Conflict of Interest in a Small Conveyancing Matter
You are a paralegal at a two-partner firm in Nakuru. A husband and wife, Mr. and Mrs. Kariuki, come in together to have a transfer of matrimonial property prepared. The property is registered in the husband's sole name, but the wife is contributing KES 2,000,000 of the KES 5,000,000 purchase price and wants her interest protected. In the same week, the firm is instructed by a bank to prepare security documents over the same property for a loan to the husband's business. The wife is unaware of the loan instruction. Both partners are on leave; the senior partner's secretary tells you to 'just open one file for the family' and proceed.
1. Identify the conflict issues and explain why 'one file for the family' is problematic.
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Conflict issues:
- Husband vs. wife on the transfer - the wife is contributing funds but the property is in the husband's sole name; their interests in how title is held (sole vs. joint, or a protection of her contribution) may diverge.
- Bank instruction vs. family instruction - the bank's security over the property may prejudice the wife's interest, and the firm cannot act for the bank while also protecting the wife.
- Duty of confidentiality - information from the bank instruction cannot be used or disclosed to the wife without consent, yet she is a client of the same firm.
Why one file is wrong: A single file implies a single client with a single interest. It obscures whose instructions are being taken, who is entitled to see the file, and which duty prevails. It also makes it impossible to obtain informed consent to any conflict, because the parties are not told of the divergent interests.
Correct approach: Separate files, separate engagement, written disclosure of the conflict, and - given the direct adversity - likely declining one or both instructions until a partner decides.
2. What should you do given that both partners are on leave and the secretary has told you to proceed?
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Steps:
- Do not proceed. A secretary cannot authorise you to act where a conflict exists; instructions must come from a person with authority.
- Contact a partner - leave is not a bar to a short call or message on a conflict issue. Document the attempt.
- Do not open the file in a way that creates a client relationship you cannot properly serve.
- Tell the clients, neutrally, that the firm needs to check for conflicts before proceeding, and that they will be contacted. Do not disclose the bank instruction.
- Record everything - the instruction from the secretary, the conflict identified, and the escalation.
Reasoning: A paralegal has a duty to act on instructions only within authority and to avoid facilitating a breach of professional rules. Silence or 'just do it' is not authority to act in a conflict.