All eyes on Nortel privilege ruling this week

Crown attorneys involved in the Nortel fraud trial have cast a deep chill across the province’s legal community over concerns that another ruling in prosecutors’ favour this week could set a dangerous precedent for the treatment of privilege.

“This is most definitely not a common occurrence and it represents a very aggressive move by the prosecutor,” says Edward Prutschi, a partner at Adler Bytensky Prutschi Shikhman. “It’s of grave concern, and I think it’s a case where a very bright line should be drawn.”

Crown attorneys in the high-profile trial of former Nortel Networks CEO Frank Dunn successfully argued earlier this month that his lawyers, McCarthy Tétrault LLP’s Tom Heintzman and Junior Sirivar, were eligible to testify about documents presented to the company’s audit committee in March 2004.

The Crown argued that because third parties were present during those proceedings, traditional solicitor-client privilege didn’t apply.

The Crown is also pushing to have records from that meeting subpoenaed, admitted into evidence, and used to refresh a witness’ memory. Defence counsel have raised concerns that doing so would violate litigation and solicitor-client privilege.

At the time of the committee proceedings, Dunn, former chief financial officer Douglas Beatty, and former controller Michael Gollogly were under investigation by Nortel for accounting irregularities. Each has denied the charges against him.

Superior Court Justice Frank Marrocco has reserved his decision on the records until later this week but has ordered Heintzman and Sirivar to testify in the meantime.

The decision came as a shock to many in the province’s legal community who worry about the precedent it could set.

“This is a highly unusual practice and one that judges typically frown upon,” says Adam Dodek, a law professor at the University of Ottawa. “It is often avoided because it brings a lot of mischief to the practice.”

If Marrocco issues a second ruling on litigation privilege in the Crown’s favour, the implications could be significant, adds Dodek.

“If a client knows their lawyer could be called as a witness, it could prevent them from attending meetings with their lawyer or make them feel going to court unrepresented is a better option.

As a lawyer, it could also cause communication to be censored if a lawyer knows they may be compelled to reveal their discussions or notes. It could set a very dangerous precedent.”
The initial ruling requiring

Dunn’s lawyers to testify is of concern to criminal lawyers, according to Prutschi. “It sends a legal shiver up my spine to hear that lawyers could be forced to testify about third-party meetings they were involved in on behalf of their clients in contemplation of litigation,” he says.

“A ruling in favour of the Crown here could have broad implications, making it far more difficult for lawyers to robustly represent their clients with the spectre of being called as a witness at a later proceeding hanging over their shoulders,” he adds.

Prutschi suggests a second ruling in favour of the Crown would have a similar effect. “Lawyers’ notes could have potentially confidential information on them as they often don’t take a step-by-step review of what’s happening.

In most cases, they offer detailed analysis and legal advice. If this kind of note-taking is included, I imagine lawyers would become much more careful about what they write and will be looking over their shoulders more

Still, Prutschi says calling a lawyer with extensive litigation experience to testify may end up backfiring on the Crown. “They will be able to anticipate what the Crown is going to ask them, they’ll know how to respond, and they’ll be looking to formulate their answers very carefully.”

But others in the legal community say the Crown’s move and the subsequent ruling requiring Dunn’s lawyers to testify may not be that worrisome. “From my understanding, it is a very rare tactic on the part of the Crown,” says lawyer and University of Toronto business professor Richard Powers.

“That being said, it does show the ability of the Crown to split the conversations and records in question into workable pieces that they could then use to their advantage. I think it shows the length the Crown is willing to go to to dissect the case so specifically.”

Still, Powers agrees that a ruling in the Crown’s favour on the litigation privilege aspect of the case could spell trouble for both lawyers and clients.

“It could cause them to become very careful in the future,” he says. “It could also raise issues of what lawyers will now do with their notes if they know they could potentially be used to their detriment.

It could certainly become another hurdle, as if lawyers’ jobs aren’t already difficult enough.”
Bruce Karten, a criminal lawyer in Toronto, says that although the Crown’s move is “quite a shocker,” the presence of a third party technically waives solicitor-client privilege and makes the litigation privilege issue the more hotly contested matter.

“Solicitor-client privilege is waived by definition when a third party is present, although there is the issue of whether or not that third party was aligned with the counsel in question’s interests and whether or not there was enough of an exception to exclude that privilege,” he says.

But the Nortel trial isn’t the only high-profile case where Crown lawyers have challenged traditional notions of solicitor-client privilege recently.

A commission charged with probing the suicide of Cpl. Stuart Langridge, who hanged himself at the Canadian Forces Base in Edmonton in March 2008, has stalled over crucial Defence Department documents.

Justice Department lawyer Elizabeth Richards, who’s lead counsel for the Department of National Defence in the case, has argued some of the documents are subject to solicitor-client privilege.

Richards has also argued the government has institutional privilege over the documents, much to the ire of lawyers for the family and the commission. As of last week, counsel had yet to reach an agreement on the documents.

The differences between the cases are quite stark, according to Dodek.
“In one case, it does appear that the government is being quite zealous in protecting its own privilege and attacking it in the other,” he says.

“One would hope that if the government is being very zealous in protecting its own privilege that it would be just as sympathetic to the privileges of individuals.”

In the meantime, lawyers will be watching Marrocco’s ruling this week.
“It will go to the core of what solicitor-client privilege is intended to protect against,” says Prutschi. “It’s all uncharted territory now.”

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