A lawyer’s duty of loyalty to their client is one of the basic tenets of the practice of law. Both law societies and courts have strongly enforced this rule for the protection of the public. The influence of any adverse interests, be they those of other clients or of the lawyer personally, would be an affront to the lawyer’s core duty to advocate for their client “by all means and expedients, and at all hazards and costs to other persons.”[1] It would be inconceivable for the same lawyer to attempt to advocate for directly adverse parties, such as a complainant and respondent, vendor and purchaser, or employer and collective bargaining unit.The coexistence of such adverse interests would preclude the lawyer from providing the single-minded representation their clients expect, require, and deserve.
Immigration law is unique among disciplines of law as it can necessarily involve simultaneously acting for multiple parties in joint retainer situations, where potential conflicts of interest may arise. For example, while an employer and employee may appear to share the same interests at the outset of an immigration matter (i.e., obtaining a certain immigration status for the employee), the immigration process can involve many auxiliary stages during which the interests of the employer and employee could diverge, rendering the parties adverse to each other. When this happens, the same lawyer or law firm continuing to represent both parties would deprive both parties of zealous, loyal representation, and undermine the integrity of the administration of justice.
Below is an analysis of the Canadian jurisprudence and Ontario regulatory landscape pertaining to conflicts of interests for lawyers. It will then address a common approach used to navigate this landscape in an immigration law context, as well as the limitations of that approach.
Legal Jurisprudence on Conflicts of Interest
Four seminal cases set out the guiding principles and policy considerations for understanding conflicts of interest under Canadian law: MacDonald Estate, Neil, Strother, and McKercher.
In MacDonald Estate, Sopinka J., writing for the majority of the Supreme Court, establishes that the primary public policy interest at stake in a potential conflict of interest scenario is the maintenance of “the high standards of the legal profession and the integrity of our system of justice.”[2] This consideration is sufficiently pressing to override the Court’s concern for the competing value that a client should not be deprived of the right to the choice of counsel without good cause, and the desirability of permitting reasonable mobility in the legal profession.[3] A lawyer will not be permitted to represent a client if there is a risk that, in so doing, the integrity of the justice system will be compromised, and a high standard must be met to discharge this risk.
Factually in this case, Dangerfield, a solicitor who was previously acting for the appellant with respect to the matter at hand, later joined the respondent’s counsel’s law firm. Dangerfield and senior members of the respondent’s law firm all provided sworn affidavits confirming that the case had not been discussed with Dangerfield since joining the firm and would not be discussed moving forward. The Court held that these affidavits were not sufficient to assure the public of the integrity of the legal profession and of the administration of justice, and that institutional mechanisms would be necessary to ensure that no disclosure would occur by the "tainted" lawyer to other lawyers at the respondent’s firm. Only such robust objective measures would enable “the confidence of the public in the integrity of the profession and in the administration of justice” to be maintained and strengthened.[4]
Reiterating the public policy considerations in Macdonald Estate, in Neil, a lawyer’s duty to be loyal to their client and avoid conflicts of interest was said to stem from the importance of maintaining public confidence in the integrity of the administration of justice. The legal system may appear to be a hostile and hideously complicated environment, and the public will lose confidence in the reliability and trustworthiness of this system unless they are assured that their lawyer will navigate the legal system for them with undivided loyalty.[5] The value of an adversarial legal system as a problem-solving tool for the public can therefore only be actualized if lawyers provide their clients with unquestionable loyalty and dedication, free from the influence of any conflicting adverse interests.[6] A lawyer’s duty of loyalty is also intertwined with their fiduciary obligations to their client, as undivided loyalty requires concern for only the client’s interests and never those of the lawyer.
With respect to the content of the duty of loyalty, Binnie J. sets out the following bright line rule:
“a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other.”[7]
This bright line rule establishes that consent and full disclosure may be able to resolve situations that otherwise would have resulted in a conflict of interest, but limits this to situations in which a lawyer believes they are still able to represent each client without adversely affecting the other. Binnie J. also clarifies that there does not necessarily need to be an actual adverse effect on a client for a conflict of interest to exist. Merely a “substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person” is enough for a conflict of interest to be found.[8] A lawyer must explicitly avoid situations that would create the risk of their client being affected by the lawyer’s own interests or those of the lawyer’s other clients.
The Court’s analysis in Strother introduces the idea that determining whether a conflict of interest exists when a lawyer is representing multiple clients with competing commercial interests is a question of fact.[9] In particular, for sophisticated clients in specialized fields, such as large commercial organizations seeking advice on sophisticated tax planning schemes, a lawyer may be able to infer implied consent to a degree of overlapping representation with other clients with competing commercial interests. The inference of implied consent may be drawn more readily for more sophisticated clients.[10] Of course, despite this carve-out, the most prudent practice would be to obtain informed consent to overlapping representation. Implied consent also may only be inferred with respect to representation of other clients with competing commercial interests, and not with respect to a lawyer’s own competing commercial interests.
In McKercher, the Court’s most recent seminal ruling on conflicts of interest, the bright line rule from Neil was clarified and restated by McLachlin C.J. as follows:
‘…the general “bright line” rule is that a lawyer, and by extension a law firm, may not concurrently represent clients adverse in interest without obtaining their consent — regardless of whether the client matters are related or unrelated … However, when the bright line rule is inapplicable, the question becomes whether the concurrent representation of clients creates a “substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person”’[11]
McLachlin C.J. also provided guidance as to how three additional duties stemming from the duty of loyalty supplement the bright line rule for conflicts of interest: the duty to avoid conflicting interests; the duty of commitment to the client’s cause; and the duty of candour.
A lawyer or law firm has a duty to avoid conflicting interests and may not concurrently represent clients that are adverse in legal interest without first obtaining the informed consent of both clients. If the clients are not adverse in legal interest (e.g. if they simply have competing commercial interests), the ethical issue to consider is whether a joint retainer creates a substantial risk that the lawyer’s representation would be “materially and adversely affected” by the lawyer’s own interests or the lawyer’s duties to other clients.[12]
Under the duty of commitment to the client’s cause, subject to law society rules, a lawyer must not undermine the lawyer-client relationship. In general, a lawyer or law firm may not summarily and unexpectedly dismiss a client simply to avoid a conflict of interest with an existing or future client.[13]
Finally, the duty of candour requires that a lawyer disclose to the client any factors relevant to their ability to provide effective representation. Generally, a lawyer must advise an existing client before accepting a retainer that will require them to act against the client, even if the situation falls outside the scope of the bright line rule. The existing client must be permitted to choose to take their business elsewhere should their relationship with the lawyer be damaged by the adverse retainer.[14]
Regulatory Landscape on Conflicts of Interest
Following MacDonald Estate, Neil, Strother, and McKercher, as well as the release of a Model Code of Professional Conduct developed by the Federation of Law Societies of Canada[15] in response to these cases, the various provincial legal regulatory bodies amended their rules respecting conflicts of interest to encapsulate the principles set out by the Court. As an illustrative example, the Law Society of Ontario addresses the duties outlined in McKercher through the following provisions of its “Rules of Professional Conduct”:
Duty to Avoid Conflicting Interests
“3.4-2 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.”[16]
Duty of Commitment to the Client’s Cause
“3.4-9 Despite rule 3.4-8, if clients consent to a joint retainer and also agree that if a contentious issue arises the lawyer may continue to advise one of them, the lawyer may advise that client about the contentious matter and shall refer the other or others to another lawyer for that purpose.”[17]
Duty of Candour
“3.2-2 When advising clients, a lawyer shall be honest and candid.
…
Commentary
…
[1.1] … The duty of candour requires a lawyer to inform the client of information known to the lawyer that may affect the interests of the client in the matter.”[18]
The Limited Scope Joint Retainer Approach
As stated above, the potential of a conflict of interest is often present in the practice of corporate immigration law, particularly in the context of employee relocation. This type of advocacy involves representing two parties with prototypically adverse interests – an employer and their employee. One common strategy that lawyers deploy to avoid violating their professional responsibilities in these situations is to use a limited scope joint retainer between the lawyer, the employer, and the employee. Such a retainer would set out that the scope of the employee’s representation by the lawyer is restricted to only the employee’s present immigration case. The employer and employee would need to provide informed consent to the overlapping representation and all information received from either party in connection to the employee’s immigration matter would need to be shared between both parties. Finally, the retainer would include a “preferred client” clause setting out that if a contentious issue arises, the lawyer would continue to advise only one party, typically the employer, and would refer the employee to another lawyer with respect to the contentious issue.
