Keeping client confidences and acting with commitment

“Lawyers must keep their clients’ confidences and act with commitment to serving and protecting their clients’ legitimate interests. Both of these duties are essential to the due administration of justice.”

Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7 at para. 1

This recent decision of the Supreme Court of Canada resolves nearly fifteen years of litigation regarding the lawyer’s role in protecting against anti-money laundering and anti-terrorist financing. This decision is significant to those interested in legal ethics on several points.

Solicitor-client privilege

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “Act”) and the regulations thereunder (collectively the “Regime”) require that lawyers collect, record and retain certain client information. The Act authorizes search and seizure of documents in the possession of lawyers. The Court concluded that the Regime to be contrary to section 8 of the Charter for failure to provide sufficient protection to solicitor-client privilege.

A number of significant points were made by the majority. The first is the reiteration from Lavallee[i] at para. 36 that “A law office search power is unreasonable unless it provides a high level of protection for material subject to solicitor-client privilege”. The Court responded to the submission that Lavallee did not dictate the outcome in this case because the search and seizure power in question was not “seeking evidence of criminal wrongdoing” but was rather “in connection with an administrative law regulatory compliance regime” by stating inter alia that:

… the reasonable expectation of privacy in relation to communications subject to solicitor-client privilege is invariably high, regardless of the context. The main driver of that elevated expectation of privacy is the specially protected nature of the solicitor-client relationship, not the context in which the state seeks to intrude into that specially protected zone.

While the Court accepted that “… when a search provision is part of a regulatory scheme, the target’s reasonable expectation of privacy may be reduced”, the Court said at para. 44 that:

The core principle of the [Lavallee] decision is that solicitor-client privilege “must remain as close to absolute as possible if it is to retain relevance”: This means that there must be a “stringent” norm to ensure its protection, such that any legislative provisions that interfere with the privilege more than “absolutely necessary” will be found to be unreasonable: …[ii]

While considered in the context of an Act which “has a predominantly criminal law character” whose “regulatory aspects serve criminal law”, it appears that the Court has more generally diminished or eliminated the relevance of the reason for the search and seizure and has emphasized that what is relevant is that solicitor-client privileged information is not protected in the search and seizure[iii].

Independence of the profession

The majority of the Court of Appeal for British Columbia concluded that on one of the principles of fundamental justice relevant to section 7 of the Charter is “the independence of the Bar”. The majority concluded that the Regime deprives lawyers and clients of their liberty interests in a manner which does not accord a principle of fundamental justice namely the independence of the Bar.

Justice Cromwell, for the majority, differentiated between a broad and a narrow version of independence at para. 77 as follows:

According to the broad version, the independence of the bar means that lawyers “are free from incursions from any source, including from public authorities”: … The narrower, more focused version, is anchored in concern about state interference with the lawyer’s commitment to the client’s cause. This narrower version, as I see it, boils down to the proposition that the state cannot impose duties on lawyers that interfere with their duty of commitment to advancing their clients’ legitimate interests. …

The majority of the Court of Appeal placed “great stress on independence of the bar as it relates to self-regulation of the legal profession”. Justice Cromwell was not prepared to decide whether self-regulation of the profession is a principle of fundamental justice either stating at para. 86 that:

While the Court of Appeal and the Federation place great stress on independence of the bar as it relates to self-regulation of the legal profession, I do not find it necessary or desirable in this appeal to address the extent, if at all, to which self-regulation of the legal profession is a principle of fundamental justice. As LeBel J. [has] pointed out… self-regulation is certainly the means by which legislatures have chosen in this country to protect the independence of the bar … But we do not have to decide here whether that legislative choice is in any respect constitutionally required. Nor does the appeal require us to consider whether other constitutional protections may exist in relation to the place of lawyers in the administration of justice.

Some will regret that the Court did not find self-regulation to be constitutionally protected thereby avoiding other forms of regulation such as in Australia and England where self-regulation has been lost. While I am a supporter of self-regulation, my view is that this is the better result. Good self-regulation may well be the best approach but other forms of independent regulation would be better than bad self-regulation. If the profession does not regulate well then there should be a risk of loss of self-regulation. And there is no doubt that lawyers are conflicted by their self-interest in some important respects. This conflict is mitigated to some extent by the risk of loss of self-regulation – and loss of self-regulation could be necessary depending on the nature and extent of self-interested self-regulation.

