Are conflicts of interest on the rise and should clients be more wary? Rebecca Abraham finds out
Action between companies and at the courts has been fast and furious across the country as the new bankruptcy regime has transformed the rules of the game. While private practice lawyers have generally welcomed the spike in demand for their services, in at least one instance they have found that they can get caught in the crossfire.
A battle between bidders for a bankrupt edible oil maker, Ruchi Soya, has brought to the fore a situation where a law firm had allegedly acted for two parties with dissimilar interests. The law firm in question, Cyril Amarchand Mangaldas (CAM), is the legal counsel to the resolution professional overseeing the Ruchi Soya process under the Insolvency and Bankruptcy Code, 2016.
Lawyers at the firm had allegedly also advised one of the two bidders, Adani Wilmar. CAM had later reportedly given up the Adani brief after the opposing bidder cried foul.
The bottom line
It is not often that instances of conflicts of interest between lawyers and clients come to light. While the rules and regulations governing conduct by lawyers in India are less prescriptive than those in more developed jurisdictions, the ethical and business case for maintaining the integrity and credibility of a law firm in this respect is overwhelming.
Rabindra Jhunjhunwala, a partner at Khaitan & Co, does not mince words when he says “even a .0001% chance of a conflict situation” that has not been flagged will cost the firm dearly.
Most others agree, and both big and small firms of repute have well-defined systems to log information to avoid conflicts.
Pravin Anand, the managing partner of Anand and Anand, says issues about conflicts are particularly important as the 29-partner intellectual property (IP) firm has a large number of foreign clients and it cannot afford to upset anybody.
“For a firm our size, I get emails every hour asking for clearance [on a potential] conflict,” says Anand.
At Anand and Anand, like at other firms, clients are taken on only after a thorough check on the firm’s database and running their names past the partners. Sometimes this may not be enough and “accidents can happen”, says Anand.
As in most other jurisdictions, the larger firms have devised no-go zones, as far as clients are concerned. Anand, for instance, never appears for generics in pharmaceutical cases or open source software clients. He states that he doesn’t “feel comfortable taking opposing stands”, and will appear only “for the owner of the technology and the creator of the patent or trademark”.