About
The issues raised highlight competing and contrasting values of importance to the legal profession and the public generally. These include the interests of the public in expecting (i) undivided loyalty from lawyers whom they retain, (ii) freedom to be represented by counsel of their choice, and (iii) the reasonable expectations of professional mobility.
The Task Force aims to advance and reconcile these competing values in the public interest, and to provide practical guidance to both providers and consumers of legal services, protecting those values.
While the courts can – and will – provide guidance through particular judicial decisions on the source, scope, nature and content of professional obligations to preserve confidentiality and avoid conflicts of interest, such guidance is necessarily shaped by the context of litigation. Since many of the key issues – such as the effectiveness of advance waivers or consents – have not been litigated, there is an opportunity for the profession to establish principled professional guidance in the area. In other jurisdictions (such as England and Wales and some Australian states) professional groups have taken the lead. Now, the CBA is doing the same.
Over the last two decades, three major developments have dramatically shaped the Canadian law of conflict of interest. For the first time, the Supreme Court of Canada took the opportunity, in the context of specific litigation, to develop and articulate principles that have shaped the subsequent development of the Canadian law of conflict of interest, first in the seminal case involving migrating lawyers, MacDonald Estate v Martin, [1990], then in the context a complex criminal proceeding, R. V. Neil, [2002], and most latterly in Strother v. 3464920 Canada Inc. [2007].
In R. v. Neil, the Supreme Court of Canada reaffirmed and restated the duty of loyalty owed by lawyers to current clients. The Court recognized that the duty of loyalty may be modified or waived with the informed consent of clients. However, the Court expressed the duty and its potential modification or waiver in broad and open-ended terms, creating uncertainty and practical difficulty for lawyers and their clients in applying this duty in particular situations. In its broadest interpretation, the rule expressed in Neil is felt to be unworkable for both small and large firms, in small and large centres, and in both general and specialty areas of practice, and serves neither the interests of justice nor any public interest.
On Friday June 1, 2007, the Supreme Court of Canada returned to the subject of lawyers’ conflicts of interest, handing down its third major decision in less than twenty years. Strother v. 3464920 Canada Inc. involved the personal interests of a lawyer getting in the way of his representation of a client. The facts are uniquely complex but involve a lawyer who advised his client that a tax shelter scheme had been closed down, but didn’t tell the client when he discovered (from another client) a way of reviving them. He also took a personal share in the competing business. The Supreme Court held that he had breached his fiduciary duty, but limited the remedies following that breach. It excused his law firm which had been kept ignorant of the breach. The Court provided additional guidance to the Canadian profession on how to avoid conflicts of interest, underscoring the importance of retainer letters that document the scope of a lawyer’s mandate.
The results – perhaps inadvertent – of those cases has been to stimulate increased litigation about the nature, scope and content of professional responsibilities, and to divert significant professional resources to conflicts management and away from client service. At the same time as the court developments have been taking place, there have been significant shifts in the market for legal services in Canada, and in the way in which sophisticated clients engage legal services.
In many cases, the principles articulated by the courts and reflected in the Rules of Professional Conduct become artificial and strained, and do not advance public interests. For example, presumptions that information necessarily flows within all offices of national firms, or that all lawyer-client relationships attract uniform professional standards, may require re-examination. Both clients and the legal profession should be able to look to clear and practical guidance to govern their mutual expectations.
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