Class 4 - Topic 3: Conflict of Interest Avoidance Flashcards
Duty to Avoid Conflicts of Interest
3.4-1 A lawyer shall not act or continue to act for a client where there is a conflict of interest, except as permitted under the rules in this Section.
Conflict of Interest Defined LSO RPC 3.4-1, Commentary [1]
“A conflict of interest exists when there is a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected…”
Duty to Avoid Conflict of Interest - The 5 Categories
Conflict Category #1: Representing Opposing Parties in a Dispute
Conflict Category #2: Breaching the “Bright Line” Rule
Conflict Category #3: Impaired Concurrent Representation
Conflict Category #4: Betraying Former Clients
Conflict Category #5: Personal Interest Conflicts
Conflict Category #1: Representing Opposing Parties in a Dispute
“A lawyer shall not represent opposing parties in a dispute.” (R. 3.4-3)
“If the lawyer were permitted to act for opposing parties in such circumstances even with consent, the
lawyer’s advice, judgment and loyalty to one client would be materially and adversely affected by the same duties to the other client or clients. In short, the lawyer would find it impossible to act without offending the rules.” (R. 3.4-3, Cty [1])
Conflict Category #2: Breaching the “Bright Line” Rule
Canadian National Railway Co v McKercher LLP, 2013 SCC 39
“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.”
Or “it is unreasonable for a client to expect that its law firm will not act against it in unrelated matters.”
Joint Retainers LSO RPC 3.4-5
Before a lawyer acts in a matter or transaction for more than one client, the lawyer shall advise each of the clients that
(a) the lawyer has been asked to act for both or all of them;
(b) no information received in connection with the matter from one client can be treated as confidential so far as any of the others are concerned; and
(c) if a conflict develops that cannot be resolved, the lawyer cannot continue to act for both or all of them and may have to withdraw completely.
Separate Retainers LSO RPC 3.4-5, Cty 3.1
Joint retainers should be distinguished from separate retainers in which a law firm is retained to assist two or more clients competing at the same time for the same opportunity such as, for example, by competing bids in a corporate acquisition or competing applications for a single licence.
Each client would be represented by different lawyers in the firm. Since competing retainers of this kind are not joint retainers, information received can be treated as confidential and not disclosed to the client in the competing retainer.
However, competing retainers to pursue the same opportunity require express consent pursuant to rule 3.4-2 because a conflict of interest will exist and the retainers will be related. With consent, confidentiality screens as described in rules 3.4-17 to 3.4-26 would be permitted between competing retainers to pursue the same opportunity.
Conflict Category #3: Impaired Concurrent Representation
Canadian National Railway Co v McKercher LLP, 2013 SCC 39, paras 38
Where “the concurrent representation of clients creates a substantial risk that the lawyer’s representation of the client would be materially and adversely affected”
Because “the situation is “liable to create conflicting pressures on judgment” as a result of “the presence of factors which may reasonably be perceived as affecting judgment”
or because the duty of confidence is likely to be breached
“the onus falls upon the client to establish, on a balance of probabilities, the existence of a conflict —
there is only a deemed conflict of interest if the bright line rule applies.”
“Ethical Screens” LSO RPC 3.4-11
When a lawyer has acted for a former client and obtained confidential information relevant to a new matter, another lawyer (“the other lawyer”) in the lawyer’s firm may act in the new matter against the former client provided that:
the former client consents to the other lawyer acting; or
the law firm establishes that it has taken adequate measures on a timely basis to ensure that there will be
no risk of disclosure of the former client’s confidential information to the other lawyer having carriage of the new matter.
Conflict Category #4: Betraying Former Clients
RPC 3.4-10 “Unless the former client consents, a lawyer shall not act against a former client in
(a) the same matter, OR
(b) any related matter, or
(c) save as provided by rule 3.4-11, any other matter if the lawyer has relevant confidential information arising from the representation of the former client that may prejudice that client.”
RPC 3.4-11: “When a lawyer has acted for a former client and obtained confidential information relevant to a new matter, another lawyer (“the other lawyer”) in the lawyer’s firm may act in the new matter against the former client provided that:
(a) the former client consents to the other lawyer acting; or
(b) the law firm establishes that it has taken adequate measures on a timely basis to ensure that there will be no risk of disclosure of the former client’s confidential information to the other lawyer having carriage of the new matter.”
Conflict Category #5: Personal Interest Conflicts
A personal interest of a lawyer may create “substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected.” (RPC 3.4-1)
If so, there is a conflict of interest, and the lawyer may only act if:
“there is consent, which must be fully informed and voluntary after disclosure, from all affected clients…”
(RPC 3.4-2)
“… AND the lawyer reasonably believes that he or she is able to represent each client without having a
material adverse effect upon the representation of or loyalty to the other client.” (RPC 3.4-2)
