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Steps for Dealing with Conflicts of Interest Rules - Paralegal

To determine whether there is a conflict of interest that would prevent you from acting for a client:

           ☐ First, determine if there is a conflict of interest.

☐ Second, if there is a conflict of interest, determine whether you may act despite the conflict of interest.  

PART 1  

Is there a conflict of interest?  

    STEP 1  

           ☐ Determine who your client is.  

    STEP 2  

           ☐ Consider the nature of your retainer and the duties to your client arising from your retainer.  

    STEP 3  

            ☐ Determine whether the duties that you owe to current clients, former clients and any third persons might affect the duties owed to your client. Similarly, determine whether you have any personal interests that might affect the duties owed to your client.  

    STEP 4  

           ☐ Determine if there is a substantial risk that your duty of loyalty to the client or the representation of the client would be materially and adversely affected by your own interest or your duties to another client (current, former or joint clients) or a third person. If so, there is a conflict of interest.  

PART 2  

If there is a conflict of interest, can you act despite the conflict of interest?  

    STEP 5  

           ☐ Determine if you are being asked to represent both sides of a dispute. If so, you cannot act or continue to act.  

    STEP 6  

           ☐ If you are not being asked to represent both sides of a dispute, determine whether you reasonably believe that you are able to represent each client without having a material adverse effect on the duties owed to the other client.  

    STEP 7  

            ☐ If you do not reasonably believe  that you are able to represent each client without having a material adverse effect on the duties owed to the other client, then you cannot act.  

    STEP 8  

           ☐ Alternatively, if you reasonably believe that you are able to represent each client without having a material adverse effect on the duties owed to the other client, then you may act if there is consent from all of the affected clients.  Consent must be fully informed and voluntary after disclosure.

 

STEP 1  

Determine who your client is.

Who is a client?  

The term “client” is a defined term in the Paralegal Rules of Conduct (the “Paralegal Rules”). A client is a person who 

  • consults a paralegal and on whose behalf the paralegal provides or agrees to provide legal services; or 
  • having consulted the paralegal, reasonably concludes that the paralegal has agreed to provide legal services on his or her behalf.

Furthermore, a client includes a client of the firm of which the paralegal is a partner or associate whether or not the paralegal handles the client’s work. 

A paralegal-client relationship may arise only if there has been a consultation between the paralegal and the client. However, it may arise without formality even if there is no written retainer agreement.

(Rule 1.02, definition of “client”; Guideline 5, section 2) 


STEP 2

Consider the nature of your retainer and the duties to your client arising from your retainer.

What are a paralegal’s duties to a client arising from the retainer?
 
The conflicts of interest rule applies to a paralegal’s representation of a client in all circumstances in which the paralegal acts for, provides advice to or exercises judgment on behalf of a client.
 
Duty of loyalty

In addition to the duty of representation arising from the retainer, the law imposes other duties on a paralegal, particularly the duty of loyalty. Aspects of the duty of loyalty include: the duty of commitment to the client’s cause, the duty of candour, and the duty of confidentiality. The rule on conflicts protects all of these duties from impairment from a conflicting duty or interest.

  1. Duty of commitment to the client’s cause
The paralegal’s duty to commit to the client’s cause prevents the paralegal from withdrawing from representation of a current client, especially summarily and unexpectedly in order to circumvent the conflict of interest rules. This duty is reflected in rule 3.08 and Guideline 11 of the Paralegal Professional Conduct Guidelines (the “Guidelines”), dealing with withdrawal from representation.
  1. Duty of candour
The duty of candour requires a paralegal to advise an existing client of all matters relevant to the retainer. Even where a paralegal concludes that there is no conflict of interest in acting against a current client, the duty of candour may require that the client be advised of the adverse retainer in order to determine whether to continue the retainer. This duty is reflected in rule 3.02(2) and Guideline 7, sections 1 to 3, dealing with honesty and candour.
  1. Duty of confidentiality

Rule 3.04(3) permits a paralegal to act in a conflict in certain circumstances with the clients’ consent. The duty of confidentiality reflected in rule 3.03 is owed to both current and former clients. It requires the paralegal to hold in strict confidence, at all times, all information concerning the business and affairs of a client acquired in the course of the professional relationship.  A paralegal may only disclose such information where permitted by the Paralegal Rules. Accordingly, the paralegal’s duty of confidentiality may limit the paralegal’s ability to obtain client consent as permitted under rule 3.04(3) because the paralegal may not be able to disclose the information required to obtain consent. Where there is a conflict of interest and consent cannot be obtained for this reason, the paralegal must not act. In addition, client consent does not permit a paralegal to act where there would be actual impairment rather than merely the risk of impairment.

(Rule 3.04; Guideline 9)


STEP 3

Determine whether the duties that you owe to current clients, former clients, and any third persons might affect the duties owed to your client. Similarly, determine whether you have any personal interests that might affect the duties owed to your client. 

In what situations do conflicts of interest commonly arise? 
    
Current Client Conflicts 

Duties owed to another current client can impair client representation and loyalty. The following are examples of situations where conflicts of interest involving current clients may or will arise: 

  • acting for opposing parties in a dispute;
  • acting in a joint retainer where the interests of the parties diverge;
  • acting for more than one client in separate but related matters because of the nature of the retainers; and 
  • acting for clients in unrelated matters where the duty of confidentiality owed to one client may be inconsistent with the duty of candour owed to another client depending on whether the information obtained by the paralegal during either retainer would be relevant to both retainers. 

A bright line rule has been developed by the courts to protect the representation of and loyalty to current clients. Subject to certain limited exceptions, the bright line rule holds that a paralegal cannot act directly adverse to the immediate legal interests of a current client, without the client's consent. Paralegals should assume that matters undertaken against a current client are directly adverse to the immediate legal interests of that current client and that the bright line rule ordinarily applies because of the nature of paralegal practice.

A conflict of interest may arise from duties owed to another current client even if the bright line rule does not apply. In matters involving another current client, paralegals should take care to consider not only whether the bright line rule applies but whether there is a substantial risk of impairment to the paralegal’s loyalty to or representation of a client. In either case, there is a conflict. 

(Guideline 9, sections 10 and 11)

Joint Retainers

Acting in a joint retainer places the paralegal in a potential conflict of interest.  A paralegal has an obligation to all clients and in a joint retainer, the paralegal must remain loyal and devoted to all clients equally. The paralegal cannot choose to serve one client more carefully or resolutely than the other. If the interests of one client changes during the course of the retainer, the paralegal may be in a conflict of interest.  

Joint retainers are dealt with in rules 3.04(6) to (12) and Guideline 5, section 4 and Guideline 9, sections 26 to 29. The Law Society’s Steps for Dealing with the Joint Retainer Rules – Paralegals provides some guidance to assist paralegals with the application of these rules. 

Personal Interest Conflicts

A conflict of interest may also arise as a result of the paralegal’s personal interest in the client’s affairs or in the matter in which the paralegal is asked to act for the client. The Paralegal Rules do not prohibit a paralegal from providing legal services to  friends or family, but they do require the paralegal to avoid existing or potential conflicts of interest. A conflict of interest may arise when a paralegal provides legal services to a friend or a family member or when the client and paralegal have a sexual or intimate personal relationship. In these circumstances the paralegal’s personal feelings for the client may impede the paralegal’s ability to provide objective, disinterested professional advice to the client. 

A personal interest includes not only the paralegal’s own personal interests, but also the interests of others connected to the paralegal, such as the paralegal’s partners, associates or family members. 

(Guideline 9, sections 9 and 46 to 48) 

Former Client Conflicts

Duties owed to a former client can also impair client representation and loyalty. Since the duty of confidentiality continues after the retainer has been completed, the duty of confidentiality owed to a former client may conflict with the duty of candour owed to a current client if information from the former matter would be relevant to the current matter. 

Paralegals also have a duty not to act against a former client in the same or a related matter even where the former client’s confidential information is not at risk. In order to determine the existence of a conflict of interest, the paralegal should consider whether representing a current client in a matter includes acting against a former client. Rule 3.04(4) and (5) deal specifically with the paralegal’s obligations when acting against a former client.

(Rule 3.04; Guideline 9, section 12; Guideline 8, section 6)

Conflicts Arising from Duties Owed to Other Persons

Duties owed to other persons can impair client representation and loyalty. For example, a paralegal may act as a director of a corporation. If the paralegal acts against such a corporation, there may be a conflict of interest. But even acting for such a corporation may affect the paralegal’s independent judgment and fiduciary obligations in either or both roles, making it difficult if not impossible to distinguish legal advice from business and practical advice, which in turn may jeopardize client confidentiality. Paralegals should carefully consider the propriety and the wisdom of “wearing more than one hat” at the same time. 

(Guideline 9, section 13; Guideline 2)

Duty of Confidentiality to Third Persons

When determining whether there is a conflict of interest, paralegals should also consider the duty of confidentiality that may be owed to other persons. The Paralegal Rules provide that a paralegal owes a duty of confidentiality to every client. Problems can arise when information is provided to a paralegal or a paralegal firm by a prospective client. A prospective client is one who has consulted with a paralegal or paralegal firm to see if the firm will take on his or her matter or to see if he or she would like to hire the paralegal or paralegal firm. 

For lawyers, the duty to protect confidential information begins when the prospective client first contacts the lawyer or law firm. The courts may determine that a paralegal also owes a duty of confidentiality to prospective clients, even if the paralegal is never actually retained by the prospective client. Accordingly, a paralegal should be cautious in accepting confidential information on an informal or preliminary basis since possession of the information may prevent the paralegal from subsequently acting for another party. 

(Guideline 8, sections 6 and 7; Guideline 9, section 4)

Other Conflict of Interest Situations

The Paralegal Rules also contain specific obligations with respect to certain conflicts of interest situations. Some examples include: doing business with a client (rule 3.06), transferring between paralegal firms (rule 3.05), and engaging in outside interests and holding public office (rule 2.01(4) and (5); Guideline 2). 
 


STEP 4

Determine if there is a substantial risk that your duty of loyalty to the client or the representation of the client would be materially and adversely affected by your own interest or your duties to another client (current, former or joint clients) or a third person. If so, there is a conflict of interest.

When is the risk substantial?  

The Paralegal Rules stipulate that in order for there to be a conflict of interest, there must be a substantial risk that a paralegal’s duty of loyalty to or representation of the client would be materially and adversely affected by the paralegal’s own interest or the paralegal’s duties to another client, a former client, or a third person. For the risk to be substantial, it must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer. 

The conflict of interest rule addresses the risk or likelihood of impairment rather than actual impairment. A substantial risk is one that is significant and plausible, even if it is not certain or even probable that it will occur. Except as otherwise provided in the Paralegal Rules, it is for the client not the paralegal to decide whether to accept the risk. 

(Rule 1.02, definition of “conflict of interest”, Guideline 9, section 3) 

How do you assess if there is a conflict of interest?

Conflicts may arise at any time. To assess whether there is a conflict of interest, the paralegal will need to consider the circumstances of the retainer, the duties owed to current, former and joint clients and third parties such as prospective clients, as well as the paralegal’s personal interests. 

A paralegal should use a conflicts checking system to assist in managing conflicts of interest. The paralegal should examine whether a conflict of interest exists not only at the outset, but throughout the duration of a retainer because new circumstances or information may establish or reveal a conflict of interest. 

(Rule 3.04; Guideline 9, section 5) 

 


STEP 8  

If you reasonably believe that you are able to represent each client without having a material adverse effect on the duties owed to the other client, then you may act if there is consent from all of the affected clients. Consent must be fully informed and voluntary after disclosure.

What is “consent” under the conflicts of interest rule?  

Rule 1.02 provides that “consent” must be fully informed and voluntary after disclosure. It also provides that consent must be in writing or confirmed in writing where consent is provided orally.

Disclosure is an essential requirement to obtaining client consent and arises from the duty of candour owed to the client. The client needs to know of anything that may influence the paralegal’s judgment or loyalty. The paralegal should therefore inform the client of the relevant circumstances and the reasonably foreseeable ways that the conflict of interest could adversely affect the client’s interests. This would include the paralegal’s relation to the parties and any interest in and connection with the matter.  

Once the paralegal has provided the client with all the details, the paralegal must allow the client the time to consider the information or to ask for further clarification. The client may only consent after being given all of the information required to make an informed decision. This is called “informed consent.”

There may be situations where it is impossible for a paralegal to give a client or prospective client all necessary information. This may happen when the details about the conflict involve another client or a former client. Since a paralegal cannot reveal confidential information regarding another client, the paralegal may only say that there is a conflict and that he or she cannot continue with or accept the retainer.

(Rule 1.02 definition of “consent” and rule 3.04(3); Guideline 9, sections 16 to 20)

 Can you obtain consent in advance of a conflict?

In certain circumstances, a paralegal may be able to obtain the client’s consent in advance to conflicts that may arise in the future. However, the effectiveness of such consent is generally determined by the extent to which the client understands the material risks involved. A paralegal may wish to recommend that the client obtain independent legal advice before deciding whether to provide such consent. Advance consent should be recorded in writing; for example, in a retainer letter.

(Guideline 9, section 21)


The rules on conflicts of interest are contained in rule 3.04 of the Paralegal Rules and Guideline 9 of the Paralegal Professional Conduct Guidelines (the “Guidelines”). This resource has been prepared to assist paralegals to comply with some of their obligations under the conflicts of interest rules. Paralegals should refer to the actual Paralegal Rules and the Guidelines to determine the full extent of their obligations.