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Unformatted text preview: Dispute Resolution and Legal Ethics 08 Conflicts of Interest Page 1 of 16 P ART VIII C ONFLICTS OF I NTEREST 1 I NTRODUCTION 1.1 Fiduciary Duties In equity, certain relationships of trust give rise to onerous obligations of loyalty. For example, where someone stands in a position of ascendancy (or special trust and confidence) over another, they have an obligation not to act unconscionably. Lawyers are said to be in such a position vis-a-vis their clients. Chief among lawyers fiduciary duties is an obligation of undivided loyalty to their clients. To meet this obligation, lawyers are expected to avoid situations which raise a conflict of interest between: The lawyers personal interest and their duty to the client (lawyerclient conflicts); or The interests of multiple clients (clientclient conflicts). 1.2 Rationale for the Obligation to Avoid Conflicts of Interest Lawyers have a fiduciary obligation to avoid both kinds of conflicts. Dal Pont describes the rationale for this obligation in the following passage: Conflict of interest principles were developed to serve two purposes: to protect the client by assuring zealous and loyal representation and to maintain a public perception of integrity of the profession and the administration of justice. 1 1.3 When Conflicts Arise If a conflict of interest arises, the lawyer must take two steps to deal with it successfully: First, he or she must refrain from using the relationship as a conduit to making a personal gain (apart from a reasonable professional fee); and Second, he or she must fully disclose to the client any conflicts or gains. Lawyers have three further fiduciary duties: They must avoid representing a client where that would conflict with duties owed to a former client (successive conflicts). o The rationale for this type of conflict lies in its potential for inadvertent disclosure of confidential information They must fully account for money held on behalf of clients and for any costs incurred during the running of a matter o This obligation stems from trusts law, supplemented by statutory and common law duties 1 Gino Dal Pont, Lawyers Professional Responsibility (2001) 150. Dispute Resolution and Legal Ethics 08 Conflicts of Interest Page 2 of 16 They must disclose and use for clients benefit all material information that comes into their possession concerning the clients affairs o This duty derives from tortious obligations, principally in negligence 1.4 Consequences for Breach of a Fiduciary Duty Breach of a fiduciary duty gives rise to a common law cause of action and is also likely to amount to misconduct or unsatisfactory conduct....
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This note was uploaded on 08/17/2010 for the course BUSLAW 730-410 taught by Professor N/a during the Three '10 term at Melbourne Business School.
- Three '10