The limited scope joint retainer approach endeavours to allow a lawyer to fulfill their duty to avoid conflicting interests by securing advance consent from the employer and employee as to the joint representation. It addresses the duty of commitment to the client’s cause by complying with law society rules on dismissal of clients. The employee cannot be said to have been summarily dismissed should a contentious issue arise as they would have been given notice that the lawyer would not continue to represent them in that circumstance. The duty of candour is addressed as no information received in connection with the matter would be withheld from either the employer or the employee. Instituting a limited scope joint retainer before commencing the immigration matter also provides notice to the employer that the lawyer will be advising the employee, a party with adverse interests, and affords the either party an opportunity to choose whether to seek independent legal advice.
Limits to the Limited Scope Joint Retainer Approach
There are, however, limits to that which can be accomplished using consents and advance waivers. Under some circumstances, a conflict can be so pronounced that prior consent cannot save the relationship between lawyer and client.[19] Binnie J. appears to have anticipated such situations by only permitting a lawyer to represent consenting clients with adverse interests if the lawyer “reasonably believes” they can represent the interests of both clients “without adversely affecting the other.”[20] The LSO’s Rules of Professional Conduct ascribe a similar restriction on representing consenting clients with adverse interests to situations in which 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.”[21]
Immediately Contentious Issues
A particularly common scenario that is not adequately addressed by the limited scope joint retainer approach can arise when a client corporation has retained a multidisciplinary law firm to advise with respect to an employee’s employment contract and their immigration matters. An employment contract is an essential element to many immigration applications, so the lawyer would be required to advise in the best interests of both the employer and the employee with respect to the terms of employment. Many of the key elements of the employment contract, such as the employee’s wages, conditions of employment, working conditions, termination and notice period clauses would likely be contentious issues that would need to be negotiated between the employer and the employee. It is difficult to conceive of how a lawyer could reasonably believe they could simultaneously provide their undivided loyalty to parties as naturally adverse as an employer and employee with respect to the most classically contentious aspects of their relationship. The interests of these parties are so diametrically opposed that mere prior consent would be insufficient to prevent the parties from questioning the loyalty of their counsel and the integrity of the administration of justice in their matter. At the very least, this would trigger the preferred client clause, thus requiring that the lawyer terminate representation of the employee. Therefore, at an early stage of preparing an immigration matter for an employer and employee, contentious issues are likely to arise, preventing the lawyer from continuing their joint representation of the employer and employee.
Inadequacy of Consent from Employee
A further issue with the limited scope joint retainer approach in the scenario described above is the potential inadequacy of the consent provided by the employee. As noted in the Rules of Professional Conduct, for a consent to be effective it must be “fully informed and voluntary after disclosure.”[22] Unlike the situations described in Strother,[23] a typical employer-employee relationship involves at least one unsophisticated party (i.e. the employee) and a significant imbalance of power between the parties. It would be highly unusual for an employee to seek independent legal advice when their employer has retained a lawyer to handle their immigration matters, contrary to the preference expressed by Binnie J. in Neil.[24] Rather than being informed and voluntary, the consent provided by the employee to representation by the employer’s lawyer on retainer is likely to be seen by the employee as the only way for them to obtain immigration representation at all.
The jurisprudence makes it abundantly clear that maintenance of public confidence in the integrity of legal profession and the administration of justice is the policy consideration that ought to drive any discussion on conflicts of interest. In the situation described above involving two parties with adverse interests in which a significant imbalance exists in terms of power and sophistication, a high standard ought to be required to overcome the risk that overlapping representation would compromise the integrity of the justice system.[25] Just as sworn affidavits confirming integrity were insufficient in Macdonald Estate,[26] the employee ought to be entitled to robust institutional mechanisms over and above a consent to ensure they receive adequately loyal representation and can maintain their confidence in the integrity of the administration of justice.
