From the Ethics Committee
BC Code of Professional Conduct – consultation on conflicts portion
The Ethics Committee is seeking the views of British Columbia lawyers on the conflicts portion of Federation of Law Societies Model Code and the adaptation of it the Committee proposes for British Columbia (the “BC Code”). This is a similar consultation process to the process the Committee engaged in for the non-conflicts portion of the BC Code. Lawyers who wish to make comments on the conflicts portion of the Code, including any of the issues specifically identified below, are requested to do so by letter or email by August 22, 2011 by contacting:
Staff Lawyer – Ethics
Law Society of BC
845 Cambie Street
Vancouver, BC V6B 4Z9
Tel. direct: (604) 443-5711
Toll free from in BC: 1-800-903-5300
The final decision about whether to adopt a version of the Model Code for British Columbia will be made by the Benchers.
Spring 2010 Benchers’ Bulletin
In the Spring 2010 Benchers’ Bulletin the Ethics Committee advised British Columbia lawyers of the status of the Federation of Law Societies Model Code and the Law Society consideration of it. The Benchers’ Bulletin stated :
At the end of October 2009 the Federation of Law Societies adopted a Model Code of Conduct, based on the work that two Federation committees have done since 2005. The Federation Model Code encompasses most of the issues currently addressed by individual codes of conduct adopted by Canadian law societies. Two important issues have not yet been concluded by the Federation and incorporated in the Model Code: conflicts, generally, and the public safety exception to confidentiality. A special committee of the Federation is currently working on the conflicts issue and the Federation expects to have rules addressing the remaining issues before the end of the year.
The Federation’s intention in adopting the Model Code is to encourage more uniform codes of professional conduct among law societies. Although the Federation recognizes that each jurisdiction is solely responsible for its own code, law societies hope that the availability of a Model Code that has been compiled with the assistance of all jurisdictions, together with a process for reconsidering and revising the Model Code into the future, will lead to substantial congruence among rules of conduct in the various jurisdictions. This should assist lawyers who work in multiple jurisdictions in Canada in understanding professional rules from one jurisdiction to another.
If the Law Society of BC were to adopt the Model Code, or a version of it, the Code would replace our current Professional Conduct Handbook as the Code of Professional Conduct for British Columbia.
Current status of Ethics Committee consideration of the Model Code
The Ethics Committee invited comments on the non-conflicts portion of the BC Code from October to December 31, 2010. The Committee made numerous changes to the Code based on submissions made by members of the profession and the Benchers adopted a version of the non-conflicts portion of the Code on April 14, 2011, to be implemented at a date to be set.
The Ethics Committee has now completed a review of all parts of the conflicts portion of the Federation of Law Societies Model Code and expects to make a recommendation to the Benchers for its adoption later in the year. The Committee has accepted most of the conflicts rules from the Model Code but proposes a number of changes to them in order to adapt the Code to the needs of the profession in British Columbia. Before making a recommendation to the Benchers the Ethics Committee invites members of the profession to comment on this portion of the Code. The Committee will review those comments and, where members of the Committee are persuaded the Code can be improved, will amend the current draft of the Code before presenting it to the Benchers.
When the Benchers are satisfied with the conflicts portion of the BC Code, they will set an effective date for both the non-conflicts and conflicts portions of the Code to come into effect, replacing our current Professional Conduct Handbook.
Further process concerning the Model Code
A special advisory committee of the Federation which was struck to conduct a further review of conflicts issues, giving special attention to the views of the Canadian Bar Association, completed its work in February 2011. However, the Federation has not yet made a final decision about the content of the conflicts rules and will be considering those rules again after a further review of them by a new Federation Committee with responsibility for the Model Code, the Standing Committee on the Model Code. The Standing Committee has been established to monitor the implementation of the Model Code by Law Societies across the country and to review issues on an ongoing basis with the aim of standardizing as many provisions of the Code as possible among the Law Societies over a number of years. The Standing Committee will also be reviewing the conflicts section of the Model Code before a final version is considered by the Federation. The BC Law Society President and Ethics Committee member, Gavin Hume, Q.C., is the current Chair of the Standing Committee.
The Ethics Committee is open to changing or modifying any of the conflicts rules as a result of representations from lawyers, the Canadian Bar Association or the Federation of Law Societies.
Major changes to the conflicts portion of the Model Code proposed by Ethics Committee
This section highlights some of the major changes the Ethics Committee proposes for the conflicts portion of the Model Code and the rationale for those changes. References are to sections in the BC Code, but where the number of the rule in the BC Code and the rule in the Federation Model Code differ, the difference will be noted.
