Here at JBL HQ we had an internal discussion this week about conflicts of interest in law firms. How they are deceptively simple in principle, endlessly awkward in practice, and tend to surface at exactly the wrong moment. Yes, we gave up our lunch time to get together to talk about compliance – take from that what you will – and we thought it would be useful to share some of the topics of discussion.
What follows is a set of observations from the conversation – the patterns we keep seeing when we review files, audit firms, and talk to fee earners who are trying to do the right thing while also keeping matters moving.
If you would like a technical refresher on conflicts rules generally, start here.
Own interest conflicts: the blind spot no one logs
Most firms aren’t great at recording the personal interests of staff. Not necessarily because they don’t care, but because it can be hard to define, awkward to ask, and easy to postpone. Or perhaps it just hasn’t occurred to them.
In reality, “own interest” risks are everywhere. A fee earner’s partner works at the counterparty. Someone is a trustee of a charity connected to a client. A member of staff has a side business that overlaps with a client’s sector. None of these automatically mean you can’t act. But if you don’t know about them, you can’t assess them, manage them, or evidence the fact you’ve thought about them.
One practical suggestion from our discussion was to treat personal interest declarations like a hygiene factor, not a one-off. Build them into annual practising certificate renewals or, better, into the same rhythm as ongoing AML-related screening and HR checks. If you already have a process that periodically captures changes in circumstances, conflicts declarations can sit alongside it. The aim is to give the firm visibility before it becomes a problem.
The “consent and safeguards” reflex
A theme that kept coming up was how quickly people jump to the language of “consent” and “safeguards”.
We hear it a lot: “We’ll just get consent,” or “We’ll put information barriers in place,” or “We’ll have separate teams.” Sometimes that’s right. But often the conversation is happening too late, and the legal basis isn’t being tested properly. The safeguards outlined in the rules only become relevant if one of the exceptions to the general prohibition (to acting in a conflict situation) applies.
There’s a subtle misunderstanding buried in the way conflicts are discussed. People talk as if safeguards prevent the conflict from arising. But if the conflict is baked into the situation, safeguards don’t stop it arising – they just try to manage the consequences. The only reliable way to stop a conflict arising is to change the situation. (I remember during my LPC the lecturer saying “information barriers don’t cure a conflict” – for some reason, that stuck with me).
If you can reframe what you are being asked to do in the scope of the retainer so that you are no longer in the conflict zone, do that first. Narrow the advice. Split out contentious elements. Decline to act on one strand. Signpost the client to independent advice for the part that creates the tension. It’s not always possible, but it is often more realistic than retrofitting safeguards into a difficult situation you’ve already accepted.
Joint instructions in private client work
We also talked about joint instructions, particularly in wills and estate planning, as being rife for conflict risk. On paper, it can feel efficient and client-friendly: one meeting, one set of instructions, one adviser.
In practice, it’s more complicated. Differing intentions, unequal influence, family dynamics, capacity concerns, and confidentiality issues can all collide. When things later unravel, the file can read like a warning sign that everyone missed.
The most straightforward mitigation is also the least glamorous: separate instructions. By which we mean a genuine structure that allows each person space to speak freely, to receive advice that is theirs, and to decide what is shared. Where clients insist on doing everything jointly, the firm needs to be clear-eyed about what that means, and whether it can properly act in the best interests of both.
Starting from the answer we want and working backwards
If there was one cultural habit we’d all like to stamp out, it’s the tendency to start with the answer you want and work backwards.
Conflicts decisions are often made under pressure. The client is important, the matter is urgent, the partner wants to help, and the team is confident it can manage it. That’s exactly when the discipline needs to be strongest. The question should be “is it right to act, and can we evidence why?”. It shouldn’t be “can we think of a way to justify acting?”.
Group actions and “best interests”: the harder question
Finally, we touched on best interests in group litigation, where a few “lead” clients can end up representing the many. This is a conflict issue because even if clients appear aligned at the outset, the reality is that a few voices can end up steering strategy. These tend to be the most engaged clients, the biggest-value claims, anyone sitting on a steering group, or the individuals whose cases are used as “lead” matters to set the direction. Add in funding arrangements, settlement pressure, and different levels of appetite for risk, and you can quickly end up with tension between what is best for the group and what is best for particular individuals within it.
The practical lesson is to treat “best interests” as an ongoing consideration, not something you decide once when building the book of business. Firms need a clear method for spotting divergence, explaining how decisions will be made, and ensuring communications don’t default to the priorities of the most vocal minority. If you can’t articulate how you will act fairly for the whole cohort as positions shift, that is usually the sign you need to rethink the structure, whether that means creating sub-groups with separate advice, revisiting the scope of the retainer, or, in some cases, stepping away from acting for parts of the group altogether.
Stop and think
Conflicts rarely come about because the solicitor is a crook. They’re usually situations where good honest lawyers, moving quickly under pressure, make commercial decisions and assume everything will turn out okay in the end.
Our takeaway from the session was to slow down and think “can I act in each client’s best interests?”. If not, is it right to apply an exception and put in place safeguards? And resist the temptation to reverse-engineer a “yes”.