The duty of commitment as a principle of fundamental justice

The majority concluded at para. 103 that the narrow version of independence of the bar is a principle of fundamental justice stating:

In the context of state action engaging s. 7 of the Charter, … (subject to justification) the state cannot impose duties on lawyers that undermine the lawyer’s compliance with that duty, either in fact or in the perception of a reasonable person, fully apprised of all of the relevant circumstances and having thought the matter through. The paradigm case of such interference would be state-imposed duties on lawyers that conflict with or otherwise undermine compliance with the lawyer’s duty of commitment to serving the client’s legitimate interests.

It is on this point that the majority and the minority (the Chief Justice and Justice Moldaver) disagreed. The minority did not accept that commitment was a principle of fundamental justice and were inclined to the view that considering protection of solicitor-client privilege as a principle of fundamental justice provided a better resolution of the section 7 analysis. The minority concluded at para. 119 that:

In our view, this “principle” lacks sufficient certainty to constitute a principle of fundamental justice: …The lawyer’s commitment to the client’s interest will vary with the nature of the retainer between the lawyer and client, as well as with other circumstances. It does not, in our respectful opinion, provide a workable constitutional standard.

In considering whether the duty of commitment is a legal principle, as opposed to an important interest or a policy goal, Justice Cromwell observed at para. 91 that:

… The duty of commitment to the client’s cause has been recognized by the Court as a distinct element of the broader common law duty of loyalty and thus unquestionably is a legal principle:

However, Justice Cromwell took care to emphasize that the scope of the duty of commitment is limited. At para. 93, he provided some examples of the bounds of the duty:

Of course the duty of commitment to the client’s cause must not be confused with being the client’s dupe or accomplice. It does not countenance a lawyer’s involvement in, or facilitation of, a client’s illegal activities. Committed representation does not, for example, permit let alone require a lawyer to assert claims that he or she knows are unfounded or to present evidence that he or she knows to be false or to help the client to commit a crime. The duty is perfectly consistent with the lawyer taking appropriate steps with a view to ensuring that his or her services are not being used for improper ends.

On the question of whether there is sufficient consensus permitting the conclusion that the duty of commitment is a fundamental principle, Justice Cromwell said at paras. 96 and 97 that:

Clients — and the broader public — must justifiably feel confident that lawyers are committed to serving their clients’ legitimate interests free of other obligations that might interfere with that duty. Otherwise, the lawyer’s ability to do so may be compromised and the trust and confidence necessary for the solicitor-client relationship may be undermined. This duty of commitment to the client’s cause is an enduring principle that is essential to the integrity of the administration of justice. In Neil, the Court underlined the fundamental importance of the duty of loyalty to the administration of justice. The duty of commitment to the client’s cause is an essential component of that broader fiduciary obligation. …

The duty of commitment to the client’s cause is thus not only concerned with justice for individual clients but is also deemed essential to maintaining public confidence in the administration of justice. Public confidence depends not only on fact but also on reasonable perception. It follows that we must be concerned not only with whether the duty is in fact interfered with but also with the perception of a reasonable person, fully apprised of the relevant circumstances and having thought the matter through. The fundamentality of this duty of commitment is supported by many more general and broadly expressed pronouncements about the central importance to the legal system of lawyers being free from government interference in discharging their duties to their clients.

It is particularly noteworthy is that independence from obligations and government interference that might interfere with service of legitimate client interests is seen as important not just to the trust and confidence of individual clients but also to public confidence in the administration of justice.

It is also noteworthy that Justice Cromwell has placed commitment both as a principle essential to the administration of justice and as a fiduciary obligation. This suggests that Neil, McKercher and Federation of Law Societies may be seen as establishing that the lawyer’s duty of loyalty is founded both in fiduciary law and in the law protecting the administration of justice.

