Copyright 2011, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation & Dispute Resolution, September 2011

A recent decision by the Chief Justice of the Alberta Court of Queen's Bench deals with a unique circumstance involving conflict issues arising in circumstances where, after a lawyer moves to a new firm, the new firm is retained by a party to the litigation, while the lawyer's former firm remains retained by the opposite party.

Dow Chemical Canada Inc. and Dow Europe GmbH (Dow) are plaintiffs in an action against Nova Chemicals Corporation (Nova).

Nova retained Osler and McLeod Dixon as co-counsel. Dow retained Burnet, Duckworth & