Law Firm Conflict Check Process in England and Wales: From Intake to Decision

A law firm conflict check process has one job: show, before the firm accepts an instruction, that it has identified every person and interest involved and decided on the record whether it may act. A search result marked "clear" does not do that on its own. The record should show which parties were searched, which sources were checked, who reviewed each hit, which paragraph of the SRA Codes applied, what consent or safeguard was used and when the check must be repeated.

This guide covers England and Wales. The Solicitors Regulation Authority describes itself as the regulator of solicitors and law firms in England and Wales. Scotland and Northern Ireland have their own legal professions and conduct rules, which are not covered here.

What do the SRA Codes require?

The conflict and confidentiality duties sit in paragraphs 6.1 to 6.5 of the SRA Code of Conduct for Solicitors, RELs, RFLs and RSLs and the SRA Code of Conduct for Firms. The SRA's conflicts of interest guidance says paragraphs 6.1 and 6.2 have the same wording in both Codes, and that references to a client include a prospective client.

The Code for Firms adds the system duty. Paragraph 2.1 requires effective governance structures, arrangements, systems and controls that ensure the firm complies with the SRA's regulatory arrangements. Paragraph 2.2 requires the firm to keep and maintain records to demonstrate compliance. A conflict process with no saved record is hard to square with 2.2.

Note the split. Under the SRA guidance, a conflict of interest under 6.2 means your separate duties to act in the best interests of two or more clients in the same or a related matter conflict. A current client's adverse interest to a former client is dealt with under 6.5, which turns on confidential information.

What party information should intake collect?

Start with the exact client. Then capture every other name by its role in the matter.

Keep the name as supplied, then add former names, trading names and spelling variants as separate search values.

Collect as little as possible before clearance. The SRA's confidentiality guidance tells firms to consider limiting the confidential information they obtain from the client before a conflict check has been carried out and it has been established that they can act. Intake staff need names, roles and a neutral description, not the client's account of the dispute.

Firms in an international group should take care with central conflict teams. The same guidance says firms should explain the group structure and the data sharing and confidentiality arrangements before seeking consent to share confidential information with separate legal entities in the group, and should restrict the data supplied and who sees it.

How should the firm run the search?

Set the approved source list in firm policy: open and closed matters, client and prospect records, billing entities, the conflicts index and earlier conflict decisions. For each source, record its owner, the period it covers and how quickly new matters and party changes appear.

Then use the same protocol every time:

Fuzzy matching finds candidates. It does not make decisions. Show the reviewer why each result matched, the matter status, the responsible fee earner and the dates, and keep the original search terms so a later re-check is reproducible.

How should the reviewer analyse each hit?

Keep searching and judgment separate. An intake coordinator assembles results. A designated solicitor applies the Codes.

The conflicts guidance lists circumstances that can create an own interest conflict, including a financial interest of yours or someone close to you, a personal or business relationship, your role as an employee and your own conduct, such as wrong advice given to the client. It gives examples of conflicts between clients beyond litigation, including two clients seeking to buy the same asset, one client selling or leasing an asset to another, and agreeing a commercial contract between two clients.

The confidentiality guidance gives a worked example: a search reveals that a colleague advised the supplier now suing your proposed client, six months earlier, on their supply contract. That prevents you acting under 6.5 unless one of its two exceptions applies.

When can the firm act despite a conflict between clients?

An own interest conflict has no exceptions. The guidance says obtaining the client's consent will not change the position.

For a conflict between clients, paragraph 6.2 has two exceptions:

• Substantially common interest. The guidance describes a clear common purpose between the clients and a strong consensus on how to achieve it, such as two clients setting up a business together.
• Competing for the same objective. The guidance describes an objective that, if one client attains it, becomes unattainable for the others, such as competing bidders in a structured auction. It says this can include an asset, contract or business opportunity, but not a public takeover.

The guidance says you can rely on either exception only if all three conditions are met:

1. all the clients have given informed consent, given or evidenced in writing, to you acting;
2. where appropriate, you put in place effective safeguards to protect the clients' confidential information; and
3. you are satisfied it is reasonable for you to act for all the clients.

On reasonableness, the guidance points to the clients' relative knowledge and bargaining power, how much negotiation is needed between them, the benefits of one firm acting and the risk of confidential information passing inappropriately. It also describes restricting the retainer to aspects where a conflict is unlikely, with limits the clients clearly understand.

How do information barriers work in England and Wales?