In paras. 81, Justice Cromwell notes two types of harm to clients:

The duty of lawyers to avoid conflicting interests is at the heart of both the general legal framework defining the fiduciary duties of lawyers to their clients and of the ethical principles governing lawyers’ professional conduct. This duty aims to avoid two types of risks of harm to clients: the risk of misuse of confidential information and the risk of impairment of the lawyer’s representation of the client …

In paras. 82 and 83, Justice Cromwell discusses the common underlying basis for protection of solicitor-client privilege and commitment stating inter alia that:

The question now is whether another central dimension of the solicitor-client relationship — the lawyer’s duty of commitment to the client’s cause — also requires some measure of constitutional protection against government intrusion. In my view it does, for many of the same reasons that support constitutional protection for solicitor-client privilege. “The law is a complex web of interests, relationships and rules. The integrity of the administration of justice depends upon the unique role of the solicitor who provides legal advice to clients within this complex system”: … These words, written in the context of solicitor-client privilege, are equally apt to describe the centrality to the administration of justice of the lawyer’s duty of commitment to the client’s cause. A client must be able to place “unrestricted and unbounded confidence” in his or her lawyer; that confidence which is at the core of the solicitor-client relationship is a part of the legal system itself, not merely ancillary to it: The lawyer’s duty of commitment to the client’s cause, along with the protection of the client’s confidences, is central to the lawyer’s role in the administration of justice.

Echoing the reasons of Justice Binnie in Neil, Justice Cromwell has placed client confidence in their lawyers as “part of the legal system itself” and not “merely ancillary” to it. The protection of client confidences and commitment to the client’s cause are clearly said both to be central to the lawyer’s role in the administration of justice. These are important statements that will no doubt be repeated in future case law and not just in Charter cases.

The application of section 7 of the Charter

In order for section 7 of the Charter to be engaged, it is necessary that state deprivation of a person’s life, liberty or security be in issue.

Justice Cromwell finds that the liberty interests of the lawyer are engaged by the Regime as “The scheme limits lawyers’ liberty by punishing with imprisonment the failure to comply with its requirements”. Justice Cromwell reasons that “It is not necessary to determine whether the liberty interests of clients are infringed”. The Court of Appeal however also found that the liberty of the client was in issue as a purpose of the Regime is to establish a paper trail for enforcement purposes including criminal law sanction.

The reliance by the majority on the lawyer’s rights is curious. One might think that analysis of the right not to be deprived of liberty except in accordance with the principles of fundamental justice would consider fundamental justice as it relates to the deprivation. It seems a strained interpretation to consider principles of fundamental justice that protect third parties under section 7.

This is perhaps results-driven reasoning. Framing the issue in terms of lawyer liberty establishes a much broader protection than would focus only on client liberty. The lawyer-focused approach protects clients from loss of commitment by the state by means that deprive the lawyer of life, liberty of security of the person (but not where lesser means are used). On the other hand, a client-focused approach only protects against loss of commitment where the client’s life, liberty or security of the person is at risk of deprivation.

Leaving aside the logic of the reasoning, the effect is to establish that the state may not, without proper justification, interfere with the duty of commitment owed to clients by means of loss of loss of life, liberty or security of the lawyer. It seems logical that Charter scrutiny of impaired commitment is a engaged where a client’s loss of life, liberty or security is at risk of deprivation by the state even where commitment is impaired by means not involving the lawyer’s life, liberty or security of the person.

However (and obviously), there is no Charter protection of the duty of commitment where deprivation of the life, liberty or security of neither the lawyer nor the client is in issue.

Still, framing the duty of commitment as a principle of fundamental justice is an important statement of policy that will no doubt inform the common law and statutory interpretation even where Charter rights are not in issue.

________________________

[i] Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209

[ii] Citations in this and following quotes are omitted.

[iii] Justice Cromwell took care at para. 68 to say “I add this. The issues that would arise in the event of a challenge to professional regulatory schemes are not before us in this case. Different considerations would come into play in relation to regulatory audits of lawyers conducted on behalf of lawyers’ professional governing bodies. The regulatory schemes in which the professional governing bodies operate in Canada serve a different purpose from the Act and Regulations and generally contain much stricter measures to protect solicitor-client privilege.”

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