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Conflicted Identities: The Battle over the Duty of Loyalty in Canada

Adam M Dodek*
The leitmotif of conflict of interest is the broader duty of loyalty.1

Loyalty is a core value for the profession, although what responsibilities are encompassed within
the term is somewhat unclear.2


Conflict of interest has been a leading issue in the Canadian legal profession over the last three
decades, and it shows no sign of abating. No other issue has so consistently and dramatically
dominated both the practice of law and its regulation in Canada.3 This article describes the
conceptual and public battles that have been fought over conflicts of interest in Canada during
this time. These battles reveal deeper ontological divisions about the practice of law in Canada.
The clash over conflicts of interest exposes competing conceptions of what it means to be a
lawyer in Canada in the twenty-first century and how the legal profession should be governed.

Associate Professor, Faculty of Law, University of Ottawa, Canada. An earlier version of this
paper was presented at the Fourth International Legal Ethics Conference at Stanford Law School in July
2010 and at the annual meeting of the Association of Professional Responsibility Counsel in Toronto in
August 2011. Some of the ideas in this paper were presented at a meeting of the Canadian Association of
Legal Ethics at McGill University in January 2009. The author extends his appreciation to Professor
Richard Devlin for organising the panels on conflicts of interest at both McGill and Stanford, for
encouraging me to pursue research in this area and for his continued support and camaraderie. Thank you
to Trevor Farrow, Aline Grenon, Marina Pavlovic, Lorne Sossin, Alice Woolley, Ellen Zweibel and the two
anonymous reviewers for reading earlier drafts of this paper and providing helpful comments. Thanks also
to Malcolm Mercer for his comments and his sharp but constructive criticism on a related presentation.
Support for this research was provided by the Borden Ladner Gervais LLP Research Fellowship, the
University of Ottawas Research Development Program and the Law Foundation of Ontario. Thank you to
all of them for their support. Special thanks are due to my remarkable Research Assistant on this project
Flora Stikker, JD 2011 (Ottawa). Her work has been fantastic and I will be benefiting from it for many
years to come. All websites accessed 15 November 2011.
The Hon Michel Proulx and David Layton, Ethics and Canadian Criminal Law (Irwin Law, 2001)
287, quoted by the Supreme Court of Canada in Strother v 3464920 Canada Inc, 2007 SCC 24, [2007] 2
SCR 177.
Simon Chester, Conflicts of Interest in Adam M Dodek and Jeffrey G Hoskins, QC (eds),
Canadian Legal Practice: A Guide for the 21st Century (LexisNexis, 2009) 4.170.
For comprehensive treatment of conflicts of interest in Canada see Alice Woolley, Understanding
Lawyers Ethics in Canada (LexisNexis, 2011) c 8; Chester, ibid; Paul M Perell, Conflicts of Interest in the
Legal Profession (Butterworths, 1998); and MD McNair, Conflicts of Interest: Principles of the Legal
Profession (Canada Law Book, 2005).

available at:
at: http://ssrn.com/abstract=1964458

The conflicts of interest debate increasingly centres on the idea of lawyer loyaltythe duty of
loyalty owed by lawyers to their clients.4
In the course of the battle over conflicts of interest, participants have articulated competing
visions of lawyer loyalty. The Supreme Court of Canada strongly rejected a minimalist vision of
lawyer loyalty but has been sharply divided between a maximalist and a pragmatic vision,
ultimately adopting the latter. These markers should be conceived of as points along a spectrum
of lawyer loyalty that assist in revealing divisions of opinion rather than strict typologies.
Moreover, these visions of lawyer loyalty intersect at times with competing conceptions of how
lawyers are regulated in Canada.
While self-regulation of the legal profession is on the wane in numerous jurisdictions, Canada
stands out as a jurisdiction where self-regulation is alive and well. There have been attempted
incursions into self-regulation by governments and other regulators, but they have been episodic
and either not particularly significant5 or beaten back by the efforts of the bar with the assistance
of the courts.6 For these reasons, Alice Woolley has called Canada the last bastion of unfettered

See Richard F Devlin and Victoria Rees, Beyond Conflicts of Interest to the Duty of Loyalty:
From Martin v Gray to R v Neil (2005) 84 Canadian Bar Review 433. For a critique of the application of
the concept of loyalty in this area see Harvey L Morrison, Conflicts of Interest and the Concept of
Loyalty (2008) 87 Canadian Bar Review 566, 624 (Loyalty is a vague concept. While it is often yoked
together with the need to protect the publics confidence in the legal system, it lacks the precision necessary
to guide members of the legal profession on the proper way to deal with day-to-day conflicts problems.
There is a danger that the concept of loyalty will be used uncritically. Many more situations may be
identified as giving rise to conflicts of interest when none exist. Analytical clarity would be enhanced if use
of the concept of loyalty was avoided and the traditional approach of equity employed).
See eg Wilder v Ontario Securities Commission (2001) 53 OR (3d) 519, [2001] OJ No 1017 (CA)
(establishing that the Ontario Securities Commission has the power to regulate the conduct of lawyers
appearing before it). The bar in Canada strongly resisted the attempt by securities commissions to regulate
lawyers. While the attempt failed, the Ontario Securities Commission has shown little interest in regulating
The most notable case is the decade-long battle between the federal government and the bar over
the application of money laundering regulations to lawyers. See Law Society of British Columbia v Canada
(Attorney General) (2001) 207 DLR (4th) 705, [2001] BCJ No 2420 (SC), affd (2002) 207 DLR (4th) 736,
[2002] BCJ No 130 (CA), leave to appeal granted 25 April 2002 and notice of discontinuance of appeal
filed 25 May 2002, [2002] SCCA No 52; Federation of Law Societies of Canada v Canada (Attorney
General) [2001] AJ No 1697 (QB); Federation of Law Societies of Canada v Canada (Attorney General
(2002) 203 NSR (2d) 53, [2002] NSJ No 199, 2002 NSSC 95; Federation of Law Societies of Canada v
Canada (Attorney General) (2002) 57 OR (3d) 383 (SCJ); Federation of Law Societies of Canada v
Canada (Attorney General) (2002) 218 Sask R 193, [2002] SJ No 200, 2002 SKQB 153. The Federation of
Law Societies launched an assault on the federal governments money laundering reporting requirements.
After several court decisions in the Federations favour, the federal government settled these actions with
the Federation. See Kirk Makin, Ottawa Gives Up Forcing Lawyers to Tell on Clients Globe and Mail, 25
March 2003, A13. In 2006, the government passed Bill C-25, which exempts lawyers from the reporting
requirements of this regime, but would require lawyers to record all transactions of $3,000 or more. The
battle continues. See Lawyers Back on the Hook in Revised Money Laundering Act Law Times,

available at:
at: http://ssrn.com/abstract=1964458

self-regulation of the legal profession in the common law world.7 However, in these pages
Woolley has also written about judicial regulation of the Canadian legal profession.8 Which
account is correct? In a sense both are. Woolley is absolutely right that Canada appears to
maintain the strongest regime of self-regulation in the common law world. However, she is also
correct that judicial regulation is an important aspect of the regulation of the Canadian legal
profession. The tension between judicial regulation and self-regulation is perhaps most evident in
the area of conflicts of interest. The regulation of conflicts of interest in Canada has at times been
characterised by cooperative co-regulation, but more recently the spirit of cooperation between
the bench and the bar has been displaced by competitive regulation where the courts and the bar
are clashing. The stakes are high, not only for lawyers and law firms but for self-regulation of the
legal profession in Canada. The battle over conflicts of interest is just as important as the
substantive debate over the underlying issues.
In the sections that follow, I describe the different battles over these conceptions of lawyer loyalty
in Canada and how they intersect with these regulatory approaches. However, in order to provide
the necessary context, I first explain the regulatory framework in Canada.

I. Regulation of the Legal Profession in Canada

Unlike in the United Kingdom and other jurisdictions, the regulatory and representative
responsibilities of the Canadian bar have long been separated. Law societies in each province and
territory regulate lawyers in their jurisdiction.9 The boards of directors of the law societies are
elected predominantly by the member lawyers. Some lay members are appointed by government,
and the increase in the number of lay members has been the most notable form of government
involvement in the regulation of the Canadian legal profession over the past few decades.10 The
law societies operate under legislation enacted by the provincial legislatures and are mandated to
regulate the practice of law in the public interest.11 They generally have good working
relationships with government and are able to obtain legislative changes to update or reform their

Woolley (n 3) 4.
Alice Woolley, Judicial Regulation of the Legal Profession: Correspondents Report from
Canada (2010) 13(1) Legal Ethics 104.
Each of the 10 provinces and three territories have a single law society except for Quebec, which
has a dual bar where the Barreau du Quebec regulates lawyers and the Chambre des notaires regulates
In Ontario, four lay benchers were appointed by the Lieutenant Governor (OIC 3080/74) on 20
November 1974, pursuant to the Law Society Act, RSO 1990, c L.8, s 23(a). The four lay benchers
attended Convocation for the first time on 17 January 1975. The number of appointees increased to eight in
1999, pursuant to the Law Society Act, RSO 1990, c L.8, s 23(1).
See eg Law Society Act, RSO 1990, c L.8, s 4.2(3).

Electronic copy available at: http://ssrn.com/abstract=1964458

operations. The law societies are statutorily empowered to enact by-laws as well as the Codes of
Conduct that lawyers are required to follow. The law societies investigate complaints and
discipline lawyers. There are limited rights of appeal or judicial review to the courts.
The Canadian Bar Association (CBA), on the other hand, is a voluntary national advocacy
association of lawyers established in 1896.12 It was modelled on the American Bar Association
(ABA), but lacks the resources or the political clout of its American counterpart. It has followed
the ABAs lead in enacting Model Codes of Conduct and these have strongly influenced most law
societies codes of conduct, although that influence is being challenged by the emergence of a
newly active actor: the Federation of Law Societies, a federation of the 14 Canadian law
societies.13 In 2009, the Federation released a draft model code of conduct to be considered for
adoption by the member law societies. That process is still underway. As discussed below, the
CBA and the Federation have taken very different approaches on the conflicts issues.
Finally, there are the courts. They have the inherent power to regulate the conduct of lawyers as
officers of the court.14 The courts jurisdiction over lawyers finds its source in the courts power
to control their own process, which includes the power to regulate lawyers conduct in legal
proceedings that may affect the administration of justice.15 This jurisdiction underlies the courts
power to remove counsel for a disqualifying conflict of interest,16 to refuse to allow counsel to
withdraw from a case,17 to award costs personally against counsel,18 and to sanction counsel for
abusing the courts process.19
This is the necessary context for consideration of the battle over conflicts of interest in Canada.
This battle focuses on the Conflicts Trilogy



the three Supreme Court of Canada cases

Canadian Bar Association, About the Canadian Bar Association, www.cba.org/CBA/about/main.

Federation of Law Societies of Canada, About Us, http://www.flsc.ca/en/about-us/
See generally Brent Olthuis, Professional Conduct in Adam M Dodek and Jeffrey H Hoskins,
QC (eds), Canadian Legal Practice: A Guide for the 21st Century (LexisNexis, 2008) 3.311 (looseleaf).
Martin v Gray [1990] 3 SCR 1235 at 1245, [1990] SCJ No 41 (also known as MacDonald Estate v
Martin); R v Cunningham, 2010 SCC 10, [2010] 1 SCR 331 at para 18. See also Woolley (n 8).
See Martin v Gray (n 15).
See Cunningham (n 15).
See eg Rules of Civil Procedure, RRO 1990, Reg 194, Rule 57.07 (Ont) (liability of lawyer for
See eg R v Gunn (2003) 15 Alta LR (4th) 109 (Alta QB) (trial judge in impaired driving
prosecution ordering defence counsel to pay costs personally to Crown on basis that counsel made
improper allegations and applications amounting to abuse of process).
Martin v Gray (n 15) and Strother (n 1). In this article, I say as only as much about the facts of the
cases as is necessary to support the narrative. I do not go any further, largely for two reasons. First, this
article focuses on different visions of lawyer loyalty rather than on trying to understand each case on its
own terms. Second, I think that sometimes trying to understand the confusing facts of these cases may not
be worth the effort. The cases have tended to involve extreme and very unusual fact situations, from which
broad norms, broad prescriptive norms have been derived. Simon Chester, The Conflicts Revolution:

between 1990 and 2007 that shaped the way in which conflicts are dealt with in legal practice and
by the courts and also set the terms of the battles.

II. Round One: Transferring Lawyers and Imputed Disqualification (1990)

In 1987, the CBA had just updated its Code of Conduct for the first time in over a decade.
However, those changes did not account for significant demographic shifts in the Canadian legal
profession. Law firms had become bigger, and lawyers loyalty to their firms was weakening,
making firms composition more fluid.21 Mobility became a catchword in the Canadian legal
profession: the mobility of lawyers between large firms in the same city and later on the mobility
of lawyers between provinces.
Martin v Gray (1990) was the first case in the Trilogy. Its controversial nature has dulled
somewhat with time but when it was decided in 1990, the decision sent shockwaves through the
Canadian legal profession. Martin v Gray ushered in what has been described as a conflicts
revolution in Canada.22 The case involved a junior lawyeraptly named Dangerfieldwho
transferred from her small defunct firm to a big law firm that was acting against a former client of
hers. At her former firm, Dangerfield was actively engaged in the case and had been privy to
confidences disclosed by the client.23 Dangerfields former firm dissolved when its principal was
appointed to the bench and she joined her new firm along with seven other of the 11 members of
that firm. Both Dangerfield and senior members of her new firm swore affidavits that the case

Martin v Gray and Fifteen Years of Change (Heenan Blaikie LLP, 2006) 93. A detailed recitation and
analysis of the facts can be found in that work.
See David AA Stager with Harry W Arthurs, Lawyers in Canada (University of Toronto Press,
1990) 168.
Chester (n 20) 14 (Martin v Gray ignited the conflicts revolution in Canada). For a contrary view
see Gavin Mackenzie, Coping with Conflicts of Interest in the Wake of MacDonald Estate, Neil and
Strother, paper presented at the Ontario Bar Association Continuing Legal Education Conference,
Privilege, Confidentiality and Conflicts of Interest: Traversing Tricky Terrain, 23 October 2008 (Ontario
Bar Association, 2008) 80 (In spite of views to the contrary by some commentators, these decisions are not
revolutionary. Rather, they are unsurprising clarifications of the nature and implications of lawyers
fiduciary duties to clients, which have long been recognized).
Martin v Gray (n 15) para 2: While acting for the appellant, Twaddle was assisted by Kristin
Dangerfield, a graduate articled student and later a junior member of his firm. She was actively engaged in
the case and was privy to many confidences disclosed by the appellant to Twaddle. Dangerfield was in
attendance at numerous meetings between Mr Twaddle and the appellant Martin, assisted in the preparation
of many documents, prepared and attended examinations for discovery, was present when a settlement was
discussed by the parties and during discussions of a settlement with representatives of the law firm of
Thompson, Dorfman, Sweatman, and participated in the taking of de bene esse evidence. Upon Twaddles
appointment to the bench in 1985, Dangerfield joined the firm of Scarth, Dooley. Eight out of eleven
members of that firm, including Dangerfield, joined the Thompson firm in 1987. The Thompson firm
represents the respondent in this action.

had not been discussed since she joined the firm and would not be.24 However, no measures were
taken by the new firm to ensure that she did not receive or reveal any information related to the
file. Dangerfields former client moved to disqualify her new firm as counsel.
At the Supreme Court of Canada, all seven judges who heard the appeal25 agreed that Dangerfield
had tainted her new firm and that as a result, her former client was entitled to have Dangerfields
firm removed as counsel for his opponent.26 Martin v Gray does not directly discuss lawyer
loyalty.27 However, three different perspectives on lawyer loyalty emerge from the closely
divided 4-3 decision in this case.28
The first was a minimalist vision of lawyer loyalty. Under this version, lawyer loyalty is equated
with a duty not to breach confidences and not to use client information against a client. The
concern here is with actual violations of confidentiality. The proposed rule would only prohibit
actual violations, not appearances. It does not encompass prophylactic measures. This minimalist
vision was articulated by the law firm in Martin v Gray in its trust-me assertion that no one had
discussed the case with Dangerfield. This vision suffers from what I have elsewhere described as


