Cases, matters and conflicts of interest

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In this column last month, I noted the close relationship between law and language. Law requires language for its expression. In turn, language cannot be interpreted without reference to the law. This point came up recently when I was researching the rules in China that govern conflicts of interest for PRC law firms.

The starting point for this enquiry was Article 39 of the PRC Lawyers Law, which provides as follows:

律师不得在同一案件中为双方当事人担任代理人, 不得代理与本人或者其近亲属有利益冲突的法律事务。

A lawyer may not act as the representative of both parties in the same case and may not represent a client in legal matters where the lawyer personally or a close relative has a conflict of interest.

I was interested to know whether the prohibition under Article 39 on lawyers (or law firms) acting for two or more parties applied just in contentious situations (i.e. litigation), or whether it extended to all matters, whether contentious or not. Further, if the answer were the latter, do any exceptions apply where no direct conflict of interest exists?

The answer to this question turns on the interpretation of “case” and whether it just refers to litigation or extends to any matter or transaction in which a lawyer might be instructed by a client. The question is important, since it would mean that PRC lawyers could not act for two or more parties in any matter, even if there were no direct conflict of interest between the parties. This would exclude PRC lawyers from acting in many circumstances in which foreign law firms would be able to act, such as where the law firm seeks to act for two or more lenders in a loan transaction or two or more shareholders in a corporate transaction. This would put PRC law firms at a competitive disadvantage to foreign law firms, many of which are subject to less restrictive rules on conflicts of interest. In certain situations, it could also require corporate counsel to engage additional law firms, potentially adding to complexity and cost. By way of comparison, the word “case” is more likely to be used by English speakers in colloquial language than in formal legal drafting. Although it appears in archaic legal phrases such as “action on the case” (used to describe proceedings to claim a remedy for a personal injury or damage to property), in modern colloquial English it can refer either to a court case (i.e. litigation proceedings) or to a non-contentious matter.

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葛安德 Andrew Godwin

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew Godwin is currently on secondment to the ALRC as Special Counsel to assist with its inquiry into corporations and financial services regulation. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com