BC Code definitions of “conflict of interest” and “conflicting interest”
Since these terms are defined in the Commentary following Subrule 2.04(2), we thought it unnecessary to also include them in the definition section.
BC Code subrules 2.04(1) and (2)
The Ethics Committee added the words “except as permitted under this Code” to subrule 2.04(1) and the words “or as otherwise permitted under this Code” to subrule 2.04(2). Some parts of the Code, notably Appendix C – Real Property Transactions, permit a lawyer to act in situations that would ordinarily be situations of conflict and the purpose of these changes is to recognize that.
BC Code subrule 2.04(3) Acting Against Current Clients
The effect of BC Code subrule 2.04(3) is the same as the Model Code subrule 2.04(3), although it is worded slightly differently from the Model Code and is made expressly subject to subrules 2.04(4) and 2.04(5) of the BC Code. Subrule 2.04(3) is modeled on the test set out in R. v. Neil, 2002 SCC 70 and refined in Strother v. 344920 Canada Inc., 2007 SCC 24.
Subrule 2.04(3) in both the Model Code and BC Code seeks to adhere closely to the test set out in Neil.
The basic approach of the Federation with respect to subrule 2.04(3) may be summed up in the following quotation from R. v. Neil (Binnie J. at para 29):
The bright line is provided by the general rule that 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.
Arguing that its views were also consistent with R. v. Neil, the Canadian Bar Association Task Force on Conflicts of Interest approach to the issue of a lawyer acting against a current client emphasized the following principles (see pages 12 and 13 of CBA Final Report on Conflicts of Interest, August, 2010, see web address below)
1. recognize that there are three different types of “conflicting interest”: a “conflict of duty and interest”, a “conflict of duty and duty”, and a “conflict of duty with relationship”;
2. define a “conflicting interest” to mean an interest that gives rise to a “substantial risk of material and adverse effect on representation”;
3. provide that, except after adequate disclosure to and with the consent of the client, a lawyer may not act in a matter in which a conflicting interest is present;
4. provide that a lawyer may act in a matter which is adverse to the interests of a current client provided that: the matter is unrelated to any matter in which the lawyer is acting for the current client and no conflicting interest is present;
Lawyers who wish to follow the discussion about this rule between the Federation and the Canadian Bar Association may wish to review the following documents:
Canadian Bar Association documents
See “Final Report” (August 2008) and “CBA Response to Federation of Law Societies of Canada Advisory Committee Report on Conflicts of Interest” (August 16, 2010) at www.cba.org/CBA/groups/conflicts/.
Federation of Law Societies of Canada documents
See Federation of Law Societies Advisory Committee On Conflicts of Interest – Final Report (June 2, 2010) and Federation of Law Societies Advisory Committee On Conflicts of Interest – Supplementary Report (February 14, 2011) at www.flsc.ca/en/whatsnew/whatsnew.asp#110223.
It is noteworthy that Federation Model subrule 2.04(3) and BC Code subrule 2.04(3) provide more scope for lawyers to act against current clients than the current Professional Conduct Handbook. Chapter 6, Rule 6.3 of the Handbook only permits a lawyer to act against a current client if the matters are unrelated, no confidential information is at risk and the affected clients consent. Subrule 2.04(3) in both the Model Code and BC Code versions permits a lawyer to act with client consent alone.
Although a dialogue between the Federation and the CBA concerning appropriate wording for Rule 2.03(3) continues, and the issue will be pursued further by the both the Federation Standing Committee and the Ethics Committee, the Ethics Committee has opted not to consider any changes to the current wording in the BC Code until it has received the views of the profession.
Model Code subrule 2.04(4) Concurrent Representation
The BC Code eliminates Model Code subrule 2.04(4) “Concurrent Representation” and substitutes for it “Acting Against Current Clients without express consent.” The Ethics Committee was of the view that existing subrule 2.04(3) of the BC Code permits some of the representations specifically contemplated by Model Code subrule 2.04(4), but identified a number of problems with the Model Code subrule: it permits different lawyers in the firm to act for clients with different interests, identifies no standards for screening confidential information and refers to no criteria to determine whether such representation is actually in the interests of the clients or the public interest.
BC Code subrule 2.04(4) Acting against Current Clients without express consent
The Ethics Committee removed language from the Commentary to subrule 2.04(3) and made it into subrule 2.04(4), in place of the Model Code subrule 2.04(4) [see above]. The Committee was of the view that the concept of permitting lawyers to act against current clients without consent in the circumstances identified in subrule 2.04(4) merited its own rule. Subrule 2.04(4) is the BC Code counterpart to Chapter 6, Rule 6.4 of the Professional Conduct Handbook. Two of the noteworthy differences between subrule 2.04(4) and Rule 6.4 are the following:
- Subrule 2.04(4) does not require that a client have previously or commonly consented to a lawyer acting against that client but, instead, permits the lawyer to do so if the client is a “substantial entity.”
