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Managing conflicts of interest is becoming an increasingly significant issue for Canadian lawyers. The Canadian Bar Association (CBA) recently concluded one of the most significant overhauls of its code of professional conduct, adopting 21 recommendations made in a report aimed at providing guidance to lawyers facing conflicts.
Arguably the rule changes will be of most interest to those lawyers practising in the country’s relatively few large international outfits, where some of the bigger firms now have a partner whose only job is to deal with conflict issues.
But conflict rules do not just apply to top-tier firms. Mid-size firms, lawyers in smaller communities and their clients are all affected by the rules. They also affect lawyers’ abilities to move between firms, not to mention firms that have multiple offices that operate in several jurisdictions.
Scott Jolliffe, national managing partner of Gowling Lafleur Henderson and chairman of the CBA taskforce on conflicts of interest, summed up the association’s aim, saying: “Our hope is that there will be a consistent code of conduct that applies right across Canada.”
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 cannot use their preferred lawyer, or even find one within their community, due to rules set out in law society codes or court decisions.
The report’s first five recommendations deal with the duty of loyalty. Jolliffe noted that two recent Supreme Court of Canada decisions – R v Neil (2002) and Strother v 3464920 Canada Inc (2007) – defined a “conflicting interest” as “an interest that creates a substantial risk of material and adverse effect on representation” and said the taskforce had taken the stance that this principle underlies the duty of loyalty.
But an interpretation of part of Neil, says 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,” says Jolliffe.
But the taskforce found that if a pair of matters are not related, and no significant risk of a negative effect on representation exists, it should not necessarily mean that a lawyer is in a conflict if acting for a client with adverse interests to another client.
Recommendations 6-12 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 often tricky question of just who the client is was also dealt with by the taskforce in recommendations 13-17 of the now adopted report.
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 are entering into.
Jolliffe says 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 there was a great deal of confusion, and we had a conflicts regime that was not only confusing and difficult to understand, but also impractical,” he explains.
He says lawyers had been using these “very technical” rules as a tactic in legal actions. Many were bringing motions to disqualify opposing counsel to “delay a case, to cause confusion, to put the opponent off their game, so to speak, by forcing them to change counsel”.
Jolliffe adds that one of the challenges the taskforce 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, faced different realities. The taskforce dealt with that by visiting different communities and types of practitioner, and compromising where necessary.
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 CBA plans to pass the report 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.
Robert Todd is the associate editor of LawTimes, a sister magazine to Canadian Lawyer