He Importance of Ethics and The Application of Ethical Principles To The Legal Profession
He Importance of Ethics and The Application of Ethical Principles To The Legal Profession
He Importance of Ethics and The Application of Ethical Principles To The Legal Profession
any case, the lawyer who acts in accordance with a professional code of ethics may
still
be
engaging
in
unethical
practice.
So why is ethics important to the practice of law?
First because lawyers are integral to the working-out of the law and the Rule of
Law itself is founded on principles of justice, fairness and equity. If lawyers do not
adhere and promote these ethical principles then the law will fall into disrepute and
people will resort to alternative means of resolving conflict. The Rule of Law will
fail with a rise of public discontent.
Second, lawyers are professionals. This concept conveys the notion that issues of
ethical responsibility and duty are an inherent part of the legal profession. It has
been said that a profession's most valuable asset is its collective reputation and the
confidence which that inspires. The legal profession especially must have the
confidence of the community. Justice Kirby of the Australian High Court once
noted:
The challenge before the legal profession....is to resolve the basic paradoxes which
it faces....To reorganise itself in such a way as to provide more effective, real and
affordable access to legal advice and representation by ordinary citizens. To
preserve and where necessary, to defend the best of the old rules requiring honesty,
fidelity loyalty, diligence, competence and dispassion in the service of clients,
above mere self-interest and specifically above commercial self-advantage.
Third, because lawyers are admitted as officers of the court and therefore have an
obligation to serve the court and the administration of justice.
And finally because lawyers are a privileged class for only lawyers can, for reward,
take on the causes of others and bring them before the courts.
The application of ethical principles to the legal profession
There are a number of applications of ethical responsibilities so far as the practice
of law is concerned. It is common to divide these ethical obligations into duties
owed to the client and duties owed to the court. It should be noted that a breach of
these ethical obligations may lead to civil proceedings by the client, for example an
action for breach of confidence or an action for negligence; while at the same time
may be grounds for disciplinary proceedings under the relevant Legal Practitioners
legislation.
Conflicts of interest
It is well settled that a solicitor has a fiduciary duty to his or her client. That duty
carries with it two presently relevant responsibilities. The first is the obligation to
avoid any conflict between his duty to his client and his own interests - he must not
make a profit or secure a benefit, at the expense of his client's expense. The second
arises when he endeavours to serve two masters and requires....full disclosure to
both.
Conflicts of interest have given rise to a number of legal and disciplinary actions. It
is an area that is commonly identified by lawyers as a problem in legal practice.
Conflicts of interest are not all that easy to resolve because some interests will
require that the lawyer not act for the person while other conflicts may still allow
fort he lawyer to act for both parties.
It is also an area that requires the balancing of two public interests; namely the
interest in clients having full confidence in their lawyers, including the protecting
of their confidences, and on the other hand, the interest in the freedom of a lawyer
to take instructions and for the client to be represented by the lawyer of his or her
choice.
The difficult issue is this: Which conflicts, if not resolved, give rise to a breach of
professional ethics and which do not?
There are four broad areas of potential conflict. The first relates to those cases
where the lawyer acts for both parties.
Acting for both parties
It may be that a solicitor who tries to act for both parties puts himself in a position
that he must be liable to one or the other whatever he does..... [It] would be his
fault for mixing himself with the transaction in which he has two entirely
inconsistent interests and solicitors who try to act for both vendors and purchasers
must appreciate that they run a very serious risk of liability to one or the other
owing to the duties and obligations which such curious relation puts upon them.
At the heart of this issue is the fact that the lawyer owes a fiduciary duty to respect
the confidences of clients and at the same time to do his or her best for the client. If
you have information from one client that is prejudicial to the interests of the other
client how can you do your duty to each?
The question arises as to whether professional rules should preclude the lawyer
from acting in any case where he or she is instructed by both parties. The problem
that arises in small jurisdictions or country towns or villages cannot be ignored,
however perhaps the starting position should be that the lawyer is not to act for
both parties unless there is no other suitable practitioner available to take the
instructions. Another requirement might be that the lawyer cannot negotiate with
one party unless the other party is present or otherwise represented. There is a
wider public interest here than the mere perception of conflict; there is a real risk in
these circumstances that both parties might find themselves without representation
and put to additional costs, or that a later dispute between the parties will bring the
law into disrepute because of its failure to adequately foresee and protect one or
both of the parties.
