The fundamental importance of solicitor-client privilege and of lawyers’ duty of loyalty to their clients was confirmed once again by the Supreme Court of Canada on February 13, 2015, with its highly anticipated decision in Canada (Attorney General) v. Federation of Law Societies of Canada1

To reduce the risk that financial intermediaries may facilitate money laundering or terrorist financing, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act2 (the “Act”) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations3 (the “Regulations”) impose duties on financial intermediaries, including lawyers, to collect, record and retain information and documents allowing those persons on whose behalf they pay or receive money to be identified. 

The Supreme Court of Canada was asked to determine the constitutionality of certain provisions of the Act and Regulations insofar as they affect the solicitor-client privilege and the ethical obligations of lawyers. 

In its decision, the Court confirmed that the solicitor-client privilege is constitutionally protected. Acknowledging that the expectation of privacy in privileged communications between a lawyer and his client is invariably high, the Court confirmed that legislative provisions must not diminish that expectation and should only interfere with the privilege when it is absolutely necessary. The Court then went on to expressly recognize, as a principle of fundamental justice, lawyers’ duty of commitment to their clients’ cause. 

The Court ultimately concluded that the requirements of the Act and the Regulations insofar as they apply to lawyers are contrary to judicially recognized principles regarding searches and seizures in law offices4, and to the legitimate interests of the lawyers’ clients. The provisions at issue were thus deemed unconstitutional, as they unjustifiably infringe upon sections 7 and 8 of the Canadian Charter of Rights and Freedoms5, which respectively deal with the right to life, liberty and security of the person, and the right to be secure against unreasonable search or seizure. 

The Court has thus confirmed the constitutionally protected right to be free from unreasonable search or seizure and the importance of the public’s confidence in the legal system. It has also confirmed the State’s inability to unduly impose duties on lawyers that undermine their duty of commitment to their clients’ causes. In addition, it has emphasized that the solicitor-client privilege is essential to the effective operation of the legal system. 

Finally, this important decision points out that the legal profession has already developed standards of practice relating to the problems addressed by the Act and the Regulations, standards that reflect a consensus in the profession as to the deontological rules necessary for ethical and effective representation of clients, particularly as regards the collection and retention of information.