Thursday, February 27, 2014

Canadian Conflicts News


In honor of a recent Olympic hockey win, we feature a Canadian conflicts story. Last year, we noted developments in Canadian National Railway Co. v. McKercher LLP, which noted expert Simon Chester called "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."

Now from ABlawg.ca comes more on Canadian conflicts: "The More Things Change…. A Post-McKercher Conflicts Case", which comments on MTM Commercial Trust v Statesman Riverside Quays Ltd. 2014 ABQB 16.
  • "In his decision in MTM Commercial Trust v Statesman Riverside Quays Ltd. Justice Macleod determined whether Bennett Jones LLP could act for Matco Group, a client of many years, in a dispute with the Statesman Group, for whom Bennett Jones acted on a very limited retainer, and who had been advised that Bennett Jones would act for Matco in the event of a future dispute between the two clients."
  • "Somewhat surprisingly, Justice Macleod held that Bennett Jones could not represent Matco.  In this comment I will suggest that this judgment supports the position I set out in an ABlawg post in 2011, that 'in actual cases judges are less concerned with carefully articulating the applicable rules, and more concerned with reaching the right outcome on the facts, all things considered'"
  • "One of the striking things about Justice Macleod’s judgment is that it spends a significant amount of time summarizing the law governing conflicts of interest, but only two paragraphs discussing the application of that law to the facts of Bennett Jones’ two retainers.  That division means that it is not entirely clear how the legal doctrine cited informs the result."
  • "Ultimately it appears that two things caused problems for Bennett Jones: that it did not tell Statesman that it had taken a retainer from Matco significantly adverse to Statesman’s interests, and the severity of the impact on Statesman of Matco’s allegations in the litigation."
  • "Perhaps the key point is this: Bennett Jones could have advised Statesman, or have withdrawn in an orderly fashion from that retainer.  Likely that would not have been the preferred course of action for Matco, but Bennett Jones could also have asked for and obtained consent from Matco for taking those steps.  There was nothing in law to prevent it from taking steps to advise Statesman of what it was doing."
  • "If the law firm has acted in an up front and candid way, then it is likely to avoid problems, even if its conduct might be considered a conflict of interest on a strict application of the law.  Conversely, if there is any sense that the firm has not been up front and candid, it will run into problems, even if it has a reasonable argument that it is not in a conflict."

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