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Warning
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Simple English definitions for legal terms
conflict of interest
Read a random definition: jural
A quick definition of conflict of interest:
A conflict of interest is when someone has a problem being fair to different people because they have a relationship with them already. For example, a lawyer might have two clients who want different things, and the lawyer can't help both of them at the same time. The lawyer has to tell both clients about the problem and get their permission to keep helping them. This is important because everyone deserves to have someone who is only looking out for their best interests. In some cases, like with insurance, the company might have a lawyer who is supposed to help both the company and the person who bought the insurance. This can be a problem because the company might want to do things that are good for them but not good for the person who bought the insurance. To fix this, the person who bought the insurance might get their own lawyer who only helps them.
A more thorough explanation:
A conflict of interest occurs when there is a problem with the ethical relationship between two parties who have a preexisting connection. This can happen in law when an attorney's interests conflict with those of their client, another client, or a third-party. Attorneys have a responsibility to represent their clients' interests, but when they have multiple clients, their duties can conflict, making it impossible to fulfill both at once.
For example, if an attorney represents both the plaintiff and defendant in a case, advocating for one will inherently be advocating against the interests of the other. Attorneys must check for potential conflicts before accepting a client. If they believe there is a potential conflict of interest, they must notify their client and obtain written, informed consent from all affected parties before proceeding.
Conflicts of interest are particularly relevant in the field of insurance, where the insurance company may represent both the policyholder and the insurer. This creates a potential conflict of interest because the insurance company may take actions that harm the interests of the policyholder. For example, if the insurance company declines an early settlement offer, it may expose the policyholder to greater liability if they lose at trial.
To resolve conflicts of interest in insurance, some states require insurance companies to appoint separate counsel, known as cumis counsel, to exclusively represent the interests of the policyholder. For example, California Civil Code §2860 requires insurance companies to pay for the policyholder's choice of cumis counsel if they wish to reserve their right to contest whether the harm in question is covered by the policy.