Conflicts Involving a Lawyer’s Personal Interests
The limited scope joint retainer approach also does not shield a lawyer from conflicts of interest arising from a lawyer’s personal interests. In Strother, it was held that a lawyer’s personal interests may never interfere with their ability to provide loyal representation to their clients.[27] This principle is also reflected in the formulation of the bright line rule in McKercher, in which representation is not permitted if there exists a substantial risk that such representation would be materially and adversely affected by the lawyer’s own interests.[28] Where an employer retains a multidisciplinary law firm with respect to a broad range of legal matters and later enters into a limited scope joint retainer involving an employee’s immigration matter, a conflict of interest will almost always arise involving the lawyer’s personal financial interests. This is due to the lawyer having a personal financial interest in retaining the employer as a client with respect to non-immigration matters. The result of this conflict is the risk that the lawyer will favour the interests of the employer, rendering the interests of the employee subordinate. This inevitable dual conflict of interest, involving two areas of conflict(namely, employment law and immigration law), is unique to the practice of immigration law. Generally, in other disciplines, a lawyer’s personal interest in retaining a client for future work is generally aligned with their duty to provide loyal representation to them, and the interests of an adverse party do not confound the situation by resulting in an obvious conflict of interest (employment law) in addition to a possible conflict of interest (immigration law).
Should a lawyer’s personal interests interfere with their loyalty to their client, in particular an employee, the consequences could be severe, including a failure to adequately represent the employee’s interests depriving the employee of the benefit of an advocate altogether. Conversely, if a lawyer favours the interests of an employee over the employer’s broader business interests, it may lead to a breakdown of the relationship between the lawyer and employer. To the extent that this leads the employer to withdraw their business from the lawyer, this will deprive the employer of all the benefits of the continued relationship with the lawyer. However, in this situation, the possibility exists for the risk of a conflict of interest to be significantly reduced by employing dedicated immigration counsel. In this way, the employer would be represented by counsel that is unconcerned with securing future non-immigration work, and that can approach the immigration matters at hand with undivided loyalty.
Conclusion
Because the practice of immigration law naturally involves jointly representing parties with potentially adverse interests, avoiding conflicts of interest in this practice area poses unique challenges to a lawyer, particularly if practicing in a multidisciplinary law firm. The limited scope joint retainer approach is an adequate strategy to employ in the absence of any contentious issues between an employer and employee. However, the nature of the employer-employee relationship is one in which the parties have adverse interests. This unfortunately limits the utility of the limited scope joint retainer approach such that it may be deficient in its ability to provide sufficient safeguards to the integrity of the administration of justice. In immigration matters, lawyers may need to utilize external immigration counsel given the difficulty of implementing appropriate institutional safeguards to protect employers and employees from the risk of conflicts of interest.
[1] Henry, Lord Brougham in Nightingale, J., The Trial of Queen Caroline(1821), vol. II, The Defence, Part 1, at p. 8.
[2] MacDonald Estate v. Martin, [1990] 3 SCR 1235 [MacDonald Estate].
[5] R. v. Neil, 2002 SCC 70 [Neil], at para. 12.
[9] Strother v. 3464920 Canada Inc., 2007 SCC 24 [Strother], at para. 55.
[11] Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39 [McKercher], at para. 8.
[15] Federation of Law Societies of Canada, “Model Code of Professional Conduct”, (2006).
[16] The Law Society of Ontario, “Rules of Professional Conduct,” c 3.4-2 [RPC].
[18] Ibid c 3.2-2, Commentary 1.1.
[19] Alberta Union of Provincial Employees v. United Nurses of Alberta, Local 168, 2009 ABCA 33 at paras 43, 49.
[21] RPC, supra note 16 at c 3.4-2
[23] Strother, supra note 9.
[25] Macdonald Estate, supra note 2.
[27] Strother, supra note 9.
[28] McKercher, supra note 11.
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