It has been a long time since the Ukrainian legal market has seen one of the top firms accused of violating the Rules of Professional Conduct—and in such a sensitive matter as a conflict of interest between a client and an attorney. We are, of course, referring to the scandal surrounding the “French Boulevard” shopping and entertainment center and the ruling of the Kyiv District Court of Kharkiv dated June 26, 2020, regarding the initiation of civil proceedings in a case where ILF Law Firm and Tetyana Gavrysh personally are accused of violating the Rules of Professional Conduct for Attorneys. The law firm itself has already communicated its position to the media and colleagues, including in the pages of “Yuridicheskaya Gazeta.”

It later became clear that the conflict involves more parties and is far more complex than a mere corporate dispute. In particular, Oleksiy Shevchuk, a partner and attorney at Barristers Law Firm and chair of the Ukrainian Bar Association’s Committee on the Protection of Lawyers’ Rights, came to his colleagues’ defense, warning them against turning the profession into a theater of the absurd. Oleksiy Shevchuk cited provisions of the relevant law that require, in such cases, that a complaint be filed with the regional Bar Association’s Qualification and Disciplinary Commission in the lawyer’s place of practice. “If a client has a complaint against a lawyer, let them use the remedies provided for by the Law of Ukraine ‘On the Bar and the Practice of Law.’ File a complaint with the Qualification and Disciplinary Commission, and so on. What is the court supposed to do here? Take on the role of a bar self-governing body? If you’re a lawyer, you must act in a manner befitting this profession. Defend your client in court; file complaints with the bar association’s qualification and disciplinary commissions. But don’t turn the bar into a Mexican soap opera by creating a theater of the absurd,” the attorney concluded on his Facebook page.

Indeed, a conflict of interest, if it exists, should certainly not escalate into a PR war. A lawyer’s violation of this principle results solely and exclusively in disciplinary liability in accordance with the procedure established by the Law “On the Bar and the Practice of Law.” This is precisely what we wish to highlight at this time.

By law, a conflict of interest is a contradiction between a lawyer’s personal interests and his or her professional rights and duties, the existence of which may affect the lawyer’s objectivity or impartiality while performing their professional duties, as well as their decision to take or refrain from taking actions in the course of their legal practice (Article 1, paragraph 8 of the Law).

According to Alina Biryukova, a member of the Qualification and Disciplinary Commission of the Bar Association of the Kyiv Region, a lawyer, and a scholar, professional standards for the practice of law in most European countries today comprehensively regulate issues related to conflicts of interest in this field. At the same time, the main approaches to this issue are not particularly diverse and boil down to the following provisions:

- A lawyer may not advise or simultaneously represent two or more clients with conflicting interests, nor may they do so in circumstances where the interests of these clients are developing in a way that could give rise to a conflict;

- A lawyer is prohibited from accepting a case in which he or she has a personal stake or where his or her subjective interest is contrary to the client’s interests. A lawyer may not take on a case for a new client if there is a risk of breaching the confidentiality of information received from a previous client, or if information about the previous client could affect the new client’s case.

The accumulated experience of developed democratic countries in resolving conflicts of interest faced by lawyers in the course of their professional activities has shaped relevant international standards in this area. For example, according to Recommendation K (2000) on the Freedom to Practice the Legal Profession, lawyers’ duties to their clients must include avoiding conflicts of interest.

The General Principles of Lawyer Ethics, adopted in 1995 by the International Bar Association, state that lawyers must not accept a retainer if their clients’ interests conflict with those of the lawyers themselves, their partners, or their other clients. In accordance with the requirements of the General Code of Conduct for Lawyers in EU Countries, a lawyer is obligated to cease representing both clients if their interests come into conflict with one another, as well as if there is a threat to confidentiality or a threat to the lawyer’s own independence.

A lawyer is also required to refrain from representing a new client if doing so could pose a threat to the confidentiality of information entrusted to the lawyer by a previous client, or if the information in the lawyer’s possession regarding the previous client’s case could provide an advantage to the new client. These requirements apply to all instances of both individual and collective practice by attorneys. However, it is, of course, impossible to determine whether a particular piece of information can be considered a source of advantage without examining all the circumstances of the case and reviewing the legal services agreements.

