When Consent Fails to Waive Conflict

A few weeks ago, we at Wolf Law Chambers published an article on how legal practitioners can navigate the law to fulfill their duty to avoid conflicts of interest. We finished the article subtly hinting at the idea that the removal of a lawyer due to conflict of interest may be waived where the affected parties consent to their representation. In other words, we suggested that a lawyer may act or continue to act in conflict of interest when they are given consent from all affected clients.

Today, let’s expand on this matter, for it deserves its own article. The legal nature of consent, in this context as well as other contexts, is complicated and can be quite difficult to navigate. The risk of misinterpreting the law could be disastrous. Clients generally don’t want to lose their lawyers while lawyers generally don’t want to lose their clients, especially in the middle of a serious legal battle. So to help lawyers and clients in avoiding such disastrous scenarios due to the misinterpretation of consent, this article will outline the scope of consent and when it does not waive conflicts. 

Conflict of Interest

In the previous article, we established that there are four types of conflicting interests: (1) personal interest conflict; (2) current client conflict; (3) former client interest conflict; and (4) conflicts arising from third persons. The first type pertains to the conflict between the client’s interest and the lawyer. The remaining types consist of a conflict between a client’s interests and their lawyer’s legal duty to others. When such conflict occurs, the lawyer shall not represent their client. 

Consent

According to the Complete Rules of Professional Conduct, 

A lawyer shall not represent a client in a matter when there is a conflict of interest unless there is consent, which must be fully informed and voluntary after disclosure, from all affected clients and the lawyer reasonably believes that he or she is able to represent each client without having a material adverse effect upon the representation of or loyalty to the other client.

Hence, if a lawyer can ever represent a client while in conflict of interest, there must be consent. And this consent cannot simply mean, “I consent” or “I’ll allow my lawyer to represent me.” The consent must be fully informed and voluntary and after full disclosure. Thus, it is not only what the client says but how they say it that matters before the law. If the consent is not (1) fully informed, (2) voluntary, or (3) given after the lawyer’s disclosure, then the rule indicates that such lawyer shall not represent said client when there is a conflict of interest.

It is important for all lawyers to disclose situations of conflicts to their affected clients when it arises. According to the commentary under rule 3-4.2 of the Complete Rules of Professional Conduct, “Disclosure is an essential requirement to obtaining a client’s consent and arises from the duty of candour owed to the client. Where it is not possible to provide the client with adequate disclosure because of the confidentiality of the information of another client, the lawyer must decline to act.”

Valid and Binding Consent

If the consent received is not valid or binding, it will not be held as a strong reason to waive a conflict of interest. Courts will consider the validity of the consent with great scrutiny, as exhibited in Chiefs of Ontario v Ontario, [2003] OJ No 580 [Chiefs of Ontario]. This was a story of a law firm and Mnjikaning First Nation (MFN). What started as a strong business relationship became palpably hostile, whereby members of the firm even referred to MFN as a “wolf in sheep’s clothing.” In response to a suit submitted by the firm against MFN, the First Nation group sought to remove the members of the firm as opposing counsel, since the firm had once represented them for previous legal matters.

In this case, the Court questioned whether the past consent provided by MFN to the firm was valid and binding in waiving the firm’s conflict of interest. When approaching this issue, the Court addressed three main questions to determine valid and binding consent:

  1. Whether the client received independent legal advice; 
  2. Whether there was full disclosure by the lawyer; and
  3. Whether the lawyer fulfilled their duties when obtaining consent. 

Upon carefully answering each question, the Court concluded that consent was valid and binding. The client received independent legal advice, received full disclosure by the lawyer when participating in negotiations, and the firm fulfilled its duties to ensure consent was informed through the independent legal advisor. 

Specific Consent

Some readers may wonder what the outcome of the case was. After all, consent was valid and binding. The lawyer obtained fully informed and voluntary consent after disclosure. So the firm may continue to act against their former client, MFN, right? Interestingly, that was not the case. After establishing that the consent given by MFN to the firm on acting during conflict was valid and binding, the Court went on to question whether their consent was specific enough to include the matter of this particular case. In other words, the Court had to determine whether the scope of MFN’s consent covered the circumstances of the matter at hand.

This line of questioning makes sense upon consideration. If consent is given to someone, isn’t it important to know what the consent was for? Was the consent for all conflict, some conflict? Was it for current conflict or future conflict? These questions can play a major role in the outcome of a case, as it did in Chiefs of Ontario. In this case, the Court listed the factors that must be considered to determine the scope of consent: 

  1. The quality and degree of adversity between the lawyer and the affected client; 
  2. The quality and degree of potential adversity contemplated by the lawyer and affected client; 
  3. The nature of the retainer through the retainer and at the time of consent; and 
  4. The nature of the information to which the lawyer had access. 