Ibid, para 3.
There are nine members of the Supreme Court of Canada. A quorum is any five judges. See
Supreme Court Act, RSC 1985, c S26, s 25. The Chief Justice determines how many judges will hear each
particular case. See Peter W Hogg, Constitutional Law of Canada (Carswell, 5th edn 2007) 8.3.
Indeed, the Court heard the case on 4 May 1990 and rendered its decision six days later with
reasons to follow. Those reasons were released seven and a half months later, on 20 December 1990.
Justice Brian Dickson had participated in the hearing but retired from the Court on 1 July 1990 (puisne
justice Antonio Lamer, who became Chief Justice, had not participated in the case). By statute, Dickson
had to complete all judgments within six months of the date of his retirement or his vote would not be
counted. See Supreme Court Act, RSC 1985, c S26, s 27(2). Thus, Dickson would have been functus by 1
January 1991, 10 days after Martin v Gray was released. Without Dicksons vote, the Court would have
been deadlocked 3-3. There might have been no majority reasons (although still a unanimous decision) or
the case might have been ordered for a rehearing with additional judges.
Loyalty is mentioned only once in the Courts decision, where it cites the CBAs Rule on
Conflicts of Interest (which had been adopted by the Manitoba Law Society). This Rule provided: The
lawyer must not advise or represent both sides of a dispute and, save after adequate disclosure to and with
the consent of the client or prospective client concerned, he should not act or continue to act in a matter
when there is or there is likely to be a conflicting interest. A conflicting interest is one which would be
likely to affect adversely the judgment of the lawyer on behalf of or his loyalty to a client or prospective
client or which the lawyer might be prompted to prefer to the interests of a client or prospective client.
Canadian Bar Association, Code of Professional Conduct (CBA, 1987) c V, Rule (as cited in Martin v Gray
(n 15) para 17).
Others may take issue with my taxonomy. My point is not precision but to provoke conceptual
reflection based upon different conceptions of lawyer loyalty. The three visions may be considered
different points on a spectrum. Many see the Canadian rules as more absolute than pragmatic, and the rules
in other jurisdictions as far more pragmatic. See eg Chester (n 20) 16 (The Strict Canadian Approach), 25
(New Zealand Opts for Pragmatism) and Canadian Bar Association, Task Force on Conflicts of Interest
(Canadian Bar Association, 2008) 2934. However, the point of my classification is not comparative
analysis but internal reflection.

lexomorphism29the tendency to ascribe lawyer-like characteristics to clients based on lawyers

projecting their own values and beliefs onto clients. Lexomorphism creates rules for lawyers
about clients by taking into account the actions and beliefs of lawyers while placing minimal
value on the concerns and interests of clients and members of the public. Lexomorphic
approaches suffer by failing to attempt to understand the position of the client or the legitimate
concerns of the public.30 The minimalist vision was rejected by all members of the court in
Martin v Gray.
Although it was ultimately rejected, the conceptual foundation of the minimalist vision was
reviewed in the majority decision of the Court. Specifically, the Court consideredand
rejectedthe English test of probability of real mischief articulated in Rakusen v Ellis, Munday
& Clarke,31 pursuant to which the court must be satisfied that real mischief and real prejudice
will in all human probability result if the solicitor is allowed to act.32 Rakusen is generally
recognised as a liberal rather than a restrictive test.33 In Martin v Gray, the Supreme Court of
Canada rejected the probability of real mischief test in favour of a stricter test.34
However, the majority of the Supreme Court of Canada adopted a middle course between
Rakusens minimalist vision of lawyer loyalty and the minoritys maximalist conception of
lawyer loyalty discussed below. The majoritys view reflects a pragmatic vision of lawyer loyalty
because it explicitly embraces practical considerations arising from new, real-world contexts.35 In
discussing the changes to the legal profession, the majority opined that the fundamental
professional standards must be maintained and indeed improved in the face of such changes.
According to the members of the majority, [n]othing is more important to the preservation of this
relationship than the confidentiality of information passing between a solicitor and his or her


See Adam M Dodek, Reconceiving Solicitor-Client Privilege (2010) 35 Queens Law Journal
493, 511.
Janine Griffiths-Baker has done superb work interviewing clients in order to ascertain their
perspectives on lawyer loyalty and conflicts of interest. See J Griffiths-Baker, Serving Two Masters:
Conflicts of Interest in the Modern Law Firm (Hart Publishing, 2002) 1023, 11920. See also Allan C
Hutchinson, Who Are Clients? (And why it Matters) (2005) 84 Canadian Bar Review 411; Robert K
Vischer, Legal Advice as Moral Perspective (2006) 19 Georgetown Journal of Legal Ethics 225
(discussing the need for dialogue between lawyer and client).
[1912] 1 Ch 831 (CA). For commentary on the Rakusen case and its treatment by Commonwealth
courts see Griffiths-Baker, ibid, 2039.
As quoted in Martin v Gray (n 15) para 20.
See Chester (n 20) 11. For a detailed analysis of the decision in the Canadian context see 1114.
See Griffiths-Baker (n 30) 8285; Chester (n 20) 16.
I use the term pragmatic in the sense of being concerned with practical rather than theoretical
considerations. See Oxford English Dictionary Online (Nov 2010 Release) sv pragmatic.
Martin v Gray (n 15) para 7.

The majority identified three competing values that needed to be balanced:

1. the maintenance and integrity of our system of justice;

2. the right of litigants not to be lightly deprived of their chosen
counsel; and
3. the desirability of permitting reasonable mobility in the legal

Interestingly, neither the majority nor the minority identified the basis for selecting these values
as worthy of consideration. The foundations of the first two values are easily found in the AngloCanadian legal system. The maintenance and integrity of our system of justice is connected to the
Rule of Law which has been identified as an unwritten constitutional principle in Canada.38 The
Right to Counsel in criminal matters is constitutionally entrenched39 and strongly protected in
non-criminal matters. Indeed, it is the combination of the right to counsel and the rule of law that
provides much of the conventional justification for the right to solicitor-client privilege.40
Together, these two values are directly tied to the protection of client confidences, the basis upon
which the Supreme Court decided Martin v Gray. They are important aspects of the idea of
lawyer loyalty. However, the desirability of permitting reasonable mobility in the legal profession
has no comparable pedigree. It is not supported in the text, history or precedents of the Canadian
Constitution.41 No link is made between reasonable mobility of the legal profession and clients
interests, the justice system or the public interest.42 One is left to conclude that reasonable
mobility was elevated to a principled level based solely on the subjective considerations of the
members of the majority without adequate justification.
In balancing these three values, the majority elected a middle approach between minimalism and
maximalism. It rejected Rakusens probability of mischief approach as insufficiently protective

Ibid, para 13.

See Reference re Secession of Quebec [1998] 2 SCR 217.
See Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being
Schedule B to the Canada Act 1982 (UK), 1982, c11, s 10(b).
See eg Anderson v Bank of British Columbia (1876) 2 Ch D 644, 649 (CA); R v McClure, 2001
SCC 14, [2001] 1 SCR 445, para 33; see generally Dodek (n 29) 5067.
The Canadian Charter of Rights and Freedoms (n 39) expressly protects some occupational
mobility rights, but these involve the right to move and take up residence in another province and to pursue
the gaining of a livelihood in any practice (s 6(2)). These rights are expressly made subject to any laws
or practices of general application in force in a province other than those that discriminate among persons
primarily on the basis of province of present or previous residence (s 6(3)). It was never suggested that a
restrictive conflicts rule would infringe this section of the Charter. The issue before the Court in Martin v
Gray was not inter-provincial but intra-provincial mobility (intra-municipal to be precise).
Although Chief Justice McLachlin would later make this link in Strother (n 1) paras 1378.

but it also declined the minoritys view that there should be an irrebuttable presumption that when
a lawyer transfers firms, she will share confidential information about past files. Instead, the
majority held that there should be a rebuttable presumption. The majority held that that
presumption could be rebutted by a showing that the firm had used what we now call screening
measures (referred to by the Court as Chinese Walls and Cones of Silence). The Court rejected
the firms trust-me position.43 The Courts pragmatism continued in its approach to regulation
which is discussed below.
The majoritys pragmatic approach can be contrasted with a maximalist vision of lawyer loyalty
embraced by Justice Cory for the three judge minority. A maximalist vision is not absolutist;
rather, it places heightened emphasis on lawyer loyalty and considers it the predominant value.
The clash between the maximalist and the pragmatic visions is seen in how the majority and the
minority dealt with the three values identified above.
The minority placed the greatest weight on the first valuethe maintenance and integrity of the
justice systemand chastised the majority for giving too much weight to lawyer mobility.44 As a
result, the minority would have established an irrebuttable presumption of sharing of confidential
information when lawyers work together. As Justice Cory explained,

Neither the merger of law firms nor the mobility of lawyers can be
permitted to affect adversely the public's confidence in the judicial
system. At this time, when the work of the courts is having a very
significant impact upon the lives and affairs of all Canadians, it is
fundamentally important that justice not only be done, but appear to be
done in the eyes of the public.45

Under Justice Corys maximalist vision, the most important factor is the preservation of the
integrity of the justice system.46 In his words,

The necessity of selecting new counsel will certainly be inconvenient,

unsettling and worrisome to clients. Reasonable mobility may well be
important to lawyers. However, the integrity of the judicial system is of

Martin v Gray (n 15) para 49.

