Thursday, July 11, 2013

Canadian Conflicts - Supreme Court Revisits Rules

Simon Chester, Partner in the Litigation and Business Law groups of Heenan Blaikie and frequent Risk Roundtable contributor, wrote in with news of: Canadian National Railway Co. v. McKercher LLP, the "fourth significant decision on conflicts of interest, the scope of duties of loyalty, and the appropriate division of responsibility between courts and law societies as regulators of professional conduct. It rejected arguments for liberalizing the so-called bright-line rule, but clarified its operation."

Simon has written two articles on the topic, offering excellent background and analysis. See first: "Bright Line Rule Remains the Standard for Canadian Conflicts of Interest Law" --
  • The case reopened the “bright-line rule” and the so-called “professional litigant exception, ” formulated by former Justice Ian Binnie in R. v. Neil, and re-affirmed in Strother v. 3464920 Canada Inc. It provides:
    … a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other. (Neil, para. 29);
  • "The new Supreme Court decision holds that the McKercher firm crossed the bright line, that it breached both its duties of commitment and candour. It remits the case back to the Court of Queen's Bench to determine whether disqualification was an appropriate remedy."  
And also: "The Meaning of Wallace – a Summary of Its Key Holdings," for much more extensive review, including commentary from Malcolm Mercer at McCarthy Tetrault LLP, who represented the Canadian Bar Association, who was quoted elsewhere saying: "The result is a great one for advocates of choice, because the court ruled that clients were free to choose their lawyers and lawyers were free to act for them unless there was a real risk of mischief."

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