Conflict of Interest-Lawyers and Clients Doing Business

Conflict of Interest: Lawyers and Clients Doing Business

Basic principles of fiduciary law as well as various rules of professional conduct, require a lawyer doing a business transaction with a client to always adhere to several rules in order to avoid a conflict of interest.

These rules are:

The lawyer should not enter into a business transaction with a client or acquire any pecuniary interest from the client unless the transaction is fair and reasonable, all terms are fully disclosed, and the client has a reasonable opportunity to seek and obtain independent legal advice about the transaction. Fiduciary law will always require the lawyer to bear the burden of showing that the client’s interests were protected by such independent advice;

The lawyer must never enter into a transaction where the client expects or might reasonably be assumed to expect that the lawyers is, or protecting the client’s interests or there is a significant risk that the interests of the lawyer and the client might diverge.

The lawyer shall not act for a client where the lawyer’s duty to the client and the personal interest of the lawyer or an associate in the law firm are in conflict;

The Lawyer shall not prepare any document or instrument giving the lawyer or an associate a substantial gift from the client, including a testamentary gift.

The British Columbia Law Society states that a lawyer may act as a legal advisor or a business partner, but not both.

Transactions with clients are just generally a bad idea for both the client and the lawyer. If the deal does not work out it will be the lawyer who will be blamed, and no matter what the result, the lawyer will likely face problems.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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