Conflicts of Interest and the Bright Line Rule

April 26, 2016 Nick Esterbauer Ethical Issues, Litigation Tags: , , , , 0 Comments

The Law Society of Upper Canada recently released an e-Bulletin that outlines recent amendments to our Rules of Professional Conduct with respect to conflicts of interest.

Like the changes made to the Rules of Professional Conduct in late 2014, some of which dealt exclusively with practice involving wills and estates, these amendments are in part based on the Model Code of Professional Conduct, which was created by the Federation of Law Societies of Canada in 2011 to assist in implementing consistent professional standards throughout the country in light of increased lawyer mobility from province to province.

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The new conflict of interest rules expand upon the changes implemented to reflect the terms of the Model Code, and introduce a reference to the 2013 decision of the Supreme Court of Canada in Canadian National Railway Co. v. McKercher LLP.  This decision and the commentary added under Rules 3.4-1 and 3.4-2 refer to a “bright line rule”.  While its scope in respect of conflicts of interest is suggested to be limited, the bright line rule can apply to unrelated work done by a lawyer for two clients if the advancement of one client’s interests are adverse to the immediate legal interests of another client.  Even a “substantial risk of impairment” of the representation of a current client is noted to give rise to a conflict.  In cases where there is actual impairment (rather than the mere risk of same), client consent to act in light of the conflict does not allow a lawyer to act.

The Report of Convocation with respect to these amendments indicates that the Rules of Professional Conduct were amended to provide lawyers in Ontario with further guidance in recognizing and dealing with conflicts of interest through the additional commentary.  While the amendments to the rules themselves are relatively minor, all lawyers, including estate practitioners, should make themselves familiar with them and review the relevant commentary when faced with situations of potential conflict.

Further changes to the Model Code of Professional Conduct have now also been proposed to address obligations of a lawyer who leaves one law firm to work elsewhere.  Only time will tell whether these proposed amendments to the Model Code ultimately make it into our Law Society’s Rules of Professional Conduct.

Thank you for reading.

Nick Esterbauer

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