Curing Successive Conflicts

Gino Dal Pont Professor, Faculty of Law, University of Tasmania

partners in the practice, the evidence revealed that they performed legal work separately and without any knowledge of each other’s clients. Also, at the time of the earlier engagement, C was away and unaware of the appellant’s consultation with M. C’s undertaking not to make any inquiries or obtain information from M regarding the matter proved the clincher, Fletcher Moulton LJ saying that “[n]obody pretends that this gentleman will not act up to that undertaking”. 4 sensitivity many feel concerning litigation of this kind, informed by a belief that the appearance that a lawyer can readily change sides is subversive to the appearance of justice being done. 10 Yet case law has since marked a step away from treating family law as unique in this context,11 an upshot of which is that information barriers may, in an apt case, prove effective even in this domain.

It is well established that a lawyer should not accept an engagement to act against a former client, and can be restrained from doing so, “if a reasonable observer, aware of all the relevant facts, would think that there is a real, as opposed to a theoretical possibility that confidential information given to the [lawyer] by the former client might be used by the [lawyer] to advance the interests of a new client to the detriment of the [former] client”. 1 Professional conduct rules evince a parallel sentiment.2

The foregoing targets an individual lawyer, but the issue surrounding what are termed “successive conflicts” can surface when a law practice acts against a former client of the practice (earlier represented by another lawyer therein) or a lawyer has since moved to the practice (the “migratory lawyer”). The seminal, though now in some ways superseded, authority in the field, Rakusen v Ellis, Munday and Clarke, 3 involved a law practice (the respondent) consisting of two partners (M and C). The appellant consulted M for advice arising out of alleged unfair dismissal. The appellant later engaged another law practice in the matter, which issued a writ. In the ensuing arbitration, C was appointed, under the name of the respondent practice, to act for the employer. The appellant sought to restrain this engagement.

Despite that the respondent law practice was now acting against a former client of the practice, the English Court of Appeal rejected the appellant’s plea. Influential in this decision was that although M and C were the only

For decades thereafter it was assumed that Rakusen reflected the law, including its focus on whether the representation raised “any reasonable probability of any mischief” 5 or “real mischief and real prejudice”. 6 The tide appeared to have turned by 1990, when Ipp J in Mallesons Stephen Jaques v KPMG Peat Marwick 7 restrained Mallesons from acting for the Commissioner of Corporate Affairs to prosecute criminal charges against the defendant, where it had previously advised the defendant as to its potential criminal liability out of which the charges later stemmed. The large size of Mallesons, coupled with different teams of lawyers acting in each matter located in separate buildings, in tandem with undertakings, did not sway his Honour to the contrary. Relying on partnership law principle that imputes one partner’s knowledge to other partners, Ipp J saw the position of Mallesons as inherently conflicted.

This reasoning appeared to preclude scope for information barriers within a practice to salve the prospect of conflict. Yet months earlier a Queensland court countenanced the efficacy of information barriers, in a case of former and current retainers performed by a discrete “section” of a mid-tier firm, each under the control of different partners with separate areas of operation, and engaging separate support staff, attended by detailed undertakings.8 This pre-existing segregation within the firm, Lee J held, legitimised scope for information barriers. This very point was picked up by Lord Millett in the modern leading case, Prince Jefri Bolkiah v KPMG (a firm), 9 speaking of the need for barriers “to be an established part of the organisational structure of the firm”.

At the same time, a succession of family law cases struggled to accept scope for any legitimate information barrier to cure a successive conflict, here targeting the

The point has been driven home in a recent case, where the potential risk of disclosure by a lawyer — who had previously had “the direct, substantial and ongoing conduct of the wife’s case for a considerable period” 12 before joining the firm representing the husband — was assuaged by information barriers and undertakings. Though bearing in mind that each case must rest on its facts, it seems that curial mistrust of the information barrier may be waning somewhat.

End Notes

1 Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307 at 312 per Drummond J.

2 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (WA) r 10.2.

3 [1912] 1 Ch 831.

4 Ibid at 841.

5 Ibid.

6 Ibid at 835 per Cozens-Hardy MR.

7 (1990) 4 WAR 357.

8 Fruehauf Finance Corp Pty Ltd v Feez Ruthning (a firm) [1991] 1 Qd R 558.

9 [1999] 2 AC 222 at 239.

10 Arguably the seminal case is D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 (see at 124 per Bryson J).

11 Osferatu v Osferatu (2015) 301 FLR 295.

12 Hatzis v Hatzis [2022] FedCFamC1F 745 at [33] per Gill J.