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You arrive at work one day to find your audit manager fuming. She has just received notice that your firm's client, Green Mountain Bikes Company, has initiated litigation against your firm. This poses an adverse interest threat as the member's objectivity in relation to the client has been compromised.
Adverse interest means when someone has an interest, claim, or right that goes against someone else's interest. For example, in a court case, the plaintiff and defendant have adverse interests because they want different outcomes.
For example, in a criminal case brought by a State against a defendant, a witness whose interest is aligned with the state's interest is an adverse witness to the defendant. If the witness is not a party and has no legal interest in the outcome of the litigation, then the witness is not an adverse witness.
An adverse party is the other side of a lawsuit, the opposite party, one with opposing interests. If there are numerous parties and claims, parties may be in agreement on some matters and adverse on some issues. For example, the adverse party for a defendant is the plaintiff.
In real property, adverse interest means a person, who's not the owner of the land or house, owns an interest of the property. For example, neighbor A owns an easement, which gives A the right to pass B's land to access public road, on the land of owner B. In this case, A has an adverse interest on B's land.