Ibid, para 57.
Ibid, para 56.
Ibid, para 57.

such fundamental importance to our country and, indeed, to all free and
democratic societies that it must be the predominant consideration in
any balancing of these three factors.47

According to Justice Cory, our judicial system cannot function properly if there is any doubt or
suspicion in the mind of the public that the confidential information disclosed by a client to a
lawyer might be revealed.48 It is here that Justice Cory implicitly connects loyalty and
confidentiality by stating that a perception of unfairness would arise from the ease with which
confidential information received from clients could be privately communicated between lawyers
who are working together in the same firm.49 The maximalist vision of lawyer loyalty is stated in
Justice Corys conclusion that where a lawyer who has received confidential information joins a
firm that is acting for those opposing the interests of the former client, there should be an
irrebuttable presumption that lawyers who work together share each others confidences with the
result that a knowledge of confidential matters is imputed to other members of the firm. This
presumption must apply to the members of the new firm the lawyer joins if public confidence in
the administration of justice is to be maintained.50
The maximalist vision came within one vote of being adopted, and has provided important
conceptual foundations for later debates. For now, the pragmatic vision carried the day.
Martin v Gray sent shockwaves through the Canadian legal profession; no law society had rules
about transferring lawyers and few firms had established the elaborate conflicts mechanisms that
exist today. However, consistent with its generally pragmatic approach in the case, the majority
anticipated that its decision would have a significant impact on the legal profession. The Court
adopted an approach of cooperative co-regulation where it acknowledged and empowered the bar
as a partner in the regulation of conflicts of interest.
First, the Court invited the CBA to take steps to develop national regulatory standards.51 Next, the
Court invested the mandate with both an urgency and necessity by stating that absent exceptional
circumstances, until the governing bodies had given their regulatory imprimatur to a system of

Ibid, para 58.

Ibid, para 60.
Ibid, para 62.
Ibid, para 63.
Ibid, para 49 (It can be expected that the Canadian Bar Association, which took the lead in
adopting a Code of Professional Conduct in 1974, will again take the lead to determine whether
institutional devices are effective and develop standards for the use of institutional devices which will be
uniform throughout Canada). Griffiths-Baker notes the unusualness of the Courts deference to the
profession in this regard. See Griffiths-Baker (n 30) 8386.

screening, courts would be unlikely to accept such devices as sufficient evidence of effective
screening.52 As Simon Chester has noted, this was an innovative (and unconventional) move by
Sopinka J to ensure that whatever standards or models were developed to prevent information
flow would represent a more considered consensus than is possible in a fact-constrained bi-polar
dispute resolution process.53 Finally, the Court adopted an extremely deferential position towards
the bars regulatory role, underplaying the Courts role by describing it as merely supervisory.
In full, the majority stated:

In this regard, it must be borne in mind that the legal profession is a

self-governing profession. The Legislature has entrusted to it and not to
the court the responsibility of developing standards. The court's role is
merely supervisory, and its jurisdiction extends to this aspect of ethics
only in connection with legal proceedings. The governing bodies,
however, are concerned with the application of conflict of interest
standards not only in respect of litigation but in other fields which
constitute the greater part of the practice of law. It would be wrong,
therefore, to shut out the governing body of a self-regulating profession
from the whole of the practice by the imposition of an inflexible and
immutable standard in the exercise of a supervisory jurisdiction over
part of it.54

Not surprisingly, the CBA took up the Courts invitation, creating a Task Force which produced a
report on conflicts of interest, disqualification and screening methods.55 Its recommendations
were incorporated into the CBAs Code of Conduct56 and adopted by the Federation of Law


Martin v Gray (n 15) para 49 (Although I am not prepared to say that a court should never accept
these devices as sufficient evidence of effective screening until the governing bodies have approved of
them and adopted rules with respect to their operation, I would not foresee a court doing so except in
exceptional circumstances. Thus, in the vast majority of cases, the courts are unlikely to accept the
effectiveness of these devices until the profession, through its governing body, has studied the matter and
determined whether there are institutional guarantees that will satisfy the need to maintain confidence in the
integrity of the profession).
Chester (n 20) 17.
Martin v Gray (n 15) para 49.
Canadian Bar Association Task Force Report, Conflicts of Interest Disqualification: Martin v
Gray and Screening Methods, 1993. While what we now call screening devices or ethical walls are the
centrepiece of law firm transfers, some have questioned their efficacy. See Chester (n 20) 9, 7582.
Canadian Bar Association, Code of Professional Conduct, 2004.

Societies as a template ultimately enacted by most law societies.57 At the end of the first battle,
the only hostile skirmish had taken place within the Court itself. Through the majoritys
pragmatic approach and embrace of cooperative co-regulation, the Court had avoided any clashes
between it and the bar. This great peace would last but a decade.

III. Round Two: Neil and the Bright Line Rule (2002)
In R v Neil,58 the Supreme Court addressed the issue of conflicts of interest between two
concurrent clients. In doing so, it shifted the lawyers duty of loyalty to the centre of the
By 2002, Canadian firms had grown larger and Canada now boasted national law firmsfirms
with multiple offices in major Canadian cites like Montreal, Ottawa, Toronto, Calgary and
Vancouver. In Neil, a unanimous five judge panel held60 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 unrelatedunless both clients consent after receiving full
disclosure, and the lawyer reasonably believes he or she is able to represent each client without
adversely affecting the other.61 This has become known as the bright line rule in Neil.


Federation of Law Societies of Canada, Model Rule with Respect to Conflicts of Interest Arising
as a Result of Transfers between Law Firms (1994), www.flsc.ca/en/publications/conflictRule.asp.
R v Neil, 2002 SCC 70, [2002] 3 SCR 631.
The decision sparked significant commentary. See Michael Brooker, R v Neil: A New Benchmark
for the Duty of Loyalty? (2004) 23(1) The Society Record 16; Richard F Devlin and Victoria Rees,
Beyond Conflicts of Interest to the Duty of Loyalty: From Martin v Gray to R v Neil (2006) 84 Canadian
Bar Review 433; David Gambrill, Conflict of Interest Involves Loyalty to Client (2002) 13(39) Law
Times 5; Kimberly J Jakeman and Shanti M Davies, The Bright Line: The Decision of R v Neil and its
Impact on the Business of Law in Canada (2003) 61 The Advocate (Vancouver) 715; Julius Melnitzer,
Courts Expanding Duty of Loyalty after Neil (2005) 16(26) Law Times 11; Jim Middlemiss, The
Conflicts Conundrum (2005) 14(5) The National 38; Paul M Perell, Disqualifying Conflicts of Interest,
reductio ad absurdum (2003) 27 Advocates Quarterly 218; Don Stuart, (Annotation) (2003) 6 CR (6th)
3; Judy Van Rhijn, Widening the Net to Catch Conflicts of Interest (2006) 17(17) Law Times 9; Jan Weir,
Conflict/Duties Enlarged (2004) 24 Lawyers Weekly 8 .
Only five judges are required for a quorum of the Supreme Court. See Supreme Court Act, RSC
1985, c S26, s 25. The Chief Justice assigns the judges to hear each case, known as the coram. Since Chief
Justice McLachlin became Chief Justice in January 2000, over 81% of cases have been heard by corams of
seven or nine justices. See DR Songer, The Transformation of the Supreme Court of Canada: An Empirical
Examination (University of Toronto Press, 2008) 117. In cases where there are appeals of right (see
Criminal Code of Canada, RSC 1985, c C-46, s 691), it is not uncommon for the Chief Justice to assign
only five justices. Neil was an appeal as of right. The fact that the Chief Justice assigned only five judges to
hear the case and did not include herself indicates that the Court did not think that the case was particularly
important. Moreover, there were no interveners in Neil, unlike in Strother where the Canadian Bar
Association intervened.
Neil (n 58) para 29.

