Code of Professional Conduct – Proposed Rule on Conflicts of Interest
The new Code of Professional Conduct came into force in Nova Scotia on January 1, 2012. As noted in the December 19, 2011 edition of the Current Issues in Legal Ethics column in InForum and in the October 2011 edition of the Society Record, Rule 2.04 regarding Conflicts of Interest remained under review by the Federation of Law Societies (FLS) at the end of 2011. At the Federation’s Council meeting in December 2011, the amended conflicts provisions were approved and have now been circulated to all Canadian law societies to consider for adoption. (See the Federation’s email message below.)
The Code of Conduct Working Group met on January 17, 2012 to review the Federation’s Standing Committee on the Model Code of Professional Conduct’s November 21, 2011 Report on Conflicts of Interest. The Standing Committee states that the amended rule reflects:
the principle enunciated by the Supreme Court of Canada in its decisions in Neil, and Strother v.3464920 Canada Inc. that a lawyer must not represent a client whose immediate legal interests are adverse to those of a current client, even if the matters are unrelated, unless the clients consent (known as the “bright-line rule”).
The Society’s Working Group agrees with the conclusion of the Standing Committee that:
In amending the definition of conflicts of interest, addressing current client conflicts in a general rule rather than in a separate provision, and expanding upon the consent provisions, the Standing Committee are confident that we have achieved our goal of drafting a rule on conflicts of interest that is clear and not unnecessarily restrictive, while being consistent with the duties that lawyers owe to their clients, including the duty of loyalty.
It is important to note that the principles from Neil and Strother were recently applied by the Saskatchewan Court of Appeal in Wallace v. Canadian National Railways, et al. The Standing Committee also considered that conflict rules based on the above principles have been in place in both Alberta and British Columbia for the last 10 years and similar provisions are included in the American Bar Association’s Model Rules of Professional Conduct and have been adopted in most American jurisdictions.
The Working Group is inclined to recommend adoption of the amended rule as proposed to the Nova Scotia Barristers’ Society’s Council at its March meeting, believing that the rule is clear and consistent with current case law regarding the duty of loyalty and the fiduciary duties lawyers owe to their clients. However, the Working Group is acutely aware of the concerns that have been raised by the Canadian Bar Association in the past, and agree that seeking the input of all members of the Nova Scotia Bar will provide valuable insight into the membership’s views on the application of these rules.
As a result, the Working Group is requesting that any comments be received in writing not later than 4:30 pm on Tuesday, February 14, 2012. Those comments can be directed to the
Code of Professional Conduct Working Group
c/o Elaine Cumming
1101-1645 Granville Street
Halifax, NS B3J 1X3
ecumming@nsbs.org
Federation email: Standing Committee Report on Conflicts of Interest / Rapport du Comité permanent sur les conflits d'intérêts
The CBA Task Force has now had an opportunity review the proposed amendments to the Model Code regarding Conflicts of Interest, as well as the Report of the Standing Committee. We appreciate having had the opportunity to participate in this process.
As we have previously indicated, we support Model Rule 2.04(1) as proposed. This Model Rule properly regulates situations where there is a substantial risk of material impairment of the duties owed by lawyers to their clients. While we remain concerned about some aspects of the commentary to Model Rule 2.04(1), we recognize how difficult it is to draft commentary that simply and accurately describes complex fiduciary law which is itself evolving.
As we indicated in the Appendix to our September 21, 2011 Response, there are aspects of the other amendments which are of concern. While some of our suggested changes have been made, we think that there is further work which could be done.
But while the proposed amendments could no doubt be further improved, we also recognize that real progress has been made with very substantial effort over an extended period. We look forward to the Federation finalizing its Model Code in accordance with your Report so that the law societies may commence their consideration of, and consultation regarding, their conflicts rules. We look forward to being able to participate in the consultations undertaken by the individual law societies.
On behalf of the CBA Task Force, I wish to take this opportunity to thank the members of the several Federation committees who have worked diligently and in the public interest on this important project.
Scott Jolliffe
Chair, CBA Task Force On Conflicts of Interest
