The Conduct Rules and In-House Counsel

The Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules 2008  apply to all lawyers.  “Lawyer” is defined in the Lawyers and Conveyancers Act 2006 as anyone who holds a current Practising Certificate.  In the case of in-house counsel, the Rules only apply to the extent that in-house counsel provide regulated services.  It follows that the Rules would not apply to the extent that in-house counsel are acting in a purely commercial as opposed to a legal role, although in practice the line can be difficult to identify.

Chapter 15 of the Conduct Rules deals with the special position of in-house counsel.  It provides that the provision of regulated services by in-house counsel to the client (in this case, the employer) must be pursuant to a lawyer/client relationship.  An in-house lawyer must not enter into any agreement with his or her employer that prevents compliance with any of the obligations under the Act or the Conduct Rules.  The Conduct Rules specifically deal with the question of in-house lawyers acting for entities other than that by whom they are employed.  They state:

Section 15.2.4

Where an in-house lawyer is engaged by –

(a) a controlling entity, the lawyer may provide regulated services to a subsidiary entity of the controlling entity; or

(b) a subsidiary entity, the lawyer may provide regulated services to the controlling entity and to any other subsidiary entity of the controlling entity; or

(c) the Crown, a Crown organisation, or a Statutory Officer,

the lawyer may provide regulated services to the Crown and to any Crown organisation or Statutory Officers.

However,  in doing so, an in-house lawyer must comply with the provisions of the Act and the Rules apart from Chapter 4 (cab rank rule) and Chapter 9 (fees).

In practical terms the circumstances in which an in-house counsel may face issues of conflict of interest are likely to be fairly rare.  Likely scenarios are:

• a “classic conflict” between the personal interests of the in-house lawyer and the client (usually the employer) in relation to the matters upon which the in-house lawyer is providing regulated services; and
• for entities with subsidiaries or related entities, where the in-house legal team is providing advice to more than one entity there must in theory be a risk of a conflict of interest between the parent entity and subsidiary.  For example, an in-house lawyer is employed Company A.  She is asked to provide advice to Subsidiary B in relation to a Services Agreement between Company A and Subsidiary B.  While in most instances the interests of the two will be aligned this may not always be the case.

In which case, the Rules concerning same-matter conflict and information conflict apply with equal force.