The Conflicting Client Instructions
You represent two importers, Lumen Goods and Apex Supply, that both source from the same overseas manufacturer. The manufacturer tells you privately that it will allocate a limited production run to only one of them. Lumen's buyer asks you, "Who else are you filing for from this factory, and what are their volumes?" You know Apex's volumes from its confidential filings. Lumen offers to increase your fees if you "help us get the allocation." Apex has not authorized any disclosure. The allocation decision is worth millions to both clients. Your firm handles both accounts through the same team.
1. Can you answer Lumen's question about Apex's volumes? Why or why not?
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No. Apex's volume data is confidential client information obtained through the representation. Disclosing it without Apex's written authorization would breach confidentiality and could harm Apex in the allocation competition. The fact that both clients use the same manufacturer does not create a license to share. You should decline, explain the confidentiality obligation, and offer Lumen lawful help-such as advising on its own filing strategy-without revealing Apex's data.
2. Lumen offers higher fees to help it win the allocation. How do you handle the conflict and the fee offer?
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The offer creates a conflict: helping Lumen could disadvantage Apex, and accepting extra fees tied to a competitive outcome undermines independence. You should decline the contingent fee arrangement, disclose the conflict to both clients in writing, and seek informed consent or a waiver if the conflict can be managed. If it cannot, you may need to withdraw from one engagement or refer one client elsewhere. Do not use one client's information to benefit the other.
3. What structural safeguards should your firm adopt given both accounts share a team?
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Adopt an information barrier: separate files, restricted access, and a protocol for cross-client matters. Require written conflict checks before new engagements. Train staff on confidentiality. Document any consent or waiver. Designate a compliance contact for questions. Review the shared-team arrangement and consider assigning separate personnel if the conflict persists. Keep a record of all disclosures and decisions.