If Martin v Gray was an earthquake, Neil was treated more like a tsunami threatening Canadian
legal practice.62 To American lawyers, the rule in Neil might seem familiar. Indeed, Neils author,
Justice Binnie, explicitly adopted the definition of conflict in the American Law Institutes
Restatement of The Law Governing Lawyers as a substantial risk that the lawyers representation
of the client would be materially and adversely affected by the lawyers own interests or by the
lawyers duties to another client, a former client, or a third person.63 Justice Binnies message
was clear: if American lawyers can make this rule work surely Canadian lawyers can too.
However, many Canadian lawyers did not quite see it that way, especially those at the large
national firms who would be most impacted by this rule.64
Neil marks the ascension of the maximalist vision of lawyer loyalty in Canadian law. Justice
Binnie placed the lawyers duty of loyalty at the centre of the conflicts of interest analysis. He
articulated a robust and maximalist vision of the lawyers duty of loyalty. He explicitly
considered and rejected pragmatic considerations of the reality of how big firms operate. He
acknowledged that the bright line rule was undoubtedly a major inconvenience to large law
firms and especially to national firms with their proliferating offices in major centres across
Canada but he was not moved by this.65 He insisted that it is the firm and not just the individual
lawyer that owes a fiduciary duty to its clients.66 Again, eschewing pragmatic considerations, he
asserted that [l]oyalty includes putting the clients business ahead of the lawyers business.67
Many of the contours of the maximalist vision of lawyer loyalty are set out in this 2002
decisionby an unanimous court. Because of the procedural posture of the case,68 no
countervailing positions were presented to the Court. In essence, with Neil, Justice Binnie shot a

Alice Woolley has rightly called Neil the case of the decade in the law governing lawyers in
Canada. See Alice Woolley, The Italics that Rocked the Decade (for Canadian Lawyers) ABlawg.ca,
American Law Institute, Restatement of the Law Third, Restatement of the Law: The Law
Governing Lawyers (ALI, 2000) vol 2, 121.
Devlin and Rees divide the reactions to Neil into two categories: conventionalists and
reactionaries. See Devlin and Rees (n 59) 44153. One of the leading commentators on lawyers ethics in
Canada and a former Treasurer (president) of the Law Society of Upper Canada opined that [i]n spite of
views to the contrary by some commentators, these decisions [ie Neil and Strother] are not revolutionary.
Rather, they are unsurprising clarifications of the nature and implications of lawyers fiduciary duties to
clients, which have long been recognized. Mackenzie (n 22) 80.
Neil (n 58) para 29.
Ibid, para 29.
Ibid, para 24.
Neil was a criminal case where the conflict issue was generally accepted. The case was an appeal
as of right, a case that the Supreme Court of Canada had to hear rather than one that it elected to hear. The
issue as framed by the parties was one of the appropriate remedy, ie whether a stay of the criminal
proceedings was appropriate in this case. As a result, the case did not attract the attention of the CBA or the
Federation of Law Societies which would have likely sought to intervene and participate in the case if they
had known that it would be decided on the basis of setting out a sweeping rule regarding conflicts of
interest among current clients.

very large cannon across the bow of the bar. It was completely unexpected and it took some time
for the bar to figure out how to respond. And as the bar was beginning to respond, the third case
in the trilogy was making its way to the Supreme Court of Canada.

IV. Round Three: Strother and the Limits of Lawyer Loyalty (2007)

Five years after Neil, divisions within the Supreme Court along the maximalist-pragmatist axis
were exposed in the 2007 Strother decision. Strother involved complicated tax shelters for
investment in film production services by American studios making films in Canada. Mr Strother
represented a first client under the terms of a written retainer which expressly prohibited his law
firm from acting for other clients in relation to the tax shelter schemes. The first client continued
to use the law firms services after the written retainer terminated. The Minister of Finance
plugged the tax loophole. Mr Strother told the first client that he didnt have a fix to avoid the
effect of the rule change. Some months or a year later a former employee of the first client
approached Mr Strother to discuss the potential of a revised tax shelter scheme. Mr Strother had
found a fix for the rule change to benefit this second client. However, he did not tell the first
client. Furthermore, unbeknownst to the members of his firm, Mr Strother had gone into business
with a second client in competition with another client in an extremely lucrative deal involving $4
billion worth of transactions with profits approaching $130 million. Mr Strother and his business
partners share exceeded $64 million. Mr Strothers law firm acted for the business throughout
and received fees exceeding $9 million. The issue in Strother was the temporal and substantive
extent of the lawyers duty of loyalty to that first client. In writing the majority decision, Justice
Binnie again led in articulating a maximalist vision of the duty of loyalty. However, unlike in
Neil, there was a strong minority view in Strother, authored by Chief Justice McLachlin. The
minority view reflected a more pragmatic vision of lawyer loyalty which focused on the nature of
the retainer agreement between the law firm and its clients.
Justice Binnies majority decision explicitly confirmed the unrelated matters rule from Neil. He
began by stating that [a] fundamental duty of a lawyer is to act in the best interest of his or her
client to the exclusion of all other adverse interests, except those duly disclosed by the lawyer and
willingly accepted by the client.69
The division between the majority and the minority can be easily stated. To the majority, the
scope of the retainer is governed by contract law but the solicitor-client relationship created


Strother (n 1) para 1.

thereby is overlaid with certain fiduciary responsibilities.70 To the minority, the scope of the
fiduciary duties are circumscribed the retainer agreement, as they must be in a world where
lawyers represent more than one client.71 This is a fundamental point of disagreement between
the majority and the minority. To the majority, the source of the duty owed by lawyers to their
clients is not the retainer itself but all the circumstances (including the retainer) creating a
relationship of trust and confidence from which flow obligations of loyalty and transparency.72
To Justice Binnie, fiduciary duties provide the framework for the lawyer-client relationship which
may include obligations beyond the express terms of the retainer.73 Justice Binnie and the Chief
Justice also took different positions on what the retainer in question required.
In writing for the minority, the Chief Justice opined that whether a conflict exists between two
clients depends on the scope of the retainer between the clients in question: The fiduciary duties
owed by the lawyer are molded by this retainer, as they must be in a world where lawyers
represent more than one client.74 In the view of the Chief Justice, a retainer between a lawyer and
client is a special form of agency agreement which attracts a duty of loyalty. The agreement
commits the lawyer to do certain things for that client. The fiduciary duty attaches to this
commitment and there is no such thing as a free-floating duty of loyalty in the air.75
To the Chief Justice, the starting point is always the terms of the retainer. From this we
understand to what the duty of loyalty attaches. She explains the relationship between the two as
follows: The lawyer owes the client a duty to act loyally for the client in performing as agreed in
the retainer.76 The minoritys pragmatic approach is underscored in the statement that [t]his
manner of viewing a lawyers duties conforms to the realities of the legal profession and the
needs of clients.77 The clearest articulation of the pragmatist approach is demonstrated by the
Chief Justices statement that [o]ur law rightly imposes rigorous fiduciary duties on lawyers, but
it also recognizes the need to ensure that fiduciary obligations remain realistic and meaningful in
the face of the realities of modern practice.78
The Chief Justice squarely addressed potential criticisms of her pragmatic approach. She stated:


Ibid, para 34.

Ibid, para 117.
Ibid, para 34, quoting and adopting the Factum of the Appellant law firm Davis & Company.
Ibid, para 34
Ibid, para 117.
Ibid, paras 133, 135.
Ibid, para 135.
Ibid, para 137.
Ibid, para 138 (emphasis added).