- The lawyer must reasonably believe he or she is able to represent that client without materially adversely affecting the representation of the other.
BC Code subrule 2.04(5) Acting Against Current Clients with advance agreement
The Ethics Committee added subrule 2.04(5) so that lawyers can attempt to agree with their clients in advance about whether and under what circumstances lawyers can act against their clients in unrelated matters, when no confidential information is at risk. The Committee was of the view that it is highly desirable that lawyers and their clients agree from the beginning of the engagement about the areas and ways in which lawyers can act against a client for whom they are taking on a mandate. While it is possible that courts may find, in some instances, that the client’s inability to know all circumstances where the lawyer’s firm may wish to act against them in the future might preclude the effectiveness of such an agreement, there may be many circumstances where the expressly stated wishes of the parties in such matters will be conclusive.
BC Code subrule 2.04(6) Acting Against Former Clients
This subrule is analogous to Chapter 6, Rule 7 of the Professional Conduct Handbook. The Ethics Committee proposes to eliminate the language from the Model Code subrule [subrule 2.04(5)] “or against persons who were involved in or associated with a former client.” It was the Committee’s view that this provision makes it unnecessarily difficult to act against a former client on an unrelated matter, since it would in some cases require the consent of persons who were never the lawyer’s clients.
BC Code subrule 2.04(7)
Subrule 2.04(7) [analogous to Model Code subrule 2.04(6)] recognizes that in unusual circumstances where a lawyer’s firm has received confidential client information, a lawyer may act against a former client of the lawyer’s firm, with appropriate screening in place.
BC Code subrule 2.04(8 to 13) Joint Retainers
These subrules are the equivalent of Chapter 6, Rules 4 to 6.01 of the Professional Conduct Handbook. Sample letters currently in Appendix 6 of the Professional Conduct Handbook would be moved from the Code itself to the LSBC website.
Model Code subrule 2.04(12 to 16) Acting for Borrower and Lender
The Ethics Committee is of the view it is undesirable for lawyers to act for both borrower and lender in any situations other than those contemplated for simple conveyances. The Committee has removed these subrules from the BC Code.
BC Code subrules 2.04(14 to 17) Limited Representation
These subrules are imported unchanged from Chapter 6, Rules 7.01 to 7.04 of the Professional Conduct Handbook and are designed to permit lawyers to act pro bono for clients under the auspices of a not for profit organization without incurring the usual obligations under the traditional conflicts rules.
BC Code subrules 2.04(18 to 26) Conflicts Arising as a Result of Transfer Between Law Firms
These subrules import the current rules in Chapter 6, Rules 7.1 to 7.9 and Appendix 5 of the Professional Conduct Handbook into the BC Code. The LSBC Benchers made some changes to the Professional Conduct Handbook in 2009 to take account of the experience with these rules since 1995 and, as a result, the BC Code provisions are slightly less onerous than those of the Model Code for a firm that is being joined by a new lawyer.
BC Code subrule 2.04(27) Conflicts with Clients
Although it is clear from the Model Code rules respecting conflicts that a lawyer may not act when he or she is in a conflict with a client, the Ethics Committee was concerned that the Model Code has no standards to determine when such a conflict exists. Subrule 2.04(27) imports from Chapter 7 of the Professional Conduct Handbook the standards that the LSBC has been using since 1993: a lawyer may not act if it would reasonably be expected the lawyer’s professional judgment would be affected by the lawyer’s or anyone else’s relationship with the client or interest in the client or the subject matter of the legal services. The Ethics Committee has given a variety of opinions on this standard since 1993 and, although the standard is not an exacting one, it nevertheless provides better guidance for lawyers than the Model Code.
BC Code Appendix C Real Property Transactions
Appendix C imports into the BC Code, without change, Appendix 3 of the Professional Conduct Handbook.
Code versions attached
So that lawyers can identify the changes the Ethics Committee proposes to make to the Federation’s Model Code, the following three versions of all the conflicts provisions in the Codes are available in PDF:
1) The current version of the conflicts portion of the Federation of Law Societies Model Code (“the Model Code”).
2) The conflicts portion of the Code proposed for British Columbia, the BC Code, is based on the Model Code and has many rules in common with it, but amends it in ways that are intended to improve it for use in British Columbia.
3) A redlined version of the conflicts portion of the BC Code that highlights proposed changes to the Model Code.
4) A Table of Concordance between the conflicts rules in the draft BC Code and those in the current Professional Conduct Handbook.