Tuesday, July 27, 2010

SRA Relaxes Conflicts Rules for Firms Using Information Barriers / Ethical Walls

The Solicitors Regulation Authority, the regulatory body of the Law Society in England and Wales, has been working to modify conflicts rules for some time (see updates in 2009 and 2010). While earlier this year the SRA announced that, based on client concerns, it would not relax conflicts rules to allow firms to act for adverse clients who were deemed "sophisticated" enough to content, it's recently changed directions.

The SRA just posted news regarding changes to rule 4 of the Solicitors' Code of Conduct 2007 which, along with guidance, have been approved by the Legal Services Board. Prior to the change, firms could only continue working in circumstances where such conflicts arose or were discovered after work had already commenced for a new client.

The modified rules are now in effect and allow firms to represent adverse parties so long as they have an effective information barrier (ethical screen / ethical wall) in place. The highlighted changes to the rule are now posted on the SRA web site. Importantly, firms can now act "...where the party to whom the duty of confidentiality is owed refuses consent or cannot be asked (4.05)" so long as effective information barriers are in place.

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