A Woolley: Supreme Court of Canada on Conflict of Interest

Our own Alice Woolley wrote a comment for the Legal Ethics Forum on Canadian National Railway Ltd. v. McKercher LLP 2013 SCC 30.

Today the Supreme Court of Canada issued its judgment in Canadian National Railway Ltd. v. McKercher LLP 2013 SCC 30.  The decision does not break new ground, but it does clarify the rules governing conflicts between two current clients of a law firm – i.e., that a law firm may not act for clients with directly adverse legal interests, even in matters that are unrelated, without the client’s consent.  That “bright line” rule had been the subject of debate and argument amongst the Canadian legal community, with the Canadian Bar Association arguing that the bright line should only create a rebuttable presumption.  The Supreme Court held that the rule was still in place.  At the same time, they arguably qualified its application insofar as they made it clear that “the bright line rule does not apply in circumstances where it is unreasonable for a client to expect that its law firm will not act against it in unrelated matters.” (para 37).  In addition, they were clear that disqualification of the law firm is  not an automatic response to a finding of conflicts.  Disqualification is required where there is a risk of misuse of confidential information, to avoid the risk of impaired representation or to protect the administration of justice.  When the last of those is at stake the Court may take into account “(i) behaviour disentitling the complaining party from seeking the removal of counsel, such as delay in bringing the motion for disqualification; (ii) significant prejudice to the new client’s interest in retaining its counsel of choice, and that party’s ability to retain new counsel; and (iii) the fact that the law firm accepted the conflicting retainer in good faith, reasonably believing that the concurrent representation fell beyond the scope of the bright line rule and applicable law society restrictions.” (para. 65)

For the rest of her post, click HERE

For the judgment, click HERE

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