Where a law firm changes sides: How high does the Chinese Wall need to be?

Where the law firm changes sides

Typically, it is a fundamental “no” for a law firm to switch sides and act for the opposition during the course of a dispute unless a towering Chinese Wall is implemented.

The Court (Ball J) in this case (Técnicas Reunidas SA v Andrew)[1] permitted the law firm to continue acting.

But why?

One might question how this truly bizarre situation might arise let alone how the Court might be convinced to permit the law firm to continue their retainer particularly in the face of staunch opposition.

In summary, the Court was satisfied with the efforts taken by the law firm to avoid the conflict. The Chinese Wall was high enough. None of the conflict duties (Duty of Loyalty or Duty of Confidence) were breached.

The case is instructive of the “Chinese Wall Efforts” that are deemed satisfactory to save a law firm retainer when this unusual situation arises (see below: Conflict Management Steps)


The dispute concerned a construction/engineering dispute between the plaintiff (Tecnicas) and Downer. Eventually it became the subject of an arbitration.

Initially in the dispute, Downer was advised by Norton Rose Fulbright (led by partners Crough and Ryan and their legal team of 5 lawyers).  And Tecnicas was advised by a law firm, Pinsent Masons.

In the course of the dispute, Tecnicas changed lawyers. Shortly after, the legal team from Norton Rose (led by Crough and Ryan) joined the partnership of Pinsent Masons (who were no longer acting for Tecnicas) and continued working for their client, Downer. At this time, they disclosed their potential conflict. But Tecnicas commenced proceedings to restrain Pinsent Masons acting in the arbitration on the basis that it had previously acted for them in the same subject matter.

Conflict Management Steps

Pinsent Masons implemented various conflict management steps which were overseen by the firm’s Compliance Officer in accordance with the firm’s manual, “Information barriers, protocols and Insider Lists – Procedural Guide”. They included:

  1. IT Lockdown: The electronic file (emails and documents) for the matter was securely stored and its access was restricted so that only limited relevant staff could access it.
  2. Hardcopy Security: All hard copy documents for the file were stored off site (in the London office of the firm) in a locked and secure facility maintained by the Compliance Officer.
  3. Protocol and Undertaking: An information protocol was prepared and provided to the legal team, and each signed a personal undertaking as to non-disclosure.

The Court found that the conflict management steps were effective to manage the potential conflict. There was no suggestion that the restrictions were ineffective to prevent unauthorised access to the documents.

That the law firm had a “Compliance Officer” as well as organised principles of conflict management (including a Manual) was not commented upon in the reasoning, but they are likely to be factors in favour of the law firm’s sound conflict management procedures.

How was the case for restraint framed?

The case was put three ways:

  1. The law firm should be restrained because there was a breach of the Duty of Loyalty.
  2.  The law firm should be restrained because there was a real risk that the law firm might breach its Duty of Confidence.
  3. The law firm should be restrained because of the Court’s inherent jurisdiction to protect the integrity of the judicial process and due administration of justice.

Duty of Loyalty

A firm of solicitors owe a duty of loyalty to an existing client. Without fully informed consent, it is prevented from acting in a way that is contrary to the interests of the client.  It can continue post termination of retainer (although some debate).

The duty is set out in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 at 234-5:

  • [A] fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.

Protection of Confidential Information

A firm of solicitors owes a duty to a former client to preserve the confidentiality of information provided to the firm by the client during the subsistence of the retainer. The firm may be restrained from engaging in conduct where that conduct gives rise to a real risk that the duty to preserve confidentiality may be breached, either intentionally or inadvertently, to the client’s detriment.

Court’s Inherent Jurisdiction

Principles stated by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76]:

  • [T]he court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice …
  • The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice …

The Court was not satisfied that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required the law firm to be prevented from continuing to act for Downer.


The case is highly unusual from a factual perspective but helpful in setting out the Court’s expectation for what an effective Chinese Wall looks like. It is also helpful in terms of how a conflict restraint case might typically be formed, although in this case, none of the three heads were able to be established.

[1] Técnicas Reunidas SA v Andrew [2018] NSWSC 645 (Ball J)


This is a unique website which will require a more modern browser to work!

Please upgrade today!