The diversity of specific real-life situations that arise in legal practice makes it impossible to define a clear list of cases that would indicate an actual or potential conflict of interest. However, attempts to identify the most typical situations involving conflicts of interest can be found in academic publications. For example, S.O. Dekhanov includes the following circumstances among the most common cases of conflict of interest:

- a lawyer accepts retainers from clients with openly conflicting interests in the same case;

- a lawyer represents one party in a case, having previously represented the other party;

- a lawyer participates in several related cases where there is a risk that confidential information obtained by the lawyer in one proceeding could be used by him or her in another;

- The attorney has family or other close ties to a person who has a conflict of interest with the attorney’s client;

- the attorney has financial ties to a party that has a conflict of interest with his or her client;

- the attorney’s business ties with the client prevent him or her from advising the client impartially and independently;

- the attorney agrees to accept, as compensation for their services, shares or an ownership interest in a company if the value of the shares or the company depends on the outcome of the case;

- the attorney accepts retainers from competing companies;

- a lawyer has represented different parties during the preparation of legal documents for the purpose of signing an agreement between those parties, and subsequently represents one of the parties in circumstances where this affects or may affect the activities of the other party.

In any case, a lawyer is required to immediately notify the client of the emergence of a conflict of interest (clause 3, part 1, Article 21 of the Law).

In addition, a lawyer, law firm, or law association is prohibited from entering into a contract for the provision of legal services (and is required to refuse to perform the contract) in the event of:

- an existing conflict of interest (paragraph 1, part 1 of Article 28 of the Law);

- circumstances that may lead to a conflict of interest, in particular, where the performance of the agreement may conflict with the interests of the attorney, members of his or her family, or close relatives, the law firm or bar association of which he or she is a founder (member), or the lawyer’s professional duties (clause 6, paragraph 2, part 1 of Article 28 of the Law).

The Rules of Attorney Ethics and decisions of the Ukrainian Bar Council contain detailed provisions of the law regarding specific aspects of conflicts of interest; compliance with these provisions, in accordance with paragraph 5, part 1, Article 21 of the Law, is mandatory for attorneys.

Thus, in certain cases, a lawyer is required to obtain written consent from the client. According to Article 9 of the Rules of Professional Conduct for Lawyers, a lawyer may not, without the written consent of clients with whom a conflict of interest has arisen, simultaneously represent or defend two or more clients, whose interests are mutually conflicting or are likely to become conflicting, nor may they provide professional legal assistance to them under such circumstances.

If a lawyer receives confidential information from a client to whom he or she has provided professional legal assistance that is related to the interests of a new client in the course of providing legal assistance, the lawyer is required to obtain written consent from the clients between whom a conflict of interest has arisen. Without written consent from the client with whom a conflict of interest has arisen, a lawyer may not represent, defend, or provide professional legal assistance to that client if the client’s interests conflict with the lawyer’s own interests.

In the absence of the client’s written consent, if a conflict of interest arises during the attorney’s performance of a contract, such contract must be terminated in accordance with the conditions set forth by the PAE.

The Summary issued by the High Qualification Commission of Advocates also states that an attorney’s compliance with the principle of the inadmissibility of conflicts of interest is ensured at all stages of the attorney’s practice:

1) at the stage of accepting a client’s retainer (Art. 20 of the PAE). A lawyer may not accept a retainer if the client’s interests objectively conflict with the interests of another client with whom the lawyer is bound by a contract for the provision of legal assistance. A lawyer also may not accept a case if the conflict of interest arises because the attorney has received confidential information from another client—information covered by attorney-client privilege or otherwise protected by law—that is likely to be used in providing legal assistance to the new client. These restrictions do not apply in a specific case with the written consent of the client (clients) whose interests the attorney represents and which are in conflict.

At the client’s request, prior to entering into a contract for the provision of legal assistance, the attorney (law firm, law partnership) must also inform the client of any circumstances that could give rise to a conflict of interest. Such disclosure, in accordance with Part 1 of Article 16 of the Law on the Bar, ensures, among other things, the client’s free choice of attorney;

2) during the performance of the client’s mandate (Article 34 of the PAE). If a lawyer becomes aware of a conflict of interest between the interests of this client and those of other clients, as well as other persons, under the circumstances specified in Article 20 of the PAE, the lawyer must terminate the agreement with the client (or several clients) and/or the person who entered into the agreement on behalf of the client, unless the lawyer receives the client’s (or clients’) written consent to continue representing their interests;

3) after fulfilling the client’s instructions (Article 35(2) of the Law on the Bar). A lawyer’s obligations arising from the principle of avoiding conflicts of interest remain in effect even after the lawyer has completed the performance of the agreement.

