Ethics in Practice

 

Duties to Prospective Clients: Ethical Considerations

This article discusses the ethical duties owed by a solicitor to a former client.

The Ethics Committee, a committee of the Council of the Law Society, is tasked with providing guidance to members on their ethical obligations. The Committee responds to written questions from Law Society members by rendering a written opinion through a private and confidential letter. Members can submit a written inquiry to the Committee through the Representation and Law Reform Department at represent@lawsoc.org.sg. For detailed guidelines for inquiries to the Committee, please refer to the Council’s Practice Direction 2 of 2009 which can be found on the Legal Ethics section of the Law Society’s website at www.lawsociety.org.sg.

When reading this article, members should bear in mind that the Committee has omitted facts which it does not consider crucial to the ethical obligations of the lawyer in question or to the guidance given. Members are advised to write to the Committee for a specific opinion on their query in order to receive the Committee’s specific guidance on their particular situation with full knowledge of all the facts. If members wish to guide themselves based solely on the Committee’s opinion without writing in for a specific opinion, they must accept that they run the risk that there could be crucial differences of fact or in the applicable rules of ethics which could affect their position and render them subject to discipline. Neither the Committee nor the Law Society assumes any responsibility or liability in rendering the Committee’s opinions or for anything a member does or omits based on the Committee’s opinion and without seeking a formal opinion on the facts of their case from the Committee.
In last month’s column, we discussed the duties owed by a solicitor under r 31 of the Legal Profession (Professional Conduct) Rules (“PCR”) to a prospective client who does not subsequently retain or engage the solicitor.

In this month’s column, we discuss another common scenario under r 31: where a solicitor or his firm is retained or engaged by a client in a matter and the solicitor or his new firm is later engaged to act against the former client.

Scenario 1

Let us first look at a simple scenario. You acted for Client A in drafting a simple will a few years ago.  That retainer then came to an end.  You now act for Client B, the Wife in a divorce matter. Client A is the Husband in the divorce matter. What would you do?

1.   Continue to act for the Wife. There is no conflict of interest as the divorce proceeding is not “related” to the drafting of the will.

2.   Discharge yourself from acting for the Wife. You acted for the Husband previously and a conflict of interest arises if you continue to act for the Wife.

The answer is … it depends on the specific circumstances of the case. For example, does it make a difference if the will was a one-line will leaving everything to the Wife and the Husband disclosed nothing to you about his assets? Does it make a difference if he did disclose information to you about his assets but so much time has passed that you now have no recollection of the information?

Structure of Rule 31

Before we proceed, it will be useful to recap the basic four-fold structure of r 31 (see Figure 1):

1.   Personal disqualification rule: r 31(1)
      A solicitor who has acted for a client in a matter is absolutely prohibited from thereafter acting against the client (or against persons who were involved in or associated with the client in that matter) in the same or any related matter.

2.   Imputation rule: r 31(2)
      It is irrelevant whether the solicitor concerned personally handled the client’s work because the term “client” includes a client of the law practice of which the solicitor is a partner, a director, an associate or an employee.

3.   Transferring  personal disqualification rule: r 31(3)
      The absolute prohibition in Rule 31(1) applies even where the solicitor concerned becomes a member of a different law practice.

4.   Firm disqualification rule: r 31(4)
      A law practice is not precluded from acting against a party in a matter provided that:
a.   the law practice has not previously acted for the party (or for persons who were involved in or associated with the party in that matter) in the same or any related matter; and

b.   any solicitor of the law practice who has previously acted for the party in the same or related matter neither acts nor is involved in that matter or related matter in any way whatsoever and does not otherwise disclose any confidential information relating to the matter or the party to any other member of the law practice.

Unlike the analysis for duties owed to prospective clients in the last column, there are naturally fewer issues over who is a “client” and what it means to have “acted” for that client in situations involving acting against a former client. The key issue in these situations is usually whether the solicitor is acting against the former client “in the same or  . . .  [a] related matter”. In some cases, it will be obvious that the two matters are neither the “same” nor “related” matters and the solicitor is therefore not prohibited under r 31 from acting against the former client. However, in other cases, the two matters may not be sufficiently distinct and a test is required to ascertain whether the two matters are the “same” or “related”.

