Solicitors
can seldom avoid potential conflicts of interest in commercial transactions, be
they corporate acquisition or disposal, company reconstruction, loan finance,
security and guarantee, pension scheme or simply employment. The same applies
with trusts and other private client work. In many cases actual conflict does
not arise, but often it does, sometimes unexpectedly and occasionally at a
crucial stage of a negotiation.
Most
legal conflicts of interest are so obvious that they are avoided as a matter of
course. In almost all commercial transactions, the main parties, sellers and
buyers, borrowers and lenders are separately represented and potential
conflicts on particular issues are identified as far as possible. Often it is a
third party, such as a financier's solicitor, who raises the issue, because the
client insists that any risk of conflict is removed. Occasionally a less
obvious conflict can pass unseen until late in a transaction, when trouble
threatens or, for example, a client's director or employee asks: "How does
this affect me personally?". In all such cases the conflict issue is a
peripheral distraction in a much larger transaction, but it can be crucial and
must be resolved promptly.
Independent
advice is always essential. If the party in conflict has his or her own
solicitors, the latter should be the first source of advice or help. But if
those solicitors are already involved in the transaction, or if they are not
experienced in the type of work, or if for some other reason are not suitable
or available, the party will need to find another solicitor with relevant
skills and experience, who can give independent advice and do so promptly and
effectively.
I offer
my services to the clients of solicitors, who because of a conflict of
interest, can no longer advise them in a transaction or a particular stage of
it. I can give to a solicitor's client independent advice on one small element
of a deal or oversee his or her interests throughout. I do not wish to act for
any such client generally or to undertake any role other than the resolution of
the conflict.
examples
of conflicts of interest
|
|
parent
company |
subsidiary |
|
|
director
of parent |
who is
also director of subsidiary |
|
|
individual
shareholder |
majority
shareholder |
|
|
director
as such |
him-
or herself as employee, or shareholder or pension scheme trustee or member |
|
|
director
with shareholding control |
director
without (significant) shareholding |
|
|
shareholders
with management role |
shareholders
with no such role |
|
|
lender |
borrower
or guarantor in same family or group of companies |
|
|
pension
scheme trustee |
sponsoring
employers and members |
|
|
trustee |
who is
also beneficiary |
|
|
tenant
for life |
remaindermen |
|
|
supplier
of goods and services |
who
also recommends them to a consumer |
|
|
solicitor
offered a legacy or seeking to limit liability |
own
client |
|
|
public
duty |
private
interests |
click
below to