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Having read the decision in full I remain unclear about what the conflict of interest was. The firm admitted a mistake, offered to remit its fees, to act for free on an appeal and cover any losing costs, and did not attempt to restrict the clients right to make a negligence claim, and then it did all those things.
They obtained advice from two Counsel. One said, with no apparent reasoning, there was a conflict of interest. The other, asked specifically, said there was not.
The only guidance is in para 8.1 which says the own client conflict arose as soon it it appreciated that the client was able to bring a negligence claim against the firm in respect of its advice. That was reported as a circumstance. The Decision says that once that was “appreciated” the firm had to stop acting, it could not consider the benefits to the client of assisting in remedying the breach, and it could not discuss that with the client.
It seems that the SRA think the key is that the firm having admitted negligence could not provide any advice on the comparative merits of different remedies (para 8.3.4).
If this is the SRA position and is absolute we must all immediately cease to act for any client who might have a claim (or complaint) against us. There is no de minimis provision. I hope every transaction you are involved in is perfect.