After considering each factor, the Court found that the matter was outside the scope of the consent. 

There’s More?

Now, we have established a general understanding of consent. Let’s recap. In order to waive a conflict of interest, there must be the valid and binding consent, which requires fully informed and voluntary consent after full disclosure and independent legal advice, and there must be consent that is specific enough to the matter at hand. Suppose these criteria are filled. Can we infer that the lawyer may act or continue to act in conflict of interest? It appears we cannot. 

Truly, there must be consent. But that doesn’t mean conflict will be waived, though it can be waived. In the case of Law Society of Upper Canada v Carlesso [Carlesso], the facts were of a lawyer who once represented a woman with whom he became romantically involved with and with whom he became engaged. Though we are happy for the couple, it is established law that a lawyer shall not act in a manner which conflicts with the interests of their client when it adversely impacts their judgment on behalf of their client. Indeed, “proving proper consent will be very difficult where a lawyer has a sexual relationship with a vulnerable client, absent independent legal advice.” 

But the lack of consent is not the reason we share this case in this article. The reason we share this case is because, near the beginning of the decision, the Law Society Tribunal explains that lawyers may not act for a client even in times when there is proper consent, as they state: 

While conflicts can sometimes be waived by a client, waiver must be informed and voluntary. In the circumstances of this case, there was an ineffective waiver of a conflict that was properly identified. What was not recognized was that what started as a risk of impaired client representation evolved into actual impairment of representation. Even with proper consent, a lawyer may not act or continue to act where a conflicting interest actually impairs client representation. To be clear, while clients can “waive conflicts” in proper circumstances, client consent does not permit a lawyer to act without fidelity to law. A client is not entitled to authorize a lawyer to act unlawfully.

So in other words, when the conflict results in impairment to the representation of the client by the lawyer, consent will not waive the conflict. It is more important that a lawyer acts with proper judgment than to receive consent for conflict. It is unlawful to act for a client when judgment is impaired. That is the boundary of consent. 

Beyond the Line

There are a few scenarios in which this boundary has been breached. In the case of Alberto Union of Provincial Employees v United Nurses of Alberta Local 168 [United Nurses], the Court stated, 

There are some situations where consent is simply ineffective, notwithstanding the good faith and intentions of the lawyer and the clients. There will be situations where matters unfold in such a way that the lawyer simply cannot continue to act, regardless of the consent obtained. Those situations may arise from the fiduciary duties of lawyers as set out in Neil, or from the passage of confidential information described in MacDonald Estate

So let’s dive into these two cases (Niel and MacDonald Estate) below.

Passage of Confidential Information

The Supreme Court in MacDonald Estate v Martin [MacDonald Estate] was faced with an issue concerning the “standard to be applied in the legal profession in determining what constitutes a disqualifying conflict of interest.” The respondent, who was the plaintiff in an action against the appellant, had once retained A. Kerr Twaddle, who was assisted by a graduate articling student. The student was actively engaged in the case on behalf of the appellant. Years

later, the student began practicing law at the Thompson firm. This firm represented the respondent in this case. The question, then, was whether Thompson and some associates are disqualified from continuing to act in this litigation by reason of conflict of interest. In order to determine this, Court derived a test, which essentially asks two questions: 

 

  1. Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand?
  2. Is there a risk that it will be used to the prejudice of the client? 

 

The Court found that the lawyer received confidential information and inferred that relevant information was disclosed. On that basis, the appeal was allowed and the trial judge’s decision to grant the order requested to remove the lawyer by reason of conflict of interest. 

 

The application of the test in MacDonald Estate can also be found in cases like Gloger v Evans [Gloger], where the Ontario Superior Court of Justice dismissed the plaintiff’s motion to remove a law firm on the grounds of conflict of interest. In the Court’s view, since the firm did not receive confidential information, and all of the information provided was irrelevant to the issue at hand, the plaintiff failed to meet the first part of the test; and thus, the Court did not order the removal of the firm by reason of conflict. 

 

It’s important to keep in mind that these decisions were made notwithstanding consent. The Supreme Court restored the judgment to remove a firm by applying the test for disqualifying conflict; and the Superior Court decided not remove a firm by applying this test. As the Court in United Nurses mentioned, the MacDonald Estate case was decided regardless of the presence of consent. And the same goes for Gloger. 