The lawyer, the client and vested interests
The general principle espoused in Blackwell's case in terms of competing loyalties
to different clients is readily transferred to situations where lawyers borrow from a
client or have business dealings with a client and fail to make adequate disclosure
to the client, or fail to arrange for the client to receive independent advice.
A case example is Law Society of New South Wales v Harvey [1976] 2 NSWLR
15. In that case the defendant was a solicitor who was also a director and
shareholder in three companies in the business of property investment. Over a
period of years, clients of the defendant lent money to these companies at the
suggestion of the defendant. The investments undertaken by the companies were
very high risk and the clients stood to lose substantially in the event of failure. In
some cases the client was only informed that his or her money had been lent to the
companies after this had occurred. The investments turned bad and the clients lost
money. This was an appeal on the point of whether the professional misconduct of
the defendant was serious enough to warrant him being struck from the roll of
solicitors.
Street CJ concluded:
Where there is any conflict between the interests of the client and that of the
solicitor, the duty of the solicitor is to act in perfect good faith and to make full
disclosure of his interest. It must be a conscientious disclosure of all material
circumstances, and everything known to him relating to the proposed transaction
which might influence the conduct of the client or anybody from whom he might
seek advice.....A solicitor who constantly promotes dealings with various clients
clearly misuses his position, and puts it beyond his capacity to observe his primary
duty to his clients. The price of being a member of an honourable profession,
whose duty to his client ought not to be prejudiced in any degree, is that a solicitor
is denied the freedom to take the benefit of any opportunity to deal with persons
whom he has accepted as clients. Therefore, he ought neither to promote, suggest
nor encourage a client to deal with him, but rather should take all reasonable steps
positively to avoid dealing directly, or indirectly, with his client.
The defendant's professional misconduct was serious and sustained involving many
clients and large amounts of money. His conduct was motivated by greed and self
interest in deliberate and flagrant disregard of his duty to his clients, and
demonstrates that he is unfitted to be a solicitor, or to be employed in a solicitor's
office in any capacity, and that his name should be removed from the roll of
solicitors.
By way of example the Model Rules referred to earlier state:
A
practitioner
must
not,
in
any
dealings
with
a
client(i) allow the interests of the practitioner or an associate of the practitioner to
conflict
with
those
of
the
client;
(ii) Exercise any undue influence intended to dispose the client to benefit the
practitioner in excess of the practitioner's fair remuneration for the legal services
provided to the client.
The Rule goes on to note that a practitioner must not accept instructions in relation
to any proceedings that would be in conflict with the practitioner's own interest or
the interest of an associate. This Rule is harsher than the Rule concerning acting
for both parties in the sense that it prohibits any dealings where the lawyer may
have a vested interest, rather than allowing for such interests after the client has
been properly informed. It is also noted that the words 'the interests of the
practitioner' should be given a wide interpretation so as to make it clear that this
includes the practitioner's spouse or partner or members of the practitioner's family.
Opposing a former client
To overcome the possibility of compromising the confidences of the former client,
firms have used mechanisms such as the quarantining of the former client's
information. These mechanisms are sometimes referred to as 'Chinese walls'. The
overriding principle is, of course clear; namely that the relationship between
lawyer and client continues after the original instructions have been completed.
There will be situations where the use of confidential material obtained during the
currency of the earlier matter will be detrimental to the client's interests, if used
directly or indirectly against the client in later proceedings. However, even if there
is no opportunity for abuse of a confidence, there is authority for the view that
acting against a former client is a breach of the terms of the retainer with the
former client and a breach of professional ethics.
Until recently, the common law position concerning the test for disqualification on
the basis of a conflict of interest involving a former client was whether there was a
reasonable probability of real mischief. However recently, in the case of Prince
Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 the House of Lords adopted a
stricter test. Lord Millet noted at 237:
I prefer simply to say that the court should intervene unless it is satisfied that there
is no risk of disclosure. It goes without saying that the risk must be a real one, and
not merely fanciful or theoretical. But it need not be substantial. ....In my view no
solicitor should, without the consent of his former client, accept instructions
unless, viewed objectively, his doing so will not increase the risk that information
which is confidential to the former client may come into the possession of a party
with an adverse interest.
The Supreme Court of Victoria in 2000 accepted these principles and suggested
that when a court is determining whether a solicitor should be able to act against a
former client, the following questions should be asked:
(i) Is the former supplier of services ....in possession of information provided by
the former client which is confidential and which the former client has not
consented
to
disclosure?
