By Jocelyn Frazer, Practice Advisor What should a lawyer do when the mortgage lender, or the police with the authority of the lender, requests the lawyer's file? If a lawyer is acting for multiple parties in a transaction, and one party requests the lawyer's file, the lawyer should retain the file originals, and provide copies of the file originals, and to provide copies of the file to each party in the transaction. Multiple representation is not in and of itself problematic. It is clear from the Code that where parties are not adverse in interest, there is fully informed consent. With the understanding that material information is not confidential with respect to the other parties, a lawyer may represent multiple parties to a transaction. It is also clear that where the parties are no longer aligned in interest, the lawyer must withdraw completely, and the parties must seek independent representation. The issue of "who is my client" should be central to the decision-making process. In the context of residential real estate transactions, it is essential that lawyers understand they have multiple clients regardless of who is paying the fees, and that they have duties to each. The fact that this does not always happen is becoming apparent in mortgage fraud investigations. Problems typically develop when one of the parties, unsually the lender, requests a copy of the file after the transaction has been completed, and continued on page 11 sidebar |
Ethics in Practice
Joint Client Conflict: A Family Law Dilemma
By Ross McLeod, QC, Practice Advisor
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Sound ethical decision making should begin with the question: Who is my client?
In the recent case of O'Toole v. Law Society of New Brunswick, [2007] N.B.J. No. 66, that province's Court of Appeal upheld a discipline decision of the Law Society. Mr. O'Toole represented the husband, Mr. Grant, and took instructions to prepare a separation agreement. When it was ready, he met with both spouses.
The lawyer advised that, if a dispute arose between them, he would have to withdraw from the file entirely and, as well, one of them would need independent legal advice on signing. He sent the husband to another lawyer to see the separation agreement signed. Mrs. Grant signed in Mr. O'Toole's office. Because the parties had agreed between themselves on the division of property, financial disclosure was never discussed with either of them.
Three years later, Mrs. Grant moved to set aside the agreement on the grounds that her husband had not made adequate financial disclosure. That cost Mr. Grant an extra $15,000 and he felt aggrieved by the conduct of Mr. O'Toole in handling the agreement.
He complained to the Law Society. Acting in a conflict of interest, unsurprisingly, was held by the Law Society's discipline committee to be conduct deserving sanction under the N.B. Law Society Act. Mr. O'Toole appealed to the Court of Appeal. A number of administrative law grounds were relied upon, including delay, standard of review and disclosure.
However, the ethical substance of the appeal turned upon the conflict in apparently representing or advising both parties and also whether the Law |
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Society had properly adopted a Code of Conduct.
The N.B. Discipline Committee found that the parties were "starkly adverse in interest". The Alberta Code of Professional Conduct, Chapter 6, Rules 1 and 2, and the Commentary provide ample guidance for the Alberta law practitioner.
What is more surprising is that Mr. O'Toole contended that he acted consistently with the long standing practice of the Fredericton family law bar of formalizing settlements already agreed between the parties, subject to independent legal advice for one of them. The panel appears not to have heard expert evidence and relied strictly on the local Code rule. The parties had agreed to the property settlement so, the lawyer testified, he saw no need to discuss financial disclosure.
Rationalization of this nature is often seen by the Practice Advisors. Lawyers make ethical decisions every day, often many times each day. Bad ethical decisions are rarely motivated by greed, stupidity, substance abuse or laziness. Ironically, ethical failures flow from striving diligently to help clients. What lawyer has not seen zealous representation stray into the overzealous, impatience become incivility and mere acquaintance result in an unintended lawyer-client relationship?
In conflict of interest situations, the first threshold question should always be, "Who is my client?" Most firms practice effective conflict checking. Lawyers are always parties to their own ethical decisions; and they make lots of them every day. Conflict checking systems cannot address all situations, like Mr. O'Toole's, and lawyers will always need to reflect on who is the client, who is not and who else may be owed ethical duties.  | |