 

Fiduciary Duties

Another example of a time where consent is ineffective in waiving conflict is where there is a breach of fiduciary duty. In the case of R v Neil [Neil], two out of five indictments were of concern. The appellant was charged with fabricating court documents and was charged with scheming to defraud Canada Trust. The conflict of interest largely concerns Gregory Lazin, who was a member of the Venkatrman firm. With regards to the Canada Trust indictment, the firm acted for the appellant while representing a Helen Lambert, who had adverse interests to the appellant on a separate civil issue. Lazin arrived for about 12 minute in Helen’s meeting at the firm to gather information that paints the appellant as the manipulative criminal and Helen as an innocent dupe. This is against the appellant’s interest. And with regards to another indictment, called the Doblonko indictment, Lazin had used a client, Doblonko, to boost the credibility of his defence on Helen’s case in the Canada Trust matter. 

The issue at hand was on the limitations of the lawyer’s duty of loyalty where the lawyer did not receive confidential information; and whether the firm or Lazin breached their duty. Several helpful cases were cited to derive a conclusion. The court cited Ramrakha v Zinner, (1994), 157 AT 279, where it stated, 

A solicitor is in a fiduciary relationship to his client and must avoid situations where he has, or potentially may, develop a conflict of interest… The logic behind this is cogent in that a solicitor must be able to provide his client with complete and undivided loyalty, dedication, full disclosure, and good faith, all of which may be jeopardized if more than one interest is represented.

The Court also cited Davey v Woolley, Hames, Dale & Dingwall, (1982) 35 OR (2d) 599, which stated: 

The underlying premise… is that, human nature being what it is, the solicitor cannot give his exclusive, undivided attention to the interests of his client if he is torn between his client’s interests and his own or his client’s interests and those of another client to whom he owes the self-same duty of loyalty, dedication and good faith.

In the Neil case, the Court confirmed that the firm and Lazin had put themselves in a position of conflict where duties to other clients conflicted with the duty of loyalty to the appellant. They attempted to act for both the appellant and Helen, who clearly had an adverse interest; and the firm breached its duty to the appellant by accepting a retainer that required them to submit, before a court, evidence of illegal conduct of the appellant. This was unacceptable, notwithstanding any concern for consent.

Concluding Remarks

As best stated by the Law Society Tribunal, 

Lawyers are required to act in the interests of their clients within the bounds of the law. This is sometimes described as zealous representation in fidelity to law. Lawyers easily appreciate the duty of zealous representation owed to their clients but some seem to less easily appreciate the duty of fidelity to law.

So before embarking on the difficult path through conflicting interests, both lawyers and clients must be careful with consent. It is not a tool to waive all conflicts. It is a means to allow lawyers to represent their clients insofar as such represent does not impair the judgment

of the lawyer and insofar as they do not breach their fundamental duties as lawyers. It is the duty of the lawyer to balance their zealous representation of a client and their fidelity to law.  

By Aaron Rajesh and Dezso Farkas

1- Law Society of Ontario, Complete Rules of Professional Conduct, at rule 3.4-1. https://lso.ca/about-lso/legislation-rules/rules-of-professional-conduct/chapter-3#ch3_sec4-1-duty-to-avoid-conflicts
2-Ibid at rule 3.4-2.
3-Chiefs of Ontario v Ontario, 63 OR (3d) 335, [2003] OJ No 580, at para 2.
4-Ibid at para 53.
5-Ibid at paras 25-44.
6-Ibid at para 51.
7-Ibid at para 7.
8-Law Society of Upper Canada v Carlesso, [2014] LSDD No 122, 2014 ONLSTH 129 [Carlesso].
9-Ibid at para 11. 
10-Ibid at para 32. 
11-Alberta Union of Provincial Employees v United Nurses of Alberta, Local 168, [2009] AJ No 48, 2009 ABCA 33, 94 Admin LR (4th) 169, 307 DLR (4th) 44, [2009] 6 WWR 235, 1 Alta LR (5th) 217, 2009 CarswellAlta 51, 448 AR 101, [2009] CLLC para 220-030, 164 CLRBR (2d) 105. [United Nurses]
12-Ibid at para 30.
13-MacDonald Estate v Martin, [1990] 3 SCR 1235, [1990] 3 RCS 1235, [1990] SCJ No 41, [1990] ACS no 41, 1990 CanLii 32.
14-Ibid at para 1.
15-Gloger v Evans, 2018 ONSC 4919. 
16-R v Neil, [2002] 3 SCR 631, 2002 SCC 70, [2002] 3 RCS 631, [2002] SCJ No 72, [2002] ACS no 72. 
17-Ibid at para 25
18-Ibid at para 26.
19-Ibid at para 31.
20-Ibid at paras 32-33.
21-United Nurses, supra note 11, at para 30.
22- Carlesso, supa note 8, at para 1.