Conflicts of interest – proposal for change Peter Williamson Chairman – SRA Board

Background Current rule in force 2006 Conflict defined – limited to “the same or related matters” Prohibition on acting where conflict BUT – 2 exceptions: –Substantially common interest –Competing for same asset Both exceptions require informed consent of clients and overriding test of reasonableness

Proposal Proposal would extend the exceptions to allow firms to act for sophisticated clients in all situations of conflict (excluding litigation) where: –both/all clients give informed consent –confidential information can be protected –it remains in the best interests of each client Other core duties – independence, integrity etc would have to be complied with

Reasons for the proposal Concerns expressed by City firms about restrictions on client freedom of choice of firm particularly in highly specialised areas of work Greater freedom for sophisticated clients to make informed decisions about how and on what terms they obtain legal advice Reduce costs and increase speed of transactions Remove doubts about when the “substantially common interest” exception applies Align our rules more closely to the USA enabling greater competitiveness (but USA have much wider definition of conflict)

Potential problems Does the proposal strike too hard at the core duties? Would it affect public confidence in the profession? To what extent can clients give informed consent? Would firm dynamics in relation to the different teams acting affect their ability to do the best for each client? How far does the exception go? Should firms be able to act in a negotiating/adversarial situation? How easy is it to monitor compliance?

Where we are now Consultation closed 31 March 38 responses – 24 in favour (but some indicating the need for extensive guidance to prevent abuse) – 8 against – the rest no firm view Respondents mainly large London firms Only one large in-house legal dept. has responded – i.e. corporate client No SRA decision has yet been made – a full analysis of the responses is in process