Clifford Chance GC demands freedom from conflicts

Clifford Chance general counsel and chairman of the City of London Law Society rules and regulation committee Chris Perrin has called for significant widening of client conflict rules at The Lawyer’s Strategic Risk Management Conference.

The City of London Law Society has made proposals, which would effectively allow clients to consent to all conflicts of interest.

Perrin said: “We’ve been talking about this possible change for some time. It gives sophisticated clients who know what they’re doing freedom.”

The Solicitors Regulation Authority’s (SRA) rules and ethics committee will convene tomorrow (12 March 2008) to begin preliminary discussions of the proposal. It will decide whether to take the proposals further, which could begin a lengthy consultation process.

Currently the rules permit law firms to act on conflicting instructions only where the clients share a common interest and consent or where two clients are competing for the same asset, such as in an auction sale.

“In addition to these two exceptions,” proposed Perrin, “there should be a wider exception to be used by sophisticated clients, which would enable them to waive conflict in any circumstances.”

Perrin argued that if two sophisticated clients want to get a deal done and both have historically used the same firm, it is impeding their desire to get the transaction done to prevent them from using that firm. And if both parties are happy that a firm will look after both their interests, he said, there is no reason why it should not.

The proposed definition of ‘sophisticated clients’ would include clients, which have received independent legal advice or which have in-house legal departments and the exception would not apply in litigation matters.

It is understood that the SRA committee will initially do background research into the issues. If it decides to proceed looking into the proposal, consultations of clients and conflicts rules in the European Union and the US could last around three months.

The City of London Law Society also called for a relaxation of confidentiality rules, particularly to extend the circumstances in which a firm can act without a former client’s consent in accepting instructions from a new client.

Perrin said that the proposal was made to mirror the Prince Jefri common law test.

The SRA declined to comment.