Practical considerations cannot be used to dilute the rigor of the

fiduciary duties that the law rightly demands of lawyers. Rather, they
explain why the law has developed a precise conception of the
lawyers duty grounded in the contract of retainer.79

At first glance, the Chief Justices pragmatic approach seems to embrace the type of cooperative
co-regulation evidenced by the majority in Martin v Gray. However, this deference is different.
The majority in Martin v Gray expressly invited the regulators to adopt screening standards.
While issue may be taken with the Courts invitation to the CBA to lead on this issue because the
CBA is an advocacy and not a regulatory body, the Courts invitation was properly grounded in
the CBAs historical role in promulgating ethical standards for the legal profession. However,
the realities of modern practice are created by the cumulative actions of individual lawyers and
law firms who have no statutory mandate to act in the public interest. As a profession, lawyers
claim special privileges in the name of the public interest but this is of a very different character
from regulators who have a statutory mandate to regulate in the public interest and may be held
accountable for their acts. By recognising the realities of modern practice, the Chief Justice has
empowered private acts as legally relevant for the determination of fiduciary duty. This is strong
pragmatism and the Chief Justices opinion has emboldened Neils critics.

V. Round Four: The CBAs Response to Neil (2008-Present)

The CBA again took the lead in responding to the Supreme Court of Canadas 2002 conflicts of
interest decision in Neil but it did so in a very different manner than it had a decade before.80 In
1991, the CBA was expressly invited by the Supreme Court of Canada to take up where the Court
had left off. In 2002, the CBA received no such invitation. Cooperative regulation was displaced
by competitive regulation. Whereas after 1991, the CBA and the Canadian legal profession
embraced or at least accepted Martin v Gray, the same could not be said about their attitude
towards Neil. The CBA made conflicts of interest a top priority and clearly set the bright line
rule in Neil in its sights. The CBA established a well-resourced Conflicts of Interest Task Force
with two apparent purposes: to provide concrete guidance on dealing with conflicts and to



Ibid, para 138.

Post-Neil only a few law societies changed their rules to specifically incorporate the bright line

delegitimise and displace the unrelated matters rule. It succeeded on the first point and it is too
early to reach a conclusion on the second.
The CBA Task Force began by issuing a Consultation Paper which clearly articulated its position:
The letter from the Chair of the Task Force began:

Our current conflict of interest rules impose a heavy burden on

lawyers, law firms, the courts and, unexpectedly, on clients. There is a

growing concern that these rules are out of step with the modern
practice of law and in need of review.

Current requirements are cumbersome, time-consuming, and an

impediment to the efficient delivery of legal services. We believe that

the existing conflict rules are not protecting clients or serving the
public interest as well as they might.

For these reasons the [CBA] established a Task Force on

Conflicts of Interest to consider a more practical approach to managing

conflicts for clients and the profession and to develop useful model
materials for lawyers. Our long-term goal is to develop a CBA
consensus on changes to the rules that may be considered by the law
societies and incorporated into their existing codes of conduct.81

The letter was clearly returning the shot across the Supreme Courts bow. The CBA Task Force
sought input on issues raised by the current conflict rules, including whether:

loyalty requirements are being interpreted appropriately;

presumptions of information-sharing within a law firm should be


retainer letters should be encouraged or required, and

the rules pose problematic challenges for particular areas and rural

and remote communities.82


CBA Task Force on Conflicts of Interest, Letter from the Chair, R Scott Joliffe (2007),

These may be considered leading questions and the Consultation Paper continued along such
The CBA Task Force produced a 150 page report plus a toolkit on dealing with conflicts of
interest.84 The importance of the latter should not be underestimated. The toolkit is valuable,
practical and comparatively uncontroversial. In contrast, the report is controversial, provocative
and surprisingly confrontational85 in places.
On the theme of competitive regulation, the CBA Report treats the Supreme Courts decisions
with little deference. The Report describes Neils unrelated matters rule as obiter86 which
Justice Binnie has strongly disputed in extra-judicial writing.87 In my mind, the resolution of the
obiter issue is far less material than the fact that the CBA has made it an issue. Characterising the
unrelated mandates rule as obiter is a remarkable way for the leading legal organisation to
characterise part of a Supreme Court decision. This is a highly formalistic approach which is
simply inconsistent with how other courts, the government and the bar generally respect
Supreme Court decisions. For example, strictly speaking, all Supreme Court of Canada references
are obiter; they are advisory opinions with no binding force.88 Yet they are respected and many of
them are hallowed by the bar. Moreover, the CBA Report noted the 5-4 division of the Court in
Strother as a factor which weakens the persuasiveness of the unrelated matters rule.89 This point


CBA Task Force on Conflicts of Interest, Consultation Paper: Practical Difficulties with Todays
Conflict of Interest Rules (CBA, 2007), www.cba.org/consultation/survey.aspx.
CBA Task Force on Conflicts of Interest, Conflicts of Interest: Final Report, Recommendations &
Toolkit, 2008.
Alice Woolley, Task Force on Conflicts of Interest: Correspondents Report from Canada (2009)
12(1) Legal Ethics 87, 91.
CBA Task Force Report (n 84) 37.
Ian Binnie, Sondage Aprs Sondage Quelques Rflexions sur les conflits dintrets (Poll
After Poll: A Few Thoughts about Conflicts of Interest (edited version of speech given at Les Journes
Stasbourgeoises, Strasbourg, France, 4 July 2008) (French version published in lInstitut canadien dtudes
juridiques, Droits de la personne: thique et droit: nouveaux dfis: actes des Journes strasbourgeoises de
lInstitut canadien dtudes juridiques suprieures 2008 (ditions Yvon Blais, 2009) (English version of
speech on file with author).
See Hogg (n 25) 8.6(d) (explaining that the black letter law is that references are not binding
even on the parties to the reference and lack the same precedential weight as an opinion in an actual case,
however there are no recorded instances where a reference opinion was disregarded by the parties or where
it was not followed by a subsequent court on the ground of its advisory character; in practice reference
opinions are treated in the same way as other judicial opinions).
CBA Task Force Report (n 84) 37. The CBA would repeat this argument in its response to the
Federation of Law Societies proposed conflicts rule. See CBA, Response to Federation of Law Societies of
Canada Advisory Committee Report on Conflicts of Interest (16 August 2010),

can only be considered ironic given that there was a similar division between the maximalist and
pragmatic visions of lawyer loyalty in Martin v Gray.90
The clear intent of characterising the unrelated matters rule as obiter was to say that the
profession was not bound to follow the rule and the issue could be revisitedreconsidered on a
blank slate as it were. This was disingenuous to say the least. As Alice Woolley has written, even
if strictly speaking the unrelated matters rule was obiter in Neil, it was reconfirmed in Strother
and applied because Strother did involve the conflict that arose between existing clients on
unrelated matters.91
The Task Force further critiqued the Unrelated Matters Rule in a manner that Alice Woolley
describes as unprincipled, unjustified and harmful.92 The Task Force recommended that the rule
be abandoned. The CBA amended its Code of Conduct to implement the Task Forces position on
the Unrelated Matters Rule and other issues. The CBAs goal was clear and expressly articulated
in the Report: to get the regulators to adopt their position and eschew the unrelated matters rule.93
The Task Force report recommended a significant challenge to the Supreme Courts regulatory
authority regarding conflicts of interest in both tone and substance.94 As one author has written
about the Task Force Reports recommendations:

These recommendations are based on the hope that the practical

difficulties caused by the Supreme Courts decision can be ameliorated
by changes to codes of professional responsibility. The validity of that
assumption may be questionable.95

The Task Forces direct challenge was likely intended to convince the Court to abandon the
unrelated matters rule. It did not take long for that challenge to elicit a response from the Court.


The CBA Report also criticises the rule in Martin v Gray that screening devices be put in place
prior to a firm acting against a former client as overly rigid. See CBA Task Force Report (n 84) 8689, 99.
For commentary see Woolley (n 85) 8890.
Ibid, 92.
Ibid, 93.
See CBA Task Force Report (n 84) xiii, 150: Recommendation 21: The Task Force is therefore
recommending that the CBA forward the Task Force Report to the Federation of Law Societies of
Canada for the Federations consideration in the development of its model code of conduct, noting the
importance of having harmonized conflicts rules in place across Canada.
Moreover, as Alice Woolley has written, the tone of the CBAs Report is extremely strident. See
Woolley (n 85) 95 (terming the CBAs report harsh and almost disrespectful in its indictment of the
Courts reasoning).
Harvey L Morrsion, Conflicts of Interest and the Concept of Loyalty (2008) 87 Canadian Bar
Review 566, 587-8.