In this regard, the Ethics Committee has provided guidance to members on a number of queries involving acting against a former client. The analysis below summarises and consolidates the key aspects of the Committee’s opinions for the guidance of members. 

Committee’s guidance on Scenario 1

In Scenario 1, the will and the divorce are clearly not “the same matter” within the meaning of r 31(1).  So r 31(1) prevents you from acting for the Wife only if the divorce proceeding is “related” to the Husband’s will. The mere fact that you prepared the will for the Husband does not in itself place you in a position of conflict if the two matters are not “related”.

There is no guidance in the PCR on the test to be applied in determining whether one matter is “related” to another matter within the meaning of r 31(1).  The Committee’s view is that two matters are clearly related if any information which the former client previously imparted in confidence to you for the purposes of the earlier matter is relevant to the later matter.  This, it seems to the Committee, strikes the right balance between protecting the interest of the former client in having his confidences preserved and the interest of the current client in being permitted to engage her choice of counsel.

Generally, therefore, you would not be precluded by r 31 from acting against the Husband in the divorce proceeding unless, for example, the Husband disclosed confidential information to you about his assets or general affairs when you acted for the Husband in preparing the will.

Ordinarily, save for the simplest of wills, a client would be expected to disclose confidential information about his assets or general affairs to a solicitor engaged to draw up his will.  Further, that confidential information would generally be of relevance in subsequent divorce proceedings. In the ordinary case, therefore, a will and a divorce would be “related matters” and it would be a breach of r 31 for you to act against the Husband in the divorce proceedings.

However, if you were instructed to draft a simple will for the Husband where he did not disclose any confidential information to you about his assets or about his affairs generally, you will not be precluded by r 31 from acting against the Husband in the divorce proceedings.

Similarly, even if confidential information was disclosed in these circumstances and even if the information continues to be confidential today, you will also be free to act against the Husband if you do not actually remember any of that confidential information and if it can no longer reasonably be considered remembered or reasonably be considered capable of being recalled. As was said in Re A Firm of Solicitors:

Common sense requires recognition that not all confidential information acquired by a solicitor will remain in the mind of the solicitor or be susceptible of being triggered as a recollection after the lapse of a period of time. For the purpose of the law imposing constraints upon solicitors acting against the interests of former clients, the law is concerned with the protection of information which (a) was originally communicated in confidence, (b) at the date of the later proposed retainer is still confidential and may reasonably be considered remembered or capable, on the memory being triggered, of being recalled and (c) relevant to the subject matter of the subsequent proposed retainer ... ”1

If you genuinely cannot recall any of the confidential information and if you consider, objectively speaking, that that information cannot reasonably be considered remembered and cannot reasonably be considered capable of being recalled, you will be free to act against the former client. This test therefore requires you to exercise your own professional judgment.

The question then arises whether you should review your file in the will matter in order to arrive at this professional judgment. The point, of course, is that the mere act of reviewing the file will remind you of confidential information which the husband imparted to you in the will matter and which you had forgotten and will thereby preclude you from acting in the divorce.  The Committee’s view is that if you genuinely have no recollection of any confidential information which the Husband imparted to you, there is no ethical obligation on you to call for and review your file in the will matter to remind yourself of that information.  However, if you do not review your file before you apply this test and determine that you do not hold relevant confidential information, you take the risk that your determination may in a later challenge be held unreasonable in light of material found in the file.

If the test in Re A Firm of Solicitors is not satisfied, the proper course to take would be to review your file in the will matter to determine if the Husband revealed to you confidential information about his assets or about his affairs generally. Such information would include information relating to the identity, whereabouts or value of assets, the disposition of assets to a person other than his wife and the provision (or lack of provision) for his dependants. If the Husband did not disclose to you any confidential information, you are not precluded by r 31 from acting against the Husband in the divorce proceedings.

On the other hand, if the Husband did disclose to you confidential information and such information continues to be confidential today, it will be necessary to consider whether that confidential information is of potential relevance to the matters in question in the divorce proceedings. In this connection, you should take a wide view of potential relevance not least because it is not possible, especially at an early stage of proceedings, to define categorically what the issues in question are. Any doubts as to potential relevance should therefore be resolved in favour of the Husband.
If having considered potential relevance, your view is that you are not precluded from acting, it is nevertheless good practice, before continuing to act, to make disclosure to the Wife that you had previously acted for the Husband but without disclosing any confidential information. Such disclosure will allow the Wife to make an informed decision as to whether she wishes to be represented by a solicitor whose ability to act for her may be challenged in the future on grounds of conflict.

