Confidentiality, Conflicts of Interest and Chinese Walls

Abstract

There is no rule prohibiting lawyers from appearing against former clientsl and, in many instances, communications between lawyers and former clients have no bearing on later unrelated cases. However, when a lawyer appears against a former client in the same matter, or in one closely connected to his former mandate, the former client may feel that he might be unfairly prejudiced by the fact that the opponent's lawyer was privy to confidential information. At first, courts were seldom called upon to consider the issues that arise when lawyers represent adversaries of former clients. Once a workable general rule was established, lawyers had little difficulty in adhering to it. However, as the size of law firms increased and different methods of legal practice developed,2 so pressures were placed upon rules which were not designed for an era of amalgamations and mega-firms. Some firms, for example, are today partnerships in name only. Changes in management structure have caused large law firms to adopt the bodies of partnerships and the minds of corporations3 and, inevitably, they have had to introduce special mechanisms to comply with professional requirements. One of these, the Chinese wall, is an internal control measure, the aim of which is to prevent communication of certain information between members of a firm. Closely associated with the idea is the concept of a 'cone of silence' which is created when one person undertakes not to disclose information to fellow members of a firm. Chinese walls are likely to arise in instances where persons are instructed to appear against former clients, where firms merge and in situations where lawyers transfer from one firm to another. In such cases, our concern is the effect of three duties, two of which are variations of a lawyer's duty to show good faith towards a client or any other person with whom he is in a fiduciary relationship. The first is the duty to maintain confidentiality; the second is the duty to avoid a conflict of interest; while the third duty is that which a partner owes to the partnership. But there are additional issues: the question of lawyer and client privilege; the extent to which knowledge of a lawyer is imputed to other lawyers within a firm; and, the common thread in all the above issues, the protection of the integrity of the legal system by ensuring that a person receives a fair trial.