Justice Binnie delivered a forceful and direct defence of the unrelated matters rule and of a
maximalist vision of lawyer loyalty in extra-judicial comments made in France in the summer of
2008,96 several months before the CBA Council adopted the Task Forces final report, responding
to its earlier Discussion Paper. As the author of Neil and the majority decision in Strother, Justice
Binnie is most associated with the maximalist vision of lawyer loyalty.97 Justice Binnies speech
was entitled Sondage aprs sondagepoll after polland it took its name from a line in a
speech given by the former head of the Barreau du Qubec several weeks earlier:

[TRANSLATION] In poll after poll [sondage aprs sondage] dealing with

public confidence in different professions, lawyers find themselves at
the bottom of the list in the company of politicians and used car
dealersthere is therefore a major problem of perception that we must
continue to work at 98

Perhaps liberated by speaking outside of Canada, Justice Binnies remarks were remarkably
candid and he directly confronted the Bars response to his decisions. The President of the CBA
who had created the Task Force on Conflicts was in the audience and Justice Binnie specifically
recognised him in his remarks.
Sondage aprs sondage is the strongest most comprehensive articulation of the maximalist vision
of lawyer loyalty in Canada. First, Justice Binnie was defensive. He emphasised that a duty of
loyalty is not a special rule for lawyers.99 It has its roots in the general law governing fiduciaries,

Binnie (n 87). Justice Binnie offered the usual caveat that the perspective on the jurisprudence
was his own and may or may not be shared by other members of the Supreme Court (1 fn 1).
Justice Binnie cannot be accused of a lack of understanding of the realities of legal practice. He
was a leading litigator when he was appointed directly from practice to the Supreme Court of Canada in
1998. He is the only member of the Supreme Court to have been appointed directly from practice. From
1986 to the time of his appointment to the Supreme Court in 1998, Justice Binnie was a senior partner at
McCarthy Ttrault, one of Canadas largest law firms with offices in six Canadian cities. See Supreme
Court of Canada, About the Court, Judges of the Court, The Honourable Mr Justice William Ian Corneil
Binnie, www.scc-csc.gc.ca/court-cour/ju/binnie/index-eng.asp, and see McCarthy Ttrault, Our Firm,
About McCarthy Ttrault, http://www.mccarthy.ca/about_mccarthy_tetrault.aspx
Allocution de Me Grald R Tremblay, lu Passation des pouvoirs, Qubec, le 31 mai 2008, p 4.
Sondage aprs sondage, les avocats se retrouvent en bas de la liste en compagnie des politiciens et des
vendeurs dautos usages au chapitre de la confiance du public envers les diverses professions Il y a
donc un problme majeur de perception sur lequel nous ne devons jamais cesser de besogner. Quoted in
Binnie (n 87).
See Binnie (n 87), citing MV Ellis, Fiduciary Duties in Canada (Carswell, 2004) 15: [T]he law
requires the individual subject to the duty [of loyalty] to scrupulously avoid placing himself in a possible or
potential conflict of interest. Therefore, the fact that a conflict could have arisen, but did not, does not
exculpate the fiduciary from wrongdoing Entering into a potential conflict of interest is a breach
whether or not the conflict is operative

of which lawyers form a small part. He said that in Neil, the Supreme Court was not ready to
modify the general principles governing fiduciaries for the benefit of those fiduciaries who
happen to be engaged in the practice of law. He also noted that Canadian courts have been quite
conservative in granting remedies for breaches of the duty of loyaltyas if to say to the bar,
dont worry. Then Justice Binnie went on the offensive.
On the issue of Unrelated Mandates, Justice Binnie skewered the CBA Discussion Paper in
several respects. First, he attacked the CBA Discussion Paper for not mentioning the ABA Rule
in the English version of its report while quoting verbatim from it in the French version of its
report. Justice Binnie then mocked the CBA Task Forces concern that the Supreme Courts
concern for a lawyers duty of loyalty will pose a major obstacle to lawyers taking on legal aid
files or unpaid legal work. Invoking the American experience once again, Justice Binnie noted
that the ABA rules have not prohibited large American law firms from acting in pro bono cases.
He then turned to the CBA Task Forces position that the conflicts issue has had a bad effect not
only on big firms but also on small firms in small towns. Justice Binnie responded: It seems that
despite acceptance of the ABA conflict rules, the legal profession in small towns across the
United States has flourished (as indeed it has flourished in the big firms in the big cities too, both
in the United States and Canada). Finally, Justice Binnie turned to his own personal experience,
noting that when he was in private practice with a large law firm he just hated to give up a file.
He said: Mercantile motives are nowhere admitted by the CBA Task Force, to be relevant to its
consideration of these issues even though its roster of authors includes representatives from big
firms not generally seen as indifferent to which firm gets what business 100
On competitive regulation, Justice Binnie further challenged the CBAs motives. He stated:

An outsider reading the CBA documents might conclude that the only
concern of the authors is the well being of prospective clients in search
of their advocate of choice, including the workers and orphans bearing
their legal aid certificates, or pro bono clients in search of a welcome
mat. However, if firms and their clients are all of the view that the
dominant policy should be freedom of choice of counsel, who is
bringing these disqualification motions that the CBA Task Force
complains about? Are they all purely tactical or is it possible that


Binnie (n 87).

clients, particularly vulnerable clients, may feel more strongly than

some lawyers about loyalty issues?101

Justice Binnie directly challenged the proposition urged by the CBA that by changing the rules of
professional conduct it could alter the conflict of interest rules. He noted that the duty of loyalty is
closely linked to a lawyers fiduciary duties. He then continued: The self-governing bodies of the
legal profession can make rules governing professional conduct but I suggest they cannot change
the principles governing the fiduciary duty of lawyers and law firms to their clients.102 Then
Justice Binnie issued a rather ominous warning: It is important that lawyers not be misled by any
changes to the rules of professional conduct into a belief that compliance with a law societys
rules will preempt a clients claim for compensation for breach of a fiduciary duty or contractual
obligation.103 In short, Justice Binnie asserted the pre-eminence of the courts in regulating
conflicts of interest.
The conflict over conflicts continued. Despite Justice Binnies admonitions, the CBA adopted the
Task Force Report later that summer. The CBA amended its Code of Conduct in conformity with
the Task Forces recommendation. And the Federation of Law Societies entered the fray.
In October 2009, the Federation adopted its Model Code of Conduct sans the chapter on
conflicts.104 More time was needed to address the issue, especially in light of the clash between
the CBA position and that of the Supreme Court. In June 2010, the Federations Special Advisory
Committee on Conflicts of Interest, composed of representatives from the constituent law
societies, submitted its report to the governing council of the Federation. It sided with Justice
Binnie and adopted a proposed rule consistent with Supreme Court jurisprudence.105 The
Federation Committee explained why it diverged from the CBAs recommendations. It noted that
while the perspectives of lawyers and firms were important in its deliberations, ultimately the
public interest mandate of law societies was foremost in its final considerations. It also noted that
the courts were not bound to accept and apply professional conduct rules set by the law societies.

See Federation of Law Societies of Canada, Model Code of Conduct (January 2010),
www.flsc.ca/en/federation-model-code-of-professional-conduct. The other missing piece was the future
harm exception to the duty of confidentiality. The author was a member of the Special Advisory Committee
on the Future Harm Recommendation whose recommendations were submitted to the Federation in June
2010; see http://www.flsc.ca/_documents/Future-Harm-Report-June-2010.pdf
See Federation of Law Societies of Canada, Special Advisory Committee on Conflicts of Interest,
Final Report, 2 June 2010, http://www.flsc.ca/_documents/Conflicts-of-Interest-Report-June-2010.pdf.
See also Supplementary Report, February 2011, http://www.flsc.ca/_documents/Supplementary-ReportConflicts-of-Interest-Feb-2011.pdf

It noted that if the CBAs position were adopted it could lead to the situation where a lawyer
complied with the ethical rules but was still subject to disqualification by the courts based on
common law fiduciary duties. The Federation felt that this would place lawyers in an untenable
position.106 This raises an important but overlooked point: that ethical duties set by law societies
may be broader than legal duties enforced by the courts, but they cannot be narrower.
The CBA responded critically to the Federations recommendations.107 The CBA criticised both
the process by which the Federation formulated its recommendation and the substance of those
recommendations. The Council of the Federation then asked the Special Advisory Committee on
Conflicts of Interest to review the CBAs response and to conduct whatever additional
consultations it deemed necessary. That Committee presented a further report to the Federation
Council in February 2011 which recommended adoption of the unrelated matters rule.108 In the
course of making its recommendations, the Advisory Committee met with members of the CBA
Task Force and also commissioned an independent review from Professor Brent Cotter of the
University of Saskatchewan Law School on the question of how the public interest is best
protected by an ethical rule governing acting against a former client. Professor Cotter concluded
that the bright line rule of Neil best advances the public interest.109 The CBA Task Force then
commissioned an opinion from the Honourable Michel Bastarache, a retired justice of the
Supreme Court of Canada. I, among others, publicly questioned Mr Bastaraches wading into the
battle as he had participated in two of the three cases in the Conflicts Trilogy.110 Not surprisingly,


Ibid. See also Morrsion (n 95) 566, 588.