However, regarding the situation mentioned above, the rules on conflicts of interest have certain specific application provisions in relations with a client that is a legal entity, as established by Article 39 of the Rules of Professional Conduct for Attorneys.

It is clear that the provisions of the Rules governing a lawyer’s conduct in situations where a conflict of interest exists or may arise apply in full to relationships involving the provision of professional legal assistance to a client that is a legal entity.

However, if, in communication with officials, employees, or other staff members of a client —a legal entity—in connection with the provision of professional legal assistance to that client, it becomes evident that a conflict of interest is arising, the attorney must disclose that he or she represents the client —the legal entity—and explain their obligations regarding the conflict of interest.

During the term of the agreement to provide legal assistance to a client—a legal entity—the attorney must not enter into agreements to provide legal assistance with persons who are in employment, civil, or other legal relationships with the client if this could conflict with the interests of the client —a legal entity. Furthermore, the attorney must not enter into legal assistance agreements with the aforementioned individuals if he or she is in possession of confidential information obtained while providing legal assistance to the legal entity.

A lawyer may not accept a retainer from a client if the essence of the mandate boils down to the need to take actions in the interests of such a client aimed at protecting their rights, which are in conflict with the interests of a legal entity where the attorney previously worked or provided professional legal assistance, if the attorney possesses information that could be used against such a legal entity.

Incidentally, in the case of ILF, media reports indicate that the firm’s attorneys initially acted as mediators, that is, intermediaries. Therefore, it is important to note another aspect here—Article 21 of the PAE stipulates that a lawyer may act as an intermediary between clients provided that:

- there is no conflict of interest between the clients, or there is written consent from both (all) clients whose interests the attorney represents and which are in conflict;

- the attorney explains the nature of the mediation relationship to each client and obtains each client’s consent to their simultaneous representation;

- the attorney has sufficient grounds to believe that he or she will be able to maintain objectivity while simultaneously representing the clients’ interests and, with respect to each of them, fulfill his or her professional duties in accordance with the law and the requirements of the rules.

The attorney must coordinate decisions with each client and ensure that each is properly informed of all circumstances and considerations necessary for making informed decisions regarding the substance of the matter.

A lawyer must cease acting as a mediator and terminate the relevant agreements with each client if at least one of the clients he or she is simultaneously representing so requests, or if circumstances arise under which compliance with the above conditions becomes impossible. If the attorney’s actions as a mediator between clients have not achieved the result desired by the clients, he or she may no longer represent the interests of any of the clients in matters related to the subject of the mediation (Art. 40 of the Rules of Professional Conduct).

The existence of a public scandal between former and current attorneys (clients) compels us to also consider the general ethical principles governing relationships among attorneys, which require adherence to the principle of avoiding the artificial creation or exacerbation of conflicts between clients (Article 50(2) of the Rules of Professional Conduct).

Incidentally, in English law, unlike in American law, there is no absolute prohibition against a lawyer representing a client in a dispute against a former client. The key questions in such cases are as follows:

- Does the attorney possess information that is confidential to his or her former client?

- If so, is this information material to the new case for the new client to the extent that its disclosure would be detrimental to the former client?

- Have measures been taken to ensure that confidential information is not disclosed?

In the latter case, this involves establishing so-called “information barriers” within the law firm, ensuring that confidential information does not become known to the team of attorneys in the firm who are representing the new client against the former one. In theory, this is precisely the approach that should be implemented in Ukraine as well; for now, however, we can only offer a few general principles to help all attorneys avoid conflicts of interest in accordance with current legislation.

First, one should not accept a retainer if the client’s interests objectively conflict with those of another client with whom the attorney has a contract for the provision of legal services, or if there are reasonable grounds to believe that the anticipated development of the interests of the new and previous clients will lead to a conflict of interest.

Second, do not accept a case if the conflict of interest arises because the attorney has received confidential information from another client—information covered by attorney-client privilege or otherwise protected by law—that is likely to be used in providing legal services to the new client (this restriction may be waived and does not apply in a specific case with the written consent of both (all) clients whose interests the attorney represents and which are (or may become) conflicting under certain conditions).

Third, do not accept a retainer if there is a personal conflict of interest between the attorney or persons associated with the attorney and the client’s interests in the cases provided for by the Law of Ukraine “On the Bar and the Practice of Law,” or similar to them to such an extent that it may affect the attorney’s objectivity and independence in performing the assignment, in particular when performing the assignment conflicts with the attorney’s religious, political, or other deeply held beliefs.