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CBA tackles conflict confusion

|Written By Robert Todd

QUEBEC CITY-The Canadian Bar Association has amended its code of professional conduct, adopting 21 recommendations from a report that aims to guide lawyers as they increasingly run up against conflicts of interest.

CBA task force on conflicts of interest chairman Scott Jolliffe holds a T-shirt picturing a flow chart from the group’s report outlining steps lawyers should take on considering possible conflicts. The CBA council passed the group’s report.

“Our hope is that ultimately there will be a consistent code of conduct that applies right across Canada,” Scott Jolliffe, national managing partner of Gowling Lafleur Henderson LLP and chairman of the CBA’s task force on conflicts of interest, tells Law Times.

While the CBA council passed a resolution at its annual conference, adding the new rules to the association’s own code, the group now hopes provincial law societies will implement them.

“I think it will take them a lot further, a lot faster, if they adopt it,” says Jolliffe.

The CBA will pass the report along to the Federation of Law Societies of Canada, which it hopes will use the report in an ongoing review of its own code of conduct, to create consistent rules across the country.

New CBA president Guy Joubert, who replaces Montreal lawyer Bernard Amyot as leader, lists promotion of the report’s recommendations atop his priorities for the year.

“At the end of the day, it’s really an access issue, because what it means is that it can create delay for clients in getting legal representation,” the Winnipeg lawyer says. “Especially if there’s a situation where there are conflicts and then someone’s not too sure how to handle the conflict, and then opts not to act for the client.”

The 259-page report includes an 80-page toolkit with dozens of sample materials that lawyers can use when pondering conflict situations. The 21 recommendations cover duty of loyalty to clients, duty of confidentiality, guidance on who the client is, and engagement letters.

Jolliffe, speaking at a media briefing following the report’s release, said, “Vague, complex, and inconsistent conflict-of-interest rules cast an unnecessarily wide net.” He noted that many clients can’t use their preferred lawyer, or even find one within their community, due to rules set out in law society codes or court decisions.

Jolliffe said conflict rules are a particular headache for clients in remote areas of Canada, where it can be nearly impossible to find a lawyer to work on a business transaction or family law matter. And he said lawyers who take on duty-counsel roles can compromise their ability to represent legal aid clients.

The report’s first five recommendations deal with the duty of loyalty. Jolliffe noted that a pair of recent Supreme Court of Canada decisions, 2002’s R. v. Neil and last year’s Strother v. 3464920 Canada Inc., defined a “conflicting interest” as “an interest that creates a substantial risk of material and adverse effect on representation,” and said the task force has taken the stance that this principle underlies the duty of loyalty.

But an interpretation of part of Neil, said Jolliffe, has been brought into some law society codes of conduct and led to confusion in other jurisdictions. Some think Neil means a lawyer “should never act when the representation of one client would be directly adverse to another client,” said Jolliffe.

But the task force found that if a pair of matters are not related, and no significant risk of a negative effect on representation exists, it shouldn’t necessarily mean that a lawyer is in a conflict if acting for a client with adverse interests to another client.

In terms of duty of loyalty upon expiration of a retainer, the report finds that a lawyer should be able to act for a new client with adversarial interest. But, noted Jolliffe, confidential information must always be kept private.

Recommendations six through 12 of the report deal with duty of confidentiality. The report notes that a distinction must be made between the misuse of confidential information and a conflicting interest.

“The distinction is important,” said Jolliffe, “because the duty of confidentiality continues forever, whereas the duty of loyalty, for the most part, ends when the retainer ends.”

The report notes that law firms keep confidential information separate from lawyers working on potentially conflicting files. The report asserts that a delay in setting up a confidentiality screen should not prevent a lawyer from acting, so long as it can be proven that confidential information was not released.

A number of factors, the report states, should be considered in such circumstances before a confidential breach is assumed. Aspects such as the interest of justice and good faith of parties are examples.

The report also deals with confidentiality screens in terms of law firm mergers. It states that a screen should only be required when merged firms begin sharing client information.

The often-tricky question of just who the client is was also dealt with by the task force, in recommendations 13 to 17 of the now-adopted report. Noting that confusion sometimes arises within corporations, where directors, shareholders, and employees may think they’re clients of the law firm representing the company, the report says codes of conduct should outline exactly whom a lawyer is bound to duties of loyalty and confidentiality.

The final amendment made to the CBA’s code of conduct deals with engagement letters. It presses lawyers to use engagement letters to make clear to clients the relationship they’re entering into.

Jolliffe tells Law Times he knew it was time for the CBA to take action on conflicts of interest after twice being asked to speak on the issue to managing partners at conferences.

“It became apparent to me that there was a great deal of confusion, and we had a conflicts regime that was not simply confusing and difficult to understand, but impractical,” says Jolliffe.

He says lawyers have been using these “very technical” rules as a tactic in legal actions. Many are bringing motions to disqualify opposing counsel to “delay a case, to cause confusion, to put the opponent off its game, so to speak, by forcing them to change counsel.”

Jolliffe says one of the challenges the task force faced was creating rules that could be applied universally in a country where big-city and rural practitioners, as well as those practising in different specialties, face different realities.

The task force dealt with that by visiting different communities and types of practitioners, and compromising where necessary, he says. For example, while the group initially hoped to make engagement letters mandatory, it shifted course after being told that policy would be impractical for lawyers working with illiterate clients or those who speak foreign languages.

The report received wide approval at the conference, and appeared to pass unanimously at CBA council. However, legal ethics specialist, and former Law Society of Upper Canada treasurer, Gavin MacKenzie, in an interview with Law Times, questioned the report’s fourth recommendation, which allows lawyers to act on matters adverse to the interests of a current client in certain circumstances.

“The task force analyzed the Neil case and concluded that that recommendation was consistent with the decision in the Neil case, bearing in mind that what the Supreme Court of Canada said was obiter,” the Heenan Blaikie LLP partner says. “It’s not entirely clear that the Supreme Court of Canada would regard it the same way, so that even if law societies adopt the CBA task force’s recommendation, unless and until the Supreme Court of Canada adopts the CBA task force’s recommendation, lawyers in firms are still going to be in the position of having to decide whether to act on matters, in some circumstances, where the Supreme Court of Canada may well say it’s a breach of their fiduciary duty.”

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