It can be difficult for a lawyer to determine whether they are acting in conflict in modern practice. A lawyer may have no knowledge of the supposed client in conflict, have never worked on the client’s file and still be in conflict. A lawyer can also be in conflict with current and previous clients. Further, a lawyer may not recognize that they are in conflict as defined by the Law Society of Ontario (LSO) Rules of Professional Conduct (Rules) and by the court. This article aims to shed light on when conflicts of interest arise in modern legal practice.
Who Is a Client?
The first step in determining whether a lawyer is acting in conflict is determining who are their current and previous clients. While a court is not bound by the Rules, the Supreme Court of Canada has mentioned that the Rules are considered “an important statement of public policy.”[i] The Rules define a client as:
“a person who consults a lawyer and on whose behalf the lawyer renders or agrees to render legal services, or who reasonably concludes that the lawyer has agreed to render legal services on their behalf; and includes a client of the law firm of which the lawyer is a partner or associate, whether or not the lawyer handles the work.”[ii]
The commentary to the Rules further states that a solicitor and client relationship may be established without formality or a retainer agreement. The test used by the LSO to determine the existence of a solicitor-client relationship is whether the alleged client had a reasonable expectation, in all the circumstances, that the lawyer was protecting their interests.[iii]
In determining who a lawyer’s current and previous clients are, the search is not limited to individuals with whom they have signed a retainer agreement and personally performed legal services. Individuals who have corresponded with a lawyer or their firm and reasonably believe the lawyer agreed to render legal services on their behalf or that the lawyer would protect their interests may also be considered their client.
Duties Owed to the Client
A lawyer owes a duty of loyalty, which includes duties of confidentiality, candour and commitment to the client’s cause to all their clients. A lawyer cannot be simultaneously loyal to multiple clients whose interests are in conflict. A lawyer cannot simultaneously uphold their duty of candour to one client while upholding their duty of confidentiality to the other when those clients are in conflict. Finally, a lawyer cannot be fully committed to the cause of both clients whose interests are in conflict. A lawyer’s duties of loyalty, confidentiality, candour and commitment to the client’s cause are all impeded when they act in conflict.[iv]
Courts’ Inherent Jurisdiction
If found to be acting in conflict, the Court has inherent jurisdiction to remove a lawyer and their firm from the record. This jurisdiction stems from the fact that lawyers are officers of the Court, and their conduct in legal proceedings, which may affect the administration of justice, is subject to the Court’s supervisory jurisdiction.[v]
Three Competing Values
In resolving conflict of interest issues, the court is concerned with three competing values. First, the court aims to maintain the high standards of the legal profession and the integrity of our system of justice. Second, the court respects that a litigant should not be deprived of his or her choice of counsel without good cause. Finally, the court recognizes the desirability of permitting reasonable mobility in the legal profession. When the court finds a conflict, the need to maintain the high standards of the legal profession and the integrity of our system of justice will prevail.[vi]
Conflict with Current Clients
There is a “Bright Line Rule” which dictates that a lawyer, and by extension their firm, may not concurrently represent clients adverse in interest without obtaining their consent. The “Bright Line Rule” applies regardless of whether the client matters are related or unrelated.[vii]
Conflict with Previous Clients
A lawyer may be acting in conflict with a previous client if they have relevant confidential information to a retainer with a current client. The court will disqualify a lawyer if a fair-minded and reasonably informed member of the public would conclude that counsel’s removal is necessary for the proper administration of justice.[viii] A reasonably informed member of the public would conclude that counsel’s removal is necessary if they possess confidential information relevant to the retainer in conflict. In determining whether there is such a disqualifying conflict of interest, the court will consider two questions: (1) Did the lawyer receive confidential information attributable to a solicitor-client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client?[ix]
In answering the first question, the client must show that a previous relationship existed which is sufficiently related to the retainer from which it is sought to remove the lawyer. Once this is shown, the court will infer that confidential information was imparted, unless the lawyer satisfies the court that no information was imparted which could be relevant. This is a difficult burden to discharge as the lawyer must satisfy the court that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed. This burden must be discharged without revealing the specifics of the privileged communication.[x]
For two retainers to be sufficiently related, the court must find it reasonably possible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter.[xi]
In answering the second question, the court must consider whether the confidential information will be misused. A lawyer who has relevant confidential information cannot act against his client or former client. In such a case, the disqualification is automatic.[xii]
Exceptions to the Rule Against Conflicts with Previous Clients
If you are found to be in acting in conflict with a previous client, the court is not automatically required to remove you from the record. Where the court finds that the test above is satisfied, there are situations in which they will not disqualify the lawyer from acting due to the conflict.
The court will not disqualify a lawyer or law firm for acting in a conflict of interest if the claimant brings the motion tactically. For example, the Supreme Court of Canada recognizes a high possibility of tactical abuse in the case of institutional clients that deal with large national firms, where those institutional clients have the resources to retain a significant number of firms. The retention of a single partner at these firms can disqualify other lawyers nationwide from acting against the client.[xiii]
Further, there are circumstances in which it is unreasonable for a client to expect their law firm not to act against them in unrelated matters. The Supreme Court of Canada in Canadian National Railway Co. v. McKercher LLP used the example of “professional litigants,” such as governments, who generally accept that lawyers or law firms will act for them in some matters and against them in other, unrelated matters. Private professional litigants, such as Charter Banks, may similarly have multiple matters that are sufficiently unrelated so that there is no danger of confidential information being abused.[xiv]
Finally, if the Court believes that the motion to remove a lawyer of record due to a conflict of interest was brought in bad faith, they may not grant the motion. For example, Courts have used delay in bringing the motion as a factor in dismissing the motion due to bad faith.[xv]
Avoiding Conflicts
When determining whether they are acting in conflict, a lawyer must first determine who are their clients or clients of their firm. Then, the lawyer must ensure that they do not currently represent two clients with adverse interests, whether or not their retainers are related. Finally, the lawyer must ensure that they do not possess any relevant confidential information from a previous client who is adverse in interest to their current retainers. If the lawyer is currently acting for two clients adverse in interest, or possess relevant confidential information from a previous client who is adverse in interest to their current retainers, they will likely be found to be acting in conflict.