Paragraph 6.5 gives two routes to act against a current or former client whose confidential information the firm holds: (a) effective measures have been taken which result in there being no real risk of disclosure, or (b) that client has given informed consent, given or evidenced in writing, including to any protective measures.

The SRA's confidentiality guidance says the test for effective measures is quite high. It lists examples that could form part of a combination of measures:

• systems that identify potential confidentiality issues;
• separate teams at all levels, including non-fee-earning staff;
• separate servers and printers so information cannot be cross-accessed;
• encryption and password protection;
• staff knowing who else is working on each matter; and
• organisational policies and training.

The leading case is Bolkiah v KPMG [1998] UKHL 52, [1999] 2 AC 222. Lord Millett said the court should intervene unless it is satisfied there is no risk of disclosure, and that the risk must be a real one, not merely fanciful or theoretical, though it need not be substantial. Once the former client shows that the firm holds information imparted in confidence and proposes to act for another party with an adverse interest in a matter to which that information is or may be relevant, the evidential burden shifts to the firm. He also said an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc.

For a 6.2 matter, the conflicts guidance says safeguards will need to include separate fee earners acting for the clients. It adds that the courts have made clear that such safeguards require established, structural separation within a firm, unless different arrangements are agreed.

How should the decision be recorded?

Avoid a single "cleared" checkbox. Use states that show where the instruction stands and who owns the next step.

The matter system should enforce the gate, with any override restricted, logged and reviewed. The same principle applies to approvals generally; the contract approval matrix guide shows how to set approval levels and record sign-off.

When should a conflict check be repeated?

The conflicts guidance says it is better to avoid a conflict by declining a client where necessary than to have one arise during the retainer. That only works if the check is repeated when the facts change. Set triggers:

• a new party, funder or connected entity joins the matter;
• the client entity changes, or a party merges or changes its name;
• the scope expands to a new transaction or proceeding;
• clients who shared a common interest start to negotiate against each other;
• a lateral hire joins, or the firm plans a merger; and
• a declined or dormant prospect returns.

On mergers, the confidentiality guidance says firms may wish to disclose the identity of key clients and the general type of work done to allow conflict checks, and that a terms of business clause limited to this may be enough if it amounts to informed consent. More detailed information is likely to need specific consent.

Log each re-check as a new event linked to the original decision. Do not overwrite the earlier record.

Conflict check checklist for firms in England and Wales

• The client is precisely identified.
• Other parties, connected entities, funders and staff interests are captured by role.
• Intake collected no more confidential information than needed.
• Searches covered every approved source, and the terms are saved.
• Each hit has a reviewing solicitor, the paragraph applied and an outcome.
• Any 6.2 exception has all three conditions met and recorded.
• Any 6.5 barrier is structural and in place before work starts.
• Re-check triggers are set on the matter.

When a reviewer needs to research case law on a conflict or confidentiality point, record the authorities in a legal research memo. Firms with US offices should read the US version of this guide, because the ABA Model Rules take a different approach. Gotham lets UK legal teams research UK case law and legislation, review contracts at scale and draft in Word, in one workspace. Every answer cites the passage it relies on.

Questions about conflict checks in England and Wales

Can a client consent to an own interest conflict?

No. Paragraph 6.1 of the SRA Codes says you do not act if there is an own interest conflict or a significant risk of one. The SRA's conflicts guidance says there are no exceptions, so obtaining the client's consent does not change the position.

What are the exceptions to the SRA rule on conflicts between clients?

Paragraph 6.2 allows two: the clients have a substantially common interest in the matter, or the clients are competing for the same objective. The SRA guidance says you can rely on either exception only if all three conditions are met: every client has given informed consent, given or evidenced in writing; effective safeguards protect confidential information where appropriate; and you are satisfied it is reasonable to act for all of them.

What makes an information barrier effective in England and Wales?

Paragraph 6.5(a) of the SRA Codes requires effective measures that leave no real risk of disclosure of the confidential information. The SRA says the test is quite high. In Bolkiah v KPMG, Lord Millett said an effective Chinese wall needs to be an established part of the firm's organisational structure, not created ad hoc.

When should a law firm repeat a conflict check?

Repeat it whenever the party or scope picture changes: a new party or funder, a change in the client entity, a merger or name change, an expanded scope, a lateral hire or a firm merger. The SRA guidance notes it is better to avoid a conflict by declining work at the outset than to have one arise during the retainer.