Category: Claims handling · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-11
Conflict-clearance is the process by which a defence firm tests a new instruction against its existing client and matter database to identify any conflict of interest that would prevent it from acting — done before substantive work begins, and refreshed as circumstances change.
Every defence instruction begins with conflict clearance. The firm searches its central conflicts database for any existing relationship with the parties involved — the policyholder, the third-party claimant, related companies, witnesses, experts and any other identified party. Hits are reviewed by the firm’s conflicts function or risk committee. Where a conflict cannot be managed, the instruction is declined.
The discipline matters because solicitors have stringent duties under the SRA Code of Conduct on conflicts. A solicitor acting in conflict, even unwittingly, can be exposed to professional disciplinary action, loss of fees, court-ordered termination of the retainer and personal liability for loss caused.
In insurance defence work, conflict clearance is particularly important because the structure of the instruction (insurer pays, but the firm acts for the policyholder) already involves a layered relationship that can shade into conflict at any point.
The SRA Code of Conduct for Solicitors, RELs and RFLs (rules 6.1 and 6.2) and the SRA Code of Conduct for Firms (rules 6.1 and 6.2) prohibit acting in own-interest conflicts and limit acting in client-client conflicts.
Rule 6.1 prohibits acting where there is an own-interest conflict or a significant risk of one. Rule 6.2 prohibits acting where there is a client-client conflict, with limited exceptions (substantially common interest with informed consent; or competing for the same objective with informed consent).
The principles are reinforced by the case law on solicitor conflicts, including Bolkiah v KPMG [1999] 2 AC 222 (the test for protection against use of confidential information) and Marks & Spencer plc v Freshfields Bruckhaus Deringer [2004] EWHC 1337 (Ch).
In insurance defence specifically, conflicts arise particularly in three scenarios. First, where the same firm has historically acted for the third-party claimant in unrelated matters. Second, where the firm is currently acting for a witness, an expert or another party involved in the claim. Third, where the firm has multiple clients within the policyholder’s group with potentially divergent interests.
The Bar’s Code of Conduct (BSB Handbook) imposes parallel rules on counsel; barristers cannot accept instructions where conflict applies.
Conflict clearance proceeds through three stages. First, intake: the instructing handler or the firm’s business intake function records the parties and the matter, with party names normalised against the firm’s master party database. Second, search: the database is searched for any hits — current matters, recent closed matters (typically within six years), and matters listed by any of the firm’s offices globally. Third, review: hits are reviewed by the conflicts function and any necessary clearance steps (informed consent, information barriers, declined instruction) are documented.
The search is more sophisticated than a simple name lookup. It captures aliases, group company structures, predecessor entities, and indirect relationships (a witness who is also a current client of another partner; an expert who has been instructed by the firm in another matter; an opponent’s solicitor who is a former associate now at the firm).
Information barriers (“Chinese walls”) may be used to manage some conflicts. A barrier separates the team working on one matter from the team working on another, with documented procedures preventing information flow. Barriers are accepted by courts in some circumstances (Bolkiah sets the test) but are not a universal solution; in many client-client conflicts the only remedy is to decline one of the instructions.
For insurance defence, the conflicts review typically also examines whether the firm is currently on the panel of the third-party claimant’s insurer (which may itself produce a strategic or commercial conflict, even if not a strict legal one) and whether any of the firm’s other clients in the same line of business might be affected.
Conflict clearance is refreshed periodically — typically on opening a new significant phase of work, on receipt of new significant information about parties, and at scheduled intervals during long-running matters.
“Soft” conflict clearance involves a quick search by the partner before formally entering the matter; “hard” clearance involves the conflicts function and risk committee for marginal cases.
“Strategic conflict” is a commercial concept not strictly captured by the SRA rules: acting for the policyholder against a major existing client of the firm in another line of business may be commercially undesirable even if not a strict legal conflict.
“Past client” conflicts arise where the firm previously acted for the claimant or a related party in matters that have closed. The risk is misuse of confidential information from the prior retainer; Bolkiah sets the protective test.
“Group-level” conflict clearance considers the firm’s relationship with related entities — the policyholder’s parent, its subsidiaries, its joint venture partners — not just the named insured.
A panel firm receives instructions from an insurer to defend a £5m PI claim against a surveyor’s firm. Conflicts intake records the parties: the policyholder (Surveyor A), the third-party claimant (Lender B), the broker (Broker C), the expert quantum witness identified to date (Quantity Surveyor D). The search returns three hits: Lender B is a client of the firm’s banking team on unrelated transactional work; Broker C is a regular client of the firm’s regulatory team; Quantity Surveyor D was instructed by the firm three years ago in a closed matter. Review: the Lender B relationship is the principal concern (current client of the firm being opposed in litigation); the matters are unrelated and the firm’s banking team has no involvement in the PI matter, but rule 6.2 requires informed consent. The firm seeks consent from Lender B (declined) and accordingly declines the new instruction. The insurer instructs an alternative panel firm; the conflict clearance there returns no hits and work proceeds. The whole conflict-clearance cycle takes 18 hours.
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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