Professional Conduct Handbook changes
Lawyers may take shares in corporate client in lieu of fees
The Benchers have amended Chapter 7, Rule 1 of the Professional Conduct Handbook to allow BC lawyers to take shares in their corporate clients in lieu of fees in certain circumstances.
The Ethics Committee recommended the change in recognition that some new companies require legal services, but may lack the resources to pay their lawyers unless they can pay in kind. A lawyer should be able to accept such a retainer, provided the lawyer's professional judgement is not compromised and the client receives independent legal advice.
Lawyers who take shares in lieu of fees must ensure that they comply with Rules 2 and 5 of Chapter 7, which provide:
Financial or membership interest in the client
2. A lawyer must not perform any legal services for a client with whom or in which the lawyer or anyone, including a relative, partner, employer, employee, business associate or friend of the lawyer, has a financial or membership interest that would reasonably be expected to affect the lawyer's professional judgement.
Financial interest in a client
5. A lawyer must not acquire a financial interest in a client of the lawyer's firm unless
(a) the acquisition is effected on or through the facilities of a stock exchange, or
(b) the client:
(i) acknowledges in writing that the lawyer is not representing the client in the acquisition and the client will not rely on the lawyer's advice in the matter, and
(ii) is independently represented in all aspects of the acquisition.
A new footnote to the Chapter cautions lawyers that acting in certain circumstances may result in a loss of insurance coverage under Exclusion 6 (business exclusion) of the compulsory professional liability policy or similar provisions in other insurance policies. As a result, lawyers should carefully review the wording of the business exclusion in the policy and feel free to contact the Lawyers Insurance Fund regarding the application of the exclusion to their own circumstances.
Lawyers assisting incapacitated persons
The Benchers recently approved Handbook changes to guide lawyers in difficult situations when clients become incapable of giving instructions or when incapacitated persons are in need of assistance.
Chapters 3 and 5 of the Professional Conduct Handbook, as amended, provide that, if a client cannot, as a result of incapacity, adequately instruct his or her lawyer, the lawyer must maintain a normal client-lawyer relationship to the extent reasonably possible. If the lawyer reasonably believes that the client cannot adequately instruct counsel, the lawyer may seek the appointment of a guardian or take other protective action the lawyer reasonably believes is necessary to protect the client's interests and may disclose the minimum amount of the client's confidential information necessary to take that action.
Pending appointment of a representative of the client, the lawyer may continue to act for the client to the extent that instructions are implied or as otherwise permitted by law: see Chapter 3, Rules 2.1 to 2.3 and Chapter 5, Rule 16.
A lawyer may also provide reasonable and necessary minimal assistance to a person who, because of incapacity, is prevented from entering into a client-lawyer relationship: see Chapter 3, Rule 2.4.
These Handbook changes are reflected in the April Member's Manual amendment package, enclosed in this mailing.