Thursday, September 15, 2011

Important Canadian Conflicts Decision (Lateral Lawyer Movement, Ethical Wall)

A recent decision worth noting -- Dow Chemical Canada Inc. v. Nova Chemicals Corporation, 2011 ABQB 509 (CanLII): A lawyer who represented Nova Chemicals at one firm, moved to another firm. That second firm later came to represent a party adverse to Nova, which moved to disqualify it.

A vice president of Nova set out the core of their argument:
  • When I engage a lawyer to prosecute a dispute on behalf of NOVA Chemicals, I do not expect that lawyer to join our enemy’s law firm. Similarly, when a lawyer who has been deeply involved with NOVA Chemicals in the early but very formative strategic stages of a very significant lawsuit against Dow, goes to a law firm that has not been previously involved in the lawsuit, in my opinion that law firm should not be allowed to take on representation of Dow (para 15).”
The judge hearing the matter focused on what confidential information might have moved with the lawyer and how it was treated. The lawyer and firm pledged that no information was communicated or used inappropriately, but the judge remarked that:
  • “…statements under oath or affirmation are an essential part of the continuance of a retainer or acceptance of a new retainer in the circumstances of a moving lawyer with prejudicial confidential information, but that alone is not enough. Screening devices are also necessary, absent consent of the other party or parties.”
The firm had put electronic ethical screening measures in place to restrict internal access to related documents and established that no confidential information was shared. That, coupled with the larger aim to allow firms maximum latitude in choosing counsel, led the judge to deny the motion to disqualify.

University of Calgary law professor Alice Woolley presents excellent analysis and lays out the issues at hand:
  • “Chief Justice Wittmann’s judgment provides new analysis of the principles governing what is necessary for a client to consent to a conflict in advance, how imputation rules operate in national firms, lawyers transferring between law firms, and the intersection between law society rules and judicial determinations in assessing conflicts.”
See also Woolley's other conflicts-related essays: "The Practice (not theory) of Avoiding Conflicts of Interest" and "The True Bright Line Conflicts Rule."