Despite concerns voiced by the Law Society of Upper Canada, lawyers could be eligible for new awards granted to whistleblowers that report wrongdoing to the Ontario Securities Commission.
The OSC is set to release and implement a new whistleblower award program and policy on July 14.
The awards are financial incentives of up to $5 million for whistleblowers who provide the OSC with information that leads to sanctions against an individual or company that violates securities law.
The proposed policy, which was unveiled last fall, said internal counsel would be eligible for such awards in certain circumstances.
However, lawyers say it is hard to imagine circumstances in which disclosing information to the OSC would not be a breach of law society rules.
Securities lawyer Jim Boyle, of Boyle & Co. LLP, says including lawyers in the whistleblowing policy is simply inconsistent with the integrity and ethical standards to which lawyers hold themselves.
“The lawyer’s ethical standards are much higher than the regulatory standard, and the lawyer’s rules of professional conduct are pretty clear,” Boyle says.
“Confidentiality and the solicitor-client relationship are paramount.”
If the proposed policy is adopted as is, internal counsel may be eligible for awards if he or she has “a reasonable basis” to believe that disclosing the information is necessary to stop someone from “engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors.”
The second exception would be if the lawyer has a reasonable basis to believe that person is acting in a way that is impeding an investigation of misconduct.
The last exception would be that if the lawyer has reported misconduct to a supervisor or chief legal officer and no action is taken after 120 days, he or she would be eligible for an award if he or she relays that information to the OSC.
External counsel will be excluded from the policy “unless disclosure is permitted by applicable provincial or territorial law society rules.”
Caitlin Sainsbury, a commercial litigator with Borden Ladner Gervais LLP who recently spoke at a panel discussion about the new policy, says the limited nature of these exceptions will make it unlikely that any internal lawyers could be whistleblowers, even if they are eligible according to OSC policy.
“Pursuant to the law society rules, an in-house lawyer likely still remains unable to make the kind of whistleblower report contemplated by the policy,” she says.
“Arguably, a lawyer could be a whistleblower, but the way the rules of professional conduct currently stand, it’s hard to conceive of a case where a lawyer could be a whistleblower in keeping with our obligations under the rules.”
When it was first released, the proposed policy set off alarm bells for the law society, which had concerns about making lawyers eligible for such awards.
Graeme Hamilton, a commercial litigator with BLG, says the difference in policy is due to a difference in the two entities’ mandates.
“From the securities commission’s standpoint, its public interest mandate involves protection of the capital markets and reporting of these issues to the extent possible,” he says.
“From the law society’s perspective, what’s important is upholding the standards of the legal profession.
“And one of the obligations of a lawyer that is considered the most sacred is that with respect to solicitor-client privilege,” adds Hamilton.
In its consultation process, the OSC asked for input as to whether internal counsel should be included.
In response, the former treasurer of the law society, Janet Minor, sent a letter, saying including counsel in the awards policy could create confusion for lawyers.
“Our view is that this would create uncertainty for lawyers in fulfilling obligations to maintain confidentiality of client information and protect privileged information, and may offend the lawyer’s duty of commitment to the client’s cause,” she wrote.
Minor noted that lawyers’ ethical rules expand past solicitor and client privilege, and include requirements to protect the confidentially of client information.
The Rules of Professional Conduct say that while lawyers shall not knowingly assist or encourage dishonesty, fraud, or illegal conduct, they are not allowed to disclose a client’s information unless certain narrow exceptions apply.
These exceptions include being required to do so by law, or when a lawyer believes disclosure is necessary to prevent “an imminent risk of death or serious bodily harm.”
Other exceptions include if another lawyer has committed a criminal offence.
“We find it hard to conceive when the confidentiality rules would permit disclosure of confidential client information in a whistleblowing context,” Minor said.
Minor also expressed concern that the policy to include counsel could create a conflict between a lawyer’s commitment to a client and his or her own interests.
The OSC is set to release and implement a new whistleblower award program and policy on July 14. The awards are financial incentives of up to $5 million for whistleblowers who provide the OSC with information that leads to sanctions against an individual or company that violates securities law.
The proposed policy, which was unveiled last fall, said internal counsel would be eligible for such awards in certain circumstances.
However, lawyers say it is hard to imagine circumstances in which disclosing information to the OSC would not be a breach of law society rules.
Securities lawyer Jim Boyle, of Boyle & Co. LLP, says including lawyers in the whistleblowing policy is simply inconsistent with the integrity and ethical standards to which lawyers hold themselves.
“The lawyer’s ethical standards are much higher than the regulatory standard, and the lawyer’s rules of professional conduct are pretty clear,” Boyle says.
“Confidentiality and the solicitor-client relationship are paramount.”
If the proposed policy is adopted as is, internal counsel may be eligible for awards if he or she has “a reasonable basis” to believe that disclosing the information is necessary to stop someone from “engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors.”
The second exception would be if the lawyer has a reasonable basis to believe that person is acting in a way that is impeding an investigation of misconduct.
The last exception would be that if the lawyer has reported misconduct to a supervisor or chief legal officer and no action is taken after 120 days, he or she would be eligible for an award if he or she relays that information to the OSC.
External counsel will be excluded from the policy “unless disclosure is permitted by applicable provincial or territorial law society rules.”
Caitlin Sainsbury, a commercial litigator with Borden Ladner Gervais LLP who recently spoke at a panel discussion about the new policy, says the limited nature of these exceptions will make it unlikely that any internal lawyers could be whistleblowers, even if they are eligible according to OSC policy.
“Pursuant to the law society rules, an in-house lawyer likely still remains unable to make the kind of whistleblower report contemplated by the policy,” she says.
“Arguably, a lawyer could be a whistleblower, but the way the rules of professional conduct currently stand, it’s hard to conceive of a case where a lawyer could be a whistleblower in keeping with our obligations under the rules.”
When it was first released, the proposed policy set off alarm bells for the law society, which had concerns about making lawyers eligible for such awards.
Graeme Hamilton, a commercial litigator with BLG, says the difference in policy is due to a difference in the two entities’ mandates.
“From the securities commission’s standpoint, its public interest mandate involves protection of the capital markets and reporting of these issues to the extent possible,” he says.
“From the law society’s perspective, what’s important is upholding the standards of the legal profession.
“And one of the obligations of a lawyer that is considered the most sacred is that with respect to solicitor-client privilege,” adds Hamilton.
In its consultation process, the OSC asked for input as to whether internal counsel should be included.
In response, the former treasurer of the law society, Janet Minor, sent a letter, saying including counsel in the awards policy could create confusion for lawyers.
“Our view is that this would create uncertainty for lawyers in fulfilling obligations to maintain confidentiality of client information and protect privileged information, and may offend the lawyer’s duty of commitment to the client’s cause,” she wrote.
Minor noted that lawyers’ ethical rules expand past solicitor and client privilege, and include requirements to protect the confidentially of client information.
The Rules of Professional Conduct say that while lawyers shall not knowingly assist or encourage dishonesty, fraud, or illegal conduct, they are not allowed to disclose a client’s information unless certain narrow exceptions apply.
These exceptions include being required to do so by law, or when a lawyer believes disclosure is necessary to prevent “an imminent risk of death or serious bodily harm.”
Other exceptions include if another lawyer has committed a criminal offence.
“We find it hard to conceive when the confidentiality rules would permit disclosure of confidential client information in a whistleblowing context,” Minor said.
Minor also expressed concern that the policy to include counsel could create a conflict between a lawyer’s commitment to a client and his or her own interests.
