Conflict of Interest in a Family Property Matter
A husband and wife, Mr and Mrs Patel, attend your office together about a property settlement after 18 years of marriage. They present as amicable and say they have agreed in principle: the former matrimonial home to Mrs Patel, and the husband to retain his superannuation and the business. They ask you to prepare the consent orders and to 'just formalise it'. During the conference, Mrs Patel mentions that she has not seen the business financials and that Mr Patel manages all the money. Mr Patel says the business is 'worth nothing much' and produces a one-page summary showing a value of $180,000. Mrs Patel says she trusts him. You suspect the business may be worth considerably more and that Mrs Patel may not understand the effect of what she is signing. You are asked to act for both parties.
1. Analyse whether you can act for both parties and what the professional obligations require.
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You cannot act for both parties in these circumstances. A practitioner must avoid a conflict of interest and must not act where the interests of two clients are in conflict or where there is a significant risk of a conflict. Even in an apparently amicable matter, the parties have divergent interests: one seeks to maximise the property received, the other to minimise it. The duty of loyalty and the duty of confidentiality owed to each client cannot be reconciled. Acting for both would also expose you to a claim that you failed to give independent advice to Mrs Patel. The correct course is to decline to act for both, explain why, and recommend that each party obtain independent legal advice. You may offer to prepare the consent orders for one party only, with the other party's solicitor reviewing them, but you must not give advice to the other party. If you act for Mrs Patel, you must not use information from Mr Patel against him without consent, which is another reason dual representation is untenable.
2. Identify the risks arising from the incomplete financial disclosure and how you should respond.
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The disclosure is plainly inadequate. A one-page summary asserting a business value of $180,000 is not proper disclosure. In a property matter, each party must make full and frank disclosure of their financial circumstances, including business interests, and the court requires disclosure before consent orders are made. Mrs Patel has not seen the financials and does not understand the business. If you prepared consent orders on this material, the orders could be set aside for non-disclosure, and you could face a negligence claim and disciplinary consequences. You should advise that a proper valuation and full financial disclosure are required before any orders are made. If you act for Mrs Patel, you should obtain the business records, consider an independent valuation, and explain the effect of the proposed orders in writing. Do not allow the parties' stated agreement to substitute for proper advice. The risk of an undervalued asset being transferred away from Mrs Patel is significant.
3. Explain how you would manage the conference and what you would say to both parties.
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You should end the joint conference and explain the position clearly to both parties together, then confirm it in writing. Explain that you cannot act for both because their interests may differ, and that each needs independent advice. Explain that full financial disclosure is required and that the summary provided is insufficient. Explain the risk that consent orders made without proper disclosure may be set aside. Do not give either party advice in the presence of the other about the merits of the proposed split. Offer to act for one party and provide a referral for the other. Record the advice and the parties' instructions in a file note. If either party later asks you to act for them, conduct a conflict check and obtain the other party's informed consent only where the conflict is truly minimal, which is unlikely here. The priority is protecting both parties' interests and your own professional position.