(ii) Is or may the information be relevant to the new matter in which the interest of
the
other
client
is
or
may
be
adverse
to
his
own?
(iii) If the answers to the first two issues are yes, then is there a risk which is real
and not merely fanciful nor theoretical that there will be disclosure?
(iv) If there is that risk then the evidential burden which is heavy, rests upon the
provider of the services to establish that there is no risk of disclosure and this may
be established in exceptional cases by the provision of a 'Chinese wall' but this is
rarely
of
sufficient
protection.
(v) Should a permanent injunction be granted?
This stricter approach reflects a concern that former clients might otherwise be
exposed to potential and avoidable risks to which they had not consented and that
former clients could not have sufficient assurance that their confidences would be
respected. However there are gradations of conflicts - some being more likely to
cause harm or public concern than others, and perhaps this should be reflected in
Codes of Practice or Rules of Conduct. In any case, if there is no harm or
disadvantage done to the client, should the fact that there has been a breach of the
Rules give rise to disciplinary action? If the purpose of discipline is not to punish
but to protect the public interest then arguably, disciplinary action arising out of a
conflict of interest should be contingent on there being some harm or damage or
disapproval by the client, unless it is a case which involves the community
generally.
Confidentiality
The duty of confidence which a lawyer owes to a client can be based on various
principles of law. It can be regarded as an implied term of the retainer or contract,
or it can be based in tort as part of the duty owed by the lawyer to the client, or it
may arise in equity.
Apart from these legal principles, the duty of confidence also gives rise to an
ethical obligation and thus a breach of client confidentiality would be grounds for
disciplinary action. There are exceptions, such as where the client consents, or
where the lawyer is compelled by law to disclose, or where the wider public
interest requires disclosure. This last exception is still inadequately defined.
Furthermore, there remains the issue as to whether the disclosure of a client
confidence to the lawyer's spouse or partner should invoke either a common law
remedy or the disciplinary machinery for breach of a professional rule. If harm
results from the disclosure then the answer is clear; however should Rules of
Conduct be treated as absolutes?
The obligation concerning the exercise of competence and care
This obligation of course covers a multitude of circumstances. A failure to exercise
competence and care can give rise to an action against the lawyer for damages as
well as lead to disciplinary action. Competence and care is all about maintaining
professional standards. Practitioners are cautioned to refrain from acting unless
they are competent. It is for this reason that various Law Society's around the
world have in place continuing legal education programmes - in some jurisdictions
these are compulsory. In Law Society v Moulton [1981] 2 NSWLR 736 Hutley JA
observed:
My Lords, the cards are now heavily stacked against maintaining the immunity of
advocates. I would rule that there is no longer any such immunity in criminal and
civil cases. In doing so I am quite confident that the legal profession does not need
the immunity...
The duty to assist the court and not to mislead the court
Having considered some of the ethical obligations that give rise to the duty of the
lawyer to the client, I turn to some of the ethical obligations that give rise to the
duty of the lawyer to the court. As noted earlier in this paper, where there is a
conflict between the lawyer's duty to the client and his or her duty to the court, the
duty to the court must prevail.
Misleading the court can occur in a number of ways; for example not referring the
court's attention to an authority on point - even where that authority is against you,
or misleading the court as to the facts of the case. It also means that the lawyer
does not merely put to the court what it is that the client wants known. The lawyer
is not the mere mouthpiece for the client but has an independent and overriding
duty to assist the court. In criminal proceedings this duty would include the duty of
the prosecution to bring to court all relevant and reliable witnesses.
One matter of particular concern in this area is the making of allegations without
their being a proper factual or legal basis upon which they can be supported. In
White Industries v Flower and Hart [1998] 806 FCA the defendant firm was given
advice from a Queen's Counsel confirming that the defendants legal position was
weak but that there was one possibility of temporarily improving the defendant's
bargaining stance, namely to start proceedings under the Trade Practices Act
alleging deceptive conduct and fraud. In a strong criticism of the legal firm (Flower
and Hart) the Full Federal Court held that they had breached their duty to the court
by instituting proceedings without proper foundation and for making an allegation
of fraud that was without foundation. The Court also criticised the manner in which
the firm had conducted the proceedings and the obstructionist and delaying
conduct that exacerbated the abuse of process. Little comment was made of the
advice given by the Queen's Counsel, however the Court indicated that a solicitor
was obliged to make an independent assessment of whether proceedings should be
instituted and not just follow the advice of counsel in the matter.
The Giving of Undertakings