Ethics Committee opinions

In addition to publishing formal opinions to the profession, the Ethics Committee provides guidance throughout the year to individual lawyers who have questions about their ethical obligations. As some of this advice may be instructive to other lawyers, the Committee has approved several of its opinions from 1999 and 2000 for publication, without identification of the lawyers, clients or others involved.

Insurer litigation handling and billing guidelines

Chapters 3, 5, 6 and 12 of the Professional Conduct Handbook
(Ethics Committee: March and April, 1999)

The Committee considered the propriety of lawyers following certain proposed conduct and billing guidelines. These guidelines, developed by an insurance company, were for lawyers defending claims by third parties. The guidelines require lawyers to obtain the permission of the insurer before performing certain tasks in the litigation or before incurring certain expenses associated with the litigation. The guidelines also stipulate that the insurer will only pay for the performance of some tasks in litigation at the billing rate of a paralegal. A further provision requires lawyers to submit their accounts to external auditors engaged by the insurer to review the accounts.

The Committee had the following views on these issues:

Potential to interfere in counsel's professional judgement

It is proper for a lawyer to follow instructions from an insurer regarding the conduct of litigation, provided those instructions do not preclude the lawyer from undertaking work or incurring expense that the lawyer reasonably believes is necessary to defend the claim against the insured. A lawyer should decline to accept a matter when the insurer's instructions do not permit the lawyer to provide adequate representation and should withdraw from matters already undertaken when such instructions are received.

Use of non-lawyers

A lawyer may accept instructions from an insurer regarding the use of non-lawyer staff in a matter, provided the instructions are not contrary to the lawyer's professional obligations regarding the use of non-lawyer staff and do not compromise the lawyer's ability to provide adequate representation.

Sending confidential information to third-party auditor

The Committee considered whether it is proper for lawyers defending a claim for damages pursuant to a policy of insurance, in the absence of the informed consent of the insured, to accept insurer instructions to submit their accounts to a third-party auditor engaged by the insurer to review the reasonableness of the accounts. Lawyers in these circumstances act for both the insured and the insurer and, for the purposes of this opinion, the Committee assumed that the accounts forwarded to the auditor would contain confidential information relevant to the matters on which the lawyers are acting.

It was the view of the Committee that a lawyer who receives such instructions in these circumstances may forward accounts to the auditor without the informed consent of the insured provided:

1.  it would be proper for the lawyer to provide the information to the insurer itself, and

2.  the insurer confirms to the lawyer in writing that:

(a)  the auditor's services are required in order to facilitate the provision of legal services in the litigation,

(b)  the arrangements in place with the auditor protect the confidentiality of the information the lawyer provides, and

(c)  the insurer will notify the lawyer if condition (a) or (b) above ceases to be true.

Whether a lawyer has a duty to return a document to opposing party contrary to client instructions

Chapter 5, Rule 15 of the Professional Conduct Handbook
(Ethics Committee: September, 1999)

Lawyer A acted for a client on a matter and was discharged in May, 1998. After discharging Lawyer A, the client received, apparently in error, a copy of a letter that the lawyer on the other side of the case had written to his client. Lawyer A's client forwarded a copy of the letter to Lawyer A and asked him to discuss the letter with her. Lawyer A declined to read the letter when it became apparent to him that the letter may be covered by Rule 15.

Lawyer A was concerned that his client might be prejudiced if he returned the letter as required by Rule 15. His client instructed him to return the letter to her rather than to its rightful owner. Believing there was a conflict between Rule 15 and Rules 2 and 3 of Chapter 5, Lawyer A sought the advice of the Ethics Committee concerning the issue.

It was the view of the Committee that, if client instructions prevented the lawyer from carrying out his ethical duty under Rule 15, he must follow the client's instructions, but may not act for the client any further in the matter.

Whether a lawyer may permit a consultant to have contingent fee in class action

Chapter 9, Rule 6 of the Professional Conduct Handbook
(Ethics Committee: December, 1999)

A lawyer contemplated bringing a class action on behalf of injured plaintiffs for recovery of damages caused by failure of a particular residential construction product. He wished to engage a construction engineering consulting service ("the consultant") to assist him with the action. The consultant would not be a witness, but instead would act as an expert advisor and assistant in the prosecution of the action. The consultant's duties would include advising what experts to engage and advising on questions to be asked.

