Learning Outcomes
After reading this article, you will be able to identify and distinguish between own interest conflicts and client conflicts under the SRA Code of Conduct. You will know when a solicitor is prohibited from acting, when the limited exceptions apply, and the steps required to comply with the Code in real practice situations. You will be equipped to spot common pitfalls and to answer SQE2-style questions on conflicts in professional practice.
SQE2 Syllabus
For SQE2, you are required to understand the rules and practical application of conflicts of interest as set out by the SRA Code of Conduct. You must be able to spot potential conflicts, apply the exceptions, and explain appropriate professional action.
As you study this article, focus on the following points:
- the distinction between own interest conflicts and client conflicts
- the general prohibition on acting where a conflict or significant risk exists
- recognising and applying the two Code exceptions that allow acting in certain client conflicts
- the additional safeguards and documentation required if relying on an exception
- the implications of breaching conflict rules in practice scenarios
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What is the difference between an own interest conflict and a client conflict?
- What are the two situations where a solicitor may act despite identifying a client conflict?
- True or false: A solicitor can proceed with acting where there is an own interest conflict if both clients provide their informed consent in writing.
- What practical steps must a solicitor take if relying on the substantially common interest exception?
Introduction
Conflicts of interest are strictly regulated by the SRA Code of Conduct. For SQE2, you must be able to recognise conflicts, apply the correct legal principles, and explain appropriate professional steps in real and hypothetical scenarios. Solicitors who breach conflict rules risk disciplinary action, reputational harm, and potential financial claims.
A conflict may arise between your duty to one client and your duties to another client (a client conflict), or between your duty to a client and your own interests (an own interest conflict). The default rule is simple: you must not act where a conflict exists or there is a significant risk of conflict. Only in narrowly defined circumstances can you continue to act.
Types of Conflict
The SRA Code draws a distinction between own interest conflicts and client conflicts.
Key Term: own interest conflict
An own interest conflict arises where a solicitor’s duty to act in the best interests of a client conflicts or risks conflicting with the solicitor’s own personal or professional interests.Key Term: client conflict (conflict of interest)
A client conflict (conflict of interest) is a situation where the duties owed to two or more clients in the same or a related matter conflict or there is a significant risk of such a conflict.
Worked Example 1.1
A solicitor holds shares in a company. A new client instructs the solicitor to bring a negligence claim against the company. Can the solicitor act?
Answer:
No. This is an own interest conflict. The solicitor’s personal financial interest in the company conflicts with their duty to act in the best interests of the new client. The Code absolutely prohibits acting in these circumstances—there are no exceptions, regardless of consent.
Spotting a Conflict
You must identify not just actual conflicts, but significant risks of conflict. The Code of Conduct defines a "significant risk" as one where it is more than just hypothetical or remote.
The General Prohibition
You must not act where there is an own interest conflict, a client conflict, or a significant risk of either. The Code’s rules apply whether you act for individuals, businesses, or multiple parties. Attempting to "manage" or "mitigate" a conflict is not a solution. Except as set out in the Code’s two specific exceptions, you must decline or cease to act.
The Two Exceptions to the Client Conflict Rule
The Code permits continuing to act for two or more clients if (and only if) one of two exceptions applies, and all additional conditions are satisfied.
- Substantially common interest: The clients share a clear common purpose and consensus about how to achieve it within the matter or a relevant aspect.
- Competing for the same objective: Two or more clients are genuinely competing for an "objective" (for example, both are bidding for the same asset in an auction) and have agreed appropriate safeguards.
Each exception has strict conditions:
- All clients give informed consent in writing;
- Effective safeguards are put in place to protect confidential information (e.g., ethical walls);
- The solicitor is satisfied it is reasonable to act for all clients.
Key Term: substantially common interest
A situation where clients have a clear shared purpose in a matter/aspect and agree how to achieve it, so are not in opposition.Key Term: competing for the same objective
Where two or more clients are rivals for an asset, contract, or business opportunity, and only one can succeed (e.g., rival auction bidders).
Worked Example 1.2
You act for two companies interested in bidding for a property at auction. Both wish to instruct you for the bid itself. May you act for both?
Answer:
Possibly. This is "competing for the same objective." You can act only if both clients give informed written consent, you implement robust safeguards (e.g., separate teams for each), and you are satisfied that acting for both is reasonable.
Practical Safeguards
The Code expects you to go further than merely obtaining consent. Effective safeguards may include:
- Separate teams acting for each client (full ethical wall, including support staff and IT);
- Clear retainer terms defining limits of representation and information sharing;
- Ongoing review—if actual conflict arises, act must cease for all affected clients.
When Does the Exception Not Apply?
- Own interest conflicts can never be overridden by client consent or information barriers.
- No exception will apply if the clients are on directly opposing sides of a dispute or if negotiation is required between the parties.
- If at any time actual conflict arises in a matter where you were acting under an exception, you must immediately cease to act for all affected clients.
Worked Example 1.3
Two business partners are setting up a company and agree all terms between themselves. They ask you to act in drafting shareholder agreements for both parties. Can you act?
Answer:
Yes, if they genuinely share a substantial common interest and agree all relevant terms. You must obtain informed, written consent from both, put appropriate information safeguards in place, and assess whether it is reasonable to act given their circumstances.
Exam Warning
Even if you think you can act under one of the exceptions, record the reasons for your decision and keep consent documentation. The SRA expects to see this if your approach is later challenged.
Breaches and Consequences
Breach of the conflict rules is a serious disciplinary offence. Typical consequences may include:
- SRA regulatory action (rebuke, fine, suspension)
- Invalidation of fee arrangements
- Claims for negligence or breach of fiduciary duty
- Reputational harm to you and your firm
Revision Tip
Questions may require you to distinguish between own interest and client conflicts in practical scenarios—be precise with your terminology and the steps taken.
Key Point Checklist
This article has covered the following key knowledge points:
- The distinction between own interest and client conflicts under the SRA Code.
- The general prohibition on acting where a conflict or risk of conflict exists, subject to narrow exceptions for client conflicts.
- There are no exceptions to the own interest conflict rule—even with client consent.
- The two client conflict exceptions: substantially common interest and competing for the same objective.
- Strict compliance with requirements for consent, safeguards, and reasonableness where an exception applies.
- Breach of these prohibitions is a serious professional and regulatory matter.
Key Terms and Concepts
- own interest conflict
- client conflict (conflict of interest)
- substantially common interest
- competing for the same objective