Canadian Bar Association, Response to Federation of Law Societies of Canada Advisory
Committee on Conflicts of Interest Final Report (August 2010),
Federation of Law Societies of Canada, Advisory Committee on Conflicts of Interest,
Supplementary Report, 14 February 2011, www.flsc.ca/_documents/conflicts-of-interest-supp-feb2011C.pdf.
Professor Cotters opinion is attached as an appendix to the Supplementary Report of the
Federation Advisory Committee, ibid.
Justice Bastarache was a member of the five-strong panel that unanimously decided Neil (n 58)
and a member of the minority in Strother (n 1). His opinion is also attached as an appendix to the
Supplementary Report of the Advisory Committee (n 108). To be clear, there exist no guidelines for the
activities of retired judges in Canada and thus Justice Bastarache could not be said to have broken any
rules. This absence of rules for retired judges spurred a group of law professors to write to the Canadian
Judicial Council, the Canadian Bar Association and the Federation of Law Societies of Canada urging
consideration of the issue. See Cristin Schmitz, Law Profs Call for Rules to Guide Ex-Judges Lawyers
Weekly, 1 April 2011, www.lawyersweekly.ca/index.php?section=article&articleid=1382. In August 2011,
a leading member of the Canadian Judicial Council stated publicly that the Council is considering updating
its guidelines for judges to address this issue, amongst other things. See Cristin Schmitz, Ethics, Judges
and Mediation Lawyers Weekly, 2 September 2011),
www.lawyersweekly.ca/index.php?section=article&articleid=1487 (Manitoba Chief Justice Richard Scott,
the chair of the CJCs judicial conduct committee, revealed during an interview that the disciplinary body
for Canadas 1,100 federally appointed judges is preparing to revisit, and eventually update, its ethical

given that he was in the minority in Strother,111 Justice Bastaraches opinion sided with the CBA.
Professor Cotter considered Justice Bastaraches opinion and then produced a supplementary
opinion confirming his prior opinion.112 The Federation Council considered the Advisory
Committees report in March 2011 and asked it to further consider the rule for current clients.
Behind the scenes, members of the CBA Task Force on Conflicts of Interest have been attempting
to lobby law societies to adopt their conflicts rule while discussions continue between the CBA
and the Federation aimed at finding a compromise. A different committee of the Federation, the
Standing Committee on the Model Code of Professional Conduct, delivered a long-awaited
further report on conflicts to the Federation Council at the end of November 2011.113 This report
essentially endorses the principles contained in previous Federation reports, although choosing
the structure the rule differently. Most importantly, the Federation continues to expressly support
the position of the Supreme Court of Canada and the bright-line rule of Neil.

Unless the Federation does an about-face, law society representatives will be forced to choose
between competing rules and competing visions of lawyer loyalty. Many are awaiting the
Supreme Courts next foray into the dispute. The stakes are high, not only in business terms but
in regulatory terms as well. As Alice Woolley has argued, if provincial regulators were to follow
the CBAs lead and adopt a similar attitude towards the Supreme Court of Canadas regulatory
authority, the privilege of self-regulation may be called into question.114

The duty of loyalty is now squarely at the centre of the conflicts of interest analysis in Canada.
While self-regulation is on the wane in other common law countries, the bar in Canada still clings
to a mythical view of unfettered self-regulation, recognising that lawyers are officers of the courts

guidelines for judges. He said since the council of federal chief justices and associate chief justices issued
the guidelines (they are advisory only) in 1998, new ethical questions have emerged, including concerns
about Canadian judges participation in international activities and judges returning to the practice of law
after they step down or retire from the Bench). To be absolutely clear, I am on record as opposing what
Justice Bastarache did in this case. I do not think it is appropriate for a retired judge to give legal advice
that directly relates to cases in which he participated. It was ill-advised for the CBA to ask Justice
Bastarache to render an opinion and it was ill-advised for Justice Bastarache to have agreed to do so. I think
it also risks undermining the legitimacy of the Supreme Courts authority. See my comments in Schmitz,
n 1.
Also attached as an appendix to the Supplementary Report of the Advisory Committee (n 108).
Federation of Law Societies of Canada, Standing Committee on the Model Code of Professional
Conduct, Report on Conflicts of Interest (November 21, 2011) http://www.flsc.ca/_documents/Conflicts-ofInterest-Report-Nov-2011.pdf
Woolley (n 85) 91.

but at times unwilling to acknowledge that the courts have a legitimate role in regulating the
conduct of lawyers. Cooperative co-regulation has acceded to competitive regulation. This is not
only a battle between the bar and the courts but a battle within the bar as the Federation and the
CBA clash over who is the authoritative voice in articulating the values of the legal profession.
The CBA is the authoritative voice of the legal profession in Canada; the Federation is the
national voice of the legal regulators. They have different mandates but they are each proposing
competing codes of conducts with contrasting conflict rules which reveal different visions of
lawyer loyalty.
Neither the CBA nor the Federation has been willing to directly confront the elephant in the
room: money. What neither of these groups seems willing to acknowledge directly is that the
issue is more than one of principle, it is also one of profit. The clash over conflicts of interest is
very much about the business of law in Canada.115 The key protagonists seem unwilling to
confront this obvious point. Perhaps this is because such an acknowledgement would necessitate
introspection and an open debate about the professions core values116what it means to be a
lawyer in Canada. The fundamental questionwhich is one of high principleis whether the
rules of ethics should be dictated by the realities of practice or whether the realities of practice
should be made to conform to the rules of ethics. I firmly believe that it should be the latter.
In an August 2011 address to the Canadian Bar Association, the Governor General of Canada,
himself a lawyer and former law dean, reminded those present that self-regulation stems from a
social contract between lawyers and society. According to His Excellency, if Canadian lawyers
fail to meet our obligations under the social contract, society will intervene and regulation and
change will be forced upon the Canadian legal profession.117 Self-regulation does not inherently
attach to the practice of law, as has been clearly confirmed by events in other common law
jurisdictions. It is only when and because self-regulation is shown to be in the public interest that
this privilege can be preserved. Thus, the rules of ethics must be independently determined and
demonstrated to protect the public interest, not made derivative of the practice of law.
To be sure, the CBA has engaged the debate on the level of principle but Alice Woolley is correct
in her observation that its definition of the public interest aligns all too easily with lawyers


See Kimberly J Jackeman and Shanti M Davies, The Bright Line: The Decision of R v Neil and
its Impact on the Business of Law in Canada (April 2003) The Advocate 715; Chester (n 20) 8.
cf Paul D Paton, Multidisciplinary Practice Redux: Globalization, Core Values, and Reviving the
MDP Debate in America (2010) 78 Fordham Law Review 2193.
His Excellency The Right Honourable David Johnston, Canadian Bar Associations Canadian
Legal ConferenceThe Legal Profession in a Smart and Caring Nation: A Vision for 2017, Halifax, Nova
Scotia, 14 August 2011, www.gg.ca/document.aspx?id=14195.

interests on conflicts of interest.118 Ultimately, as noted above, self-regulation itself may be at

risk. If the CBA is successful in loosening the restrictions on conflicts of interest, the legal
profession in Canada may end up looking less like a profession and more like a business,
weakening the case for self-regulation. If this occurs, it will be the bar itself that may provide the
basis for a challenge to self-regulation. With the battle over conflicts of interest in Canada now in
its third decade, there is a real danger of the bar delivering a self-inflicted wound on selfregulation.


Woolley (n 85) 91.