The lawyer would like to negotiate arrangements on behalf of his clients to have the consultant paid a contingent fee based on the amount recovered in the action. The fees would vary according to the stage of the litigation completed.

The lawyer would also be acting on a contingent fee basis and the fees he would ultimately be permitted to bill would be subject to court approval at the conclusion of the case. Fees payable to the consultant would also be disclosed to the court at the conclusion of the case. There was some potential for the amount of fees payable to the consultant to influence the fees the court ultimately approved for the lawyer and his firm, but that would also be true if the consultant was paid on a straight fee-for-service basis.

The purpose of the proposed contingent fee arrangement with the consultants was to reduce the risk to the litigants. The lawyer asked whether the arrangement he proposed was proper, given the prohibition on fee sharing in the Professional Conduct Handbook.

The Committee was of the opinion that no rules of professional conduct prohibit the lawyer from entering into the proposed arrangement, provided the consultant engaged by the lawyer will not be required to give evidence in the matter.

Whether a lawyer can disclose confidential information on bankrupt client in order to collect fee

Chapter 5 of the Professional Conduct Handbook
(Ethics Committee: December, 1999)

A lawyer asked whether it is proper to disclose confidential client information to the client's trustee in bankruptcy to enable the lawyer to collect his fee owed by the client. He asked the question in the following way:

I have a client who owes me a large sum of money. He has made an assignment in bankruptcy. He has filed a statement of affairs. He has not on the statement disclosed an asset of substantial value namely the right to sue a certain lawyer (a chose in action). I am of the opinion that he has such a right as I was intimately involved in the carnage that resulted from the negligence. Can I properly disclose this asset in communications with the trustee?

It was the Committee's view that the lawyer is entitled to disclose the client's confidential information to the trustee in bankruptcy if it is necessary to do that to collect his fee. Before disclosing the information he should, if possible, draw the client's attention to the alleged irregularity in the client's statement and ask that the client correct it. If the lawyer does disclose the information, he must disclose the minimum information necessary to collect the fee.

Whether debt owed to bank for line of credit is a practice debt

Chapter 2, Rule 2 of the Professional Conduct Handbook
(Ethics Committee: December, 1999)

The Discipline Committee asked the Ethics Committee to consider what constitutes a practice debt in relation to Chapter 2, Rule 2. The issue arose from a lawyer defaulting on an amount owed on a line of credit to a bank. The line of credit was used to finance the lawyer's practice.

The Committee noted that Rule 2 gives examples of the practice debts that are covered by the rule. Those examples relate to obligations that members of the profession incur to meet the needs of clients. It was the Committee's view that a more general obligation incurred by a lawyer, such as a line of credit to run a practice, is not the kind of obligation contemplated by the rule.

*   *   *

Whether a lawyer may witness document through video display terminal

Appendix 1 of the Professional Conduct Handbook
(Ethics Committee: March, 2000)

The Committee was asked whether it is proper for a lawyer to witness a signature as an officer under section 43 of the Land Title Act using live interactive videoconferencing.

The Committee noted that, in an opinion of April 11, 1996, the Ethics Committee identified the minimum obligations of a lawyer acting as a witness of the signature of an unrepresented mortgage borrower under section 43 of the Land Title Act, Appendix 1, Rule 2 and Chapter 4, Rule 1 of the Professional Conduct Handbook. The Committee expressed the view that those minimum obligations are:

  • to identify himself or herself as a lawyer,
  • to verify the identity of the borrower in accordance with section 43 of the Land Title Act, and
  • to advise the borrower that the lawyer is not protecting the borrower's interests.

It was the Committee's view that there are a number of aspects of these requirements that cannot be met using videoconferencing:

A lawyer cannot know what document the signer is signing and cannot know for certain that the paper the lawyer must sign was the paper signed by the person who executed the document.

Off-screen influences and the lack of proximity may detract from the lawyer's ability to verify the identity of the person who signed the document.

Furthermore, the Committee concluded that the words "appeared before" in section 43 require an actual physical appearance before the officer and not an appearance through the use of videoconferencing technology.