In Industry Insights

Well, it’s complicated…

The Safe Answer

No, your firm cannot generally act for both the buyer and seller in a conveyancing transaction, even with information barriers in place. The SRA has strict rules regarding conflicts of interest to ensure that the best interests of clients are protected and to maintain public trust in the legal profession.

A consultant solicitor was recently rebuked by the SRA for this very reason.

According to the SRA Code of Conduct for Solicitors, RELs, and RFLs, acting for both parties in a transaction where there is a significant risk of a conflict of interest is generally prohibited (Rule 6.2: You must not act in relation to a matter or a particular aspect of it if there is a conflict, or a significant risk of a conflict, between the interests of two or more current clients).

This is particularly relevant to conveyancing transactions, where the interests of the buyer and seller are more likely to be inherently in conflict.

There is a common misconception that using separate team members, offices and other information barriers will magically make a conflict go away. Unfortunately it’s not that simple. These measures can be very effective at mitigating the risk of inadvertent disclosure of confidential information between the clients. But they will not cure the fundamental client conflict and appearance of bias of one client over another. Remember that the firm as an entity, as well as the individual solicitor, is bound by the conflict rule.

So the SRA clearly does not like it. In the 2011 rules, there was a specific “indicative behaviour” (remember those?) which referenced acting for buyer and seller as being consistent with a conflict scenario. This was removed as part of the rulebook-slimming exercise, but the regulator has never explicitly changed its position.

The official SRA guidance on conflicts unhelpfully fails to address this common scenario, a missed opportunity.

The Law Society Practice note on conflicts is a more useful resource. It acknowledges that it is generally not permissible to act for both the buyer and the seller in a conveyancing transaction due to the potential for a conflict of interest. However, it goes on to say:

“The decision rests with you and your practice as to whether there is a conflict of interests or a significant risk of one in the circumstances, taking into account whether:

  • the seller and buyer are, for example, persons related by blood or marriage
  • the sale is at an undervalue or a gift, or
  • the seller and the buyer are both established clients of the firm”

Exceptions and Practical Steps 

While the general rule is clear, there are very limited exceptions where acting for both parties might be possible, such as in simple, straightforward transactions with no contentious issues, and where both parties give informed consent. We have to remember that conflicts are always fact-specific, and there may be cases where it is genuinely in the clients’ best interests to use one firm.

However, the exceptions to the rule in conveyancing are rare and must be approached with extreme caution. It is certainly a decision which the COLP should make.

The Law Society says:

  • You must document the basis for your decision and be prepared to justify it to the SRA. This includes recording your decision and the reasons behind it.
  • Continuously monitor the situation for any emerging conflicts of interest. The implications of a conflict arising mid-transaction could be significant for both clients and any others involved in linked transactions, such as in a conveyancing chain.
  • Even with informed consent and robust information barriers, you must ensure that acting for both parties is genuinely in their best interests and does not compromise your professional obligations.
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