a description of actual/foreseeable adverse effects of those
circumstances;
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5. If the potential conflict arises out of dual or multiple representation,

then disclose that no attorney-client privilege exists as between the
clients;
6. If the potential conflict arises out of a past representation (i.e., past
representation of adverse party in an unrelated matter), then disclose
all pertinent non-privileged facts necessary for the potential client to
make an informed decision as to whether to waive the conflict.
7. Ask for waiver from the current clients where relevant and necessary
8. If waiver is denied, refuse representation.
9. Do not collect any confidential information from the client.
10. Subject to the client’s consent you may recommend an
alternative lawyer or law firm to handle the matter.