Is the Lawyer in a Conflict of Interest?

A lawyer’s duty of loyalty to a client includes a duty to avoid conflicting interests.

Divided Loyalties

One type of prejudice from which the law of conflict of interest seeks to protect a client is the “prejudice arising where the lawyer ‘soft peddles’ his representation of a client in order to serve his own interests, those of another client, or those of a third person.”

Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, [2013] S.C.R. 649 (“CNR”), at para. 23.

As regards a current client, a lawyer must not place herself in a situation that jeopardizes her effective on-going representation of the client.

 CNR, at para. 23.

That is because “[t]here should be no room for doubt about counsel’s loyalty and dedication to the client’s case.”

R. v. McCallen (1999), 43 O.R. (3d) 56 (C.A.), at p. 67.

As well, “[w]hen a client employs an attorney, he has a right to presume, if the latter be silent on the point, that he has no engagements, which interfere, in any degree, with his exclusive devotion to the cause confided to him.”

Williams v. Reed, 29 F. Cas. 1386 (Cir. Ct., D. Maine 1824), quoted with approval in Strother v. 3464920 Canada Inc., 2007 SCC 24, [2007] S.C.R. 177, at para. 55.

Although the relentless financial pressure of the business of law may tempt some lawyers to accept or hang on to mandates that impinge on their duty of loyalty to an existing client, the law is clear: “Loyalty includes putting the client’s business ahead of the lawyer’s business.”

R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, at para. 24.

STEP ONE

Are the interests of Client X directly adverse to those of Client Y?

The case law sets out a two-step analysis to determine whether a lawyer’s acceptance of a retainer would conflict with her duty of loyalty to a current client. The first step involves ascertaining whether the “bright line” rule articulated by the Supreme Court in Neil, at para. 29, applies. That rule states:

[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.

The “bright line” rule applies only where the immediate, legal interests of clients are directly adverse in the matters on which the lawyer is acting.

CNR, at paras. 33 and 35.

STEP TWO

Does concurrent representation create a substantial risk of there being conflicting pressures on the lawyer’s judgment?

Where the “bright line” rule does not apply, the second step of the analysis considers the more contextual substantial risk principle formulated in CNR, at para. 38:

When a situation falls outside the scope of the bright line rule for any of the reasons discussed above, the question becomes whether the concurrent representation of clients creates a substantial risk that the lawyer’s representation of the client would be materially and adversely affected. The determination of whether there exists a conflict becomes more contextual, and looks to whether the situation is “liable to create conflicting pressures on judgment” as a result of “the presence of factors which may reasonably be perceived as affecting judgment”.

R. v. Baharloo, 2017 ONCA 362

conflict of interest/realistically available defence/ineffective assistance of counsel          

Lawyer in a conflict of interest by representing both the accused and a potential third party suspect.  The lawyer failed to pursue a third-party suspect defence which, in the circumstances, was a realistically available defence. Ineffective assistance of counsel established.  Conviction set aside on appeal, new trial directed.