In addition, even if your conclusion is that the matters are not “related matters”, you should bear in mind that r 24 of the PCR  prevents you from directly or indirectly disclosing any confidential information, even if wholly irrelevant to the current proceedings, which you may have received as a result of the Husband’s retainer and from disclosing the contents of the papers recording his instructions, unless certain specified circumstances apply.

Finally, as a matter of prudence and quite apart from your own views as to whether the two matters are “related matters”, you may wish to clarify with the Husband whether he is alleging that you are in possession of potentially relevant confidential information as a result of acting for him in drafting the will or whether he is otherwise objecting to you acting for the Wife. Again, if the Husband intends to take objection, you should consider carefully whether you wish to continue to act for the Wife in the divorce even if your conclusion is that the two matters are not “related matters” and that you are therefore not precluded from doing so by r 31.

Scenario 2

We now turn to a more complicated scenario. In 2008, you were a member of Law Practice F. A different solicitor in Law Practice F advised a Husband on a potential divorce.  You were not involved in any way in advising the Husband.  Nothing comes of the advice and Law Practice F’s retainer comes to an end in 2008. In 2009, you leave Law Practice F and join Law Practice G.  You now propose to act for the Wife in divorce proceedings commenced in 2009.  One of the issues in these divorce proceedings is the same issue on which Law Practice F advised the Husband in 2008.
Which of the following answers is correct?

1.   No problem. Any conflict of interest falls away once you join a different law practice.

2.   Some problem, but you can act for the Wife so long as you obtain the Husband’s informed consent.

3.   Major problem because you are imputed with the solicitor disqualification under r 31(1) even if you did not personally advise the Husband when you were with Law Practice F. The disqualification still applies to you even after you join Law Practice G.

The first point to note is that Law Practice F’s advice in 2008 and the divorce proceedings commenced in 2009 are on any analysis either “the same matter” or a “related matter” within the meaning of r 31(1) of the PCR because of the commonality in subject-matter.

With that in mind, the correct answer is … C. Option A is incorrect because r 31(3) provides that the personal disqualification in r 31(1) shall apply even where the solicitor concerned becomes a member of a different law practice. Option B is also incorrect because the personal disqualification in r 31(1) is absolute and the former client’s informed consent is not an exception.

The Ethics Committee provided guidance on a similar scenario in 2008. The analysis below summarises and consolidates the key aspects of the Committee’s opinion for the guidance of members. 

Committee’s guidance on Scenario 2

The combined effect of rs 31(1), (2) and (3) is that where A is a solicitor who is a partner,  director, associate or employee of a law practice (“F”) which has acted for a client (“C”) in a matter, A is absolutely prohibited from acting against C (or against persons who were involved in or associated with C in that matter) in the same matter, even if A leaves F to join another law practice (“G”).

The word “matter” in r 31 does not mean a particular law suit or set of formal legal proceedings. Instead, “matter” is sufficiently wide to cover the subject-matter on which A, or another solicitor in F, acted for C or his associates whether or not it is contentious, and whether or not it comprised formal legal proceedings at the time of acting or only subsequently.

In these circumstances, it is irrelevant that A does not acquire or hold, or does not recollect, any information of C which was and remains confidential.2 It is also irrelevant whether A personally handled C’s work while a member of F. This is because if any member of F acted for C in a matter while A was with F, A is deemed to have acted for C in that matter: see r 31(2). Hence, A is forever precluded from acting against C in the same or a related matter even if he leaves F to join G: see r  31(3).

It is also clear from its history and its wording that r 31 is intended to be construed in two parts. rs 31(2) and 31(3) were originally numbered rs 31(2)(a) and (b) respectively and were introduced in the original version of the PCR enacted on 1 June 1998. Together with r 31(1), this first part of r 31 is intended to regulate A’s conduct by imposing an obligation that binds A personally not to act against C whether as a member of F or as a member of G.

