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Where am I now? Lawlink > Office of the Legal Services Commissioner > Conflict of Interests
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Conflict of Interests
Whilst the OLSC, the Law Society and Bar Association can try to persuade a legal practitioner from acting in an “actual” conflict situation, the Legal Profession Act 1987 does not empower the regulators to prevent a legal practitioner from acting in a “perceived” or “potential” conflict situation. In the HIH Royal Commission Report, HIH Royal Commissioner, Neville Owen criticised law firms who chose to act for clients in a “potential” conflict of interest situation.
As a result, the Legal Services Commissioner (“Commissioner”) became aware that the current principles in relation to conflict of interests may be outdated and in need of review. The Commissioner also expressed his concern that the public’s perception of legal practitioners acting in conflict of interest situations was damaging to the profession’s reputation.
In view of the above, the Commissioner invited various interest groups to attend a Working Party meeting on 17 September 2003 to discuss the current rules in relation to conflict of interests and potential changes. The invitees included the Director General of the Attorney General’s Department and representatives from the Law Society, Bar Association, Law Reform Commission, Legal Profession Advisory Council, NSW law schools, consultants to legal practices, and a range of legal practitioners from sole practitioners to large law firms.
The Working Party’s objectives were to enquire into and review the law and practise relating to conflict of interests. The Working Party was also required to explore the mechanisms for resolving such conflicts.
The Working Party met under the following “Terms of Reference”:
- To consider the definitions of conflict of interests both “perceived” and “actual”, and to consider whether the definitions are sufficiently clear and complete;
- To explore the existing obligations and duties of legal practitioners (specifically fiduciary duties, confidentiality and disclosure principles) with respect to conflict of interests;
- To explore more transparent and effective ways of identifying and remedying “perceived” and “actual” conflict of interests in both litigious and non litigious matters;
- To address the concern that existing rules and laws relating to conflict of interests have developed without addressing commercial reality; and
- To consider the role of the regulators in relation to conflict of interests.
Prior to the first meeting, each invitee was provided with a discussion paper in relation to conflict of interests. Twenty-two participants attended the first meeting along with four representatives from the OLSC, including the Commissioner. The invitees were divided into three separate groups with each group required to consider one of the three areas of conflict of interests, namely “actual”, “potential” and “perceived” conflicts.
At the meeting, the Commissioner opened the general discussion regarding conflict of interests and requested that each group prepare a draft response to the discussion paper for the next meeting. OLSC staff facilitated and coordinated group meetings and contact between group members.
The second Working Party meeting was held on 3 December 2003. The Commissioner spoke briefly to the groups about their draft responses and a copy of each group’s draft response was given to all Working Party members for comment. Each group will prepare a final proposal which inderpinned the discussion for the final meeting.
The final Working Party meeting was held on 1 April 2004. A panel of four, headed by the Commissioner presided over the seminar.
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