Conflicting Instructions and Client Money
You are a sole practitioner in Muscat. A long-standing client, Mr. Hamad, asks you to prepare a sale contract for his villa in Seeb. The buyer is Mr. Yousuf, who is also your client in an unrelated debt case. Mr. Hamad says: 'Just draft it for both of us; you know us both.' The price is OMR 150,000; the buyer pays OMR 10,000 cash as a 'goodwill' amount outside the contract to reduce registration fees. Mr. Hamad also gives you OMR 2,000 in cash for court fees in another case. You deposit it into your office account and use OMR 800 to pay office rent because a client's cheque was delayed. Two weeks later, Mr. Yousuf asks you to sue Mr. Hamad over a defect in the villa; he says, 'You represented both of us, so you know he hid it.'
1. Identify the professional conduct issues in acting for both parties and in the cash payment.
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A lawyer cannot act for both buyer and seller in the same sale unless the conflict is fully disclosed, both clients give informed written consent, and the lawyer reasonably believes he can act impartially. Here the interests are adverse: price, defects, warranties, and registration. Mr. Hamad wants the sale; Mr. Yousuf may later complain about defects. The 'goodwill' cash payment outside the contract is a red flag. It appears designed to reduce the declared price and registration fees, which may be tax evasion or fraud on the registry. A lawyer must not draft or facilitate a false price. The OMR 2,000 for court fees is client money. It must be kept in a separate client account, not mixed with office funds. Using OMR 800 for office rent is misappropriation, even if intended to be repaid.
2. What should you do about the OMR 2,000 and the under-the-table payment?
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Restore the OMR 800 immediately from personal or office funds and deposit the full OMR 2,000 into the designated client account. Keep a written ledger showing every movement. Inform the client promptly and account for the money. For the under-the-table payment, refuse to prepare a contract that hides the true price. Advise both parties on the lawful consequences and the correct registration and fees. If Mr. Hamad insists, withdraw from the transaction and return the documents. Do not accept cash for court fees without a receipt and a proper account. Consider whether the cash payment triggers money-laundering reporting obligations; at minimum, make a written record of the advice.
3. Can you accept Mr. Yousuf's new instructions against Mr. Hamad?
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No. You cannot accept Mr. Yousuf's instructions to sue Mr. Hamad. You received confidential information from Mr. Hamad during the joint transaction, and you cannot use it against him. Even if both were clients, a lawyer cannot act against a former client in a substantially related matter without informed consent, and here consent is unlikely because the interests are directly adverse. You should decline, explain the conflict, and advise Mr. Yousuf to instruct independent counsel. You may also need to withdraw from both matters and return all documents. If you drafted the sale contract, you may be a witness, which is another reason not to act. Keep a written record of the conflict check and the steps taken.