Rule 31(4) is a distinct and second part of r 31. Rule 31(4) was added in September 2001 as a result of members’ feedback to “ensure that a law firm or law corporation is not precluded from acting against any party just because a particular advocate and solicitor within the law firm or law corporation is conflicted from doing so provided that there are adequate safeguards to ensure that there is no risk of confidential information being disclosed.”3 Rule 31(4) is therefore intended to regulate the conduct of all members of G other than A.  Rule 31(4) is not intended to regulate the conduct of A.

Hence, the opening words of r 31(4) make clear that it is intended to carve out an exception for G rather than for A. Rule 31(4) therefore imposes a separate and distinct obligation on G and on those solicitors in G who are permitted by r 31 to act against C, which does not in any way detract from the obligation imposed on A by the combined effect of rs 31(1), (2) and (3). In other words, in light of r 31(3), it is clear that r 31(4) was not intended to create a separate, more lenient rule for A simply because he has moved from F to G.

In this case, both firms acted in the “same matter” or a “related matter” even though formal legal proceedings were commenced in 2009, only after F’s representation of the Husband came to an end. Further, you were a member of F at the material time. Therefore, you are deemed also to have acted for the Husband in the earlier matter. This is so notwithstanding that:
1.   you did not personally handle the Husband’s matter at F;

2.   you may not have held, and may now have no recollection of, any confidential information of the Husband which continues to be confidential; and

3.   you left F to join G in 2009.

Further, it is not just you who comes under an ethical obligation pursuant to r 31. The second and separate part of r 31, r 31(4), imposes on G ethical obligations which it must comply with if it is to represent the Wife. Rule 31(4) does this without in any way detracting from your personal obligation not to act against the Husband under rs 31(1), (2) and (3).

Therefore, in this situation, G as a firm may continue to act for the Wife if (and only if) three conditions are satisfied:
1.   G must not previously have acted for the Husband in this matter;

2.   G must ensure that any of its solicitors who has previously acted for the Husband (necessarily while members of another firm) in this matter neither acts nor is involved in its representation of the Wife in this matter in any way whatsoever; and

3.   G must ensure that any of its solicitors who has previously acted for the Husband in this matter (again, necessarily while members of another firm) do not otherwise disclose any confidential information to any other member of G which relates to the matter or to the Husband.
The latter two conditions impose an ethical obligation on the partners of G to put in place effective information barriers (commonly known as Chinese walls) to ensure that there is no real risk of relevant confidential information being disclosed to the Wife or to the solicitors in G acting for the Wife. This is, again, a separate and distinct obligation from your personal ethical obligation not to act against the Husband.

Conclusion

Whether a solicitor may act against a former client under r 31 depends on whether the current matter is the “same” as or “related” to the former matter.  This is always a question of substance, not form, and must therefore depend on the circumstances of each case. It will usually be obvious whether two matters are the “same” by reason of an identity or overlap of parties, legal or factual issues or subject-matter.  The more difficult question is when two matters are “related”. In this regard, the “confidential information” test provides a useful yardstick.  However, in an area where substance prevails over form, this is perhaps not the only yardstick. Members should therefore be aware that there could be other considerations that a court may take into account in applying this test, for example, the solicitor’s knowledge of the disposition of the former client which is neither confidential information nor information which is directly relevant to the subject-matter of the later matter.

Where the imputation rule comes into play, the picture becomes more complicated. The basic point is that the absolute disqualification of the solicitor under r 31(1) arises even if the solicitor did not personally advise the client and survives even if the solicitor subsequently joins a different law practice, so long as the client was a client of the solicitor’s original law practice. If the solicitor’s new law practice wishes to act against the client, it may do so if and only if the three conditions under r 31(4) are met.

Ethics Committee
The Law Society of Singapore


Notes

1    [1997] Ch 1 at 9-10.

2    See Jeffrey Pinsler, Ethics and Professional Responsibility at 274, para. 16 - 014; Yasho Dhoraisingam & Sivakumar Murugaiyan, “Understanding the Recent Amendments to the Professional Conduct and Publicity Rules” (2001) Singapore Law Gazette, online: Singapore Law Gazette <www.lawgazette.com.sg/2001-12/Dec01-focus.htm>.  

3    Supra, note 2, “Understanding the Recent Amendments to the Professional Conduct and Publicity Rules”.