What's a law firm 'conflict check'?

Lawyers and law firms (like Lawlux) cannot act for a client if a conflict of interest exists.

The 3 common conflict of interest situations are:

1. Acting against a former client
2. Acting for 2 or more clients with differing interests, and
3. Where a lawyer’s business or personal interests differ from the client’s.

A conflict check is a critical procedure that assists lawyers and law firms avoid or manage conflicts of interest before engaging a potential client.

The regulatory framework, details of the 3 common conflict of interest situations and information on Lawlux’s AI-enabled conflict check procedure is below.

What’s the regulatory framework?

Lawlux is governed by the Legal Profession Uniform Law 2014 (Uniform Law) that commenced on 1 July 2015.

The Uniform Law sets out rules that lawyers must comply with when practicing law.

Those rules include the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (Uniform Rules)

The key parts of the Uniform Rules that relate to conflict checks are as follows:

• Rule 9.1 – confidentiality

A solicitor must not disclose any information which is confidential to a client and acquired by the solicitor during the client’s engagement to any person.

• Rule 10 – conflicts concerning former clients

A solicitor and law practice must avoid conflicts between the duties owed to current and former clients.

A solicitor or law practice who or which is in possession of information which is confidential to a former client where that information might reasonably be concluded to be material to the matter of another client and detrimental to the interests of the former client if disclosed, must not act for the current client in that matter unless:

• • the former client has given informed consent to the disclosure and use of that information, or
  • an effective information barrier has been established.
• Rule 11 – conflict of duties concerning current clients

A solicitor and a law practice must avoid conflicts between the duties owed to two or more current clients.

• Rule 12 – conflict concerning a solicitor’s own interests

A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor or an associate of the solicitor.

Acting against a former client

A lawyer-client relationship doesn’t completely end when a legal matter ends or when the client changes their lawyer.

Lawyers and law firms have ongoing duties to former clients, including under the duty of confidentiality.

For example, if a lawyer has confidential information about a former client, they should not act against that former client in any matter where that specific confidential information is material to the matter and detrimental to the interests of the former client if disclosed.

In the regard, Lawlux regularly implements information barriers to isolate lawyers and information between individuals.

Information barriers prevent individual lawyers from being involved in, or influencing, a matter concerning one of their former clients.  The courts recognise that information barriers, if enforced effectively, can be sufficient to prevent confidential information from being misused.

Acting for 2 or more clients with differing interests

Lawyers generally should not represent more than one client in the same legal matter.

This rule protects both the lawyer and the clients in the event that the clients’ interests diverge, even if their interests appear aligned at the commencement of the matter.

There are situations where a lawyer or law firm is permitted to act for both sides in a legal matter.  They most commonly occur in property transactions such as conveyancing.  Before the lawyer or law practice commences to act for both sides, they must have formally advised all clients of the arrangements, and all clients must have given their informed consent.  However, this is not a practice that Lawlux engages in.

Where a lawyer’s business or personal interests differ from the client’s

Lawyers and law firms must not allow their own interests to come into conflict with the interests of their clients.

Lawyers must not benefit from their relationship with their client, other than the usual payment for the legal services they have provided.

That means that a lawyer must not advise a client to become involved in their business interests, or the interests of their associates (business partners, friends or relatives) except in limited situations.

What does Lawlux’s conflict check system involve?

Lawlux takes conflicts of interest seriously.

Consistent with Lawlux’s Values which include ‘We Replace Ourselves’, Lawlux has built a proprietary conflict check system that automatically and accurately identifies potential conflicts.

The key features of Lawlux’s conflict check system are:

1. Data integrity.  Data for every corporate entity (whether as a client, opposing party or a third party) is obtained automatically from Australian Government databases using integrated APIs in Lixo AI.
2. Automated cross check of all existing corporate and individual Lawlux clients as against the proposed new client and matter details.
3. Automated deep search of all existing electronic matter documents (including file notes, documents and correspondence) as against proposed new client and matter details
4. Generative AI overlay that uses Lawlux’s in-house large language models to parse results, conduct ‘fuzzy’ entity and person name searches, and provide preliminary conflict check results in a report for efficient review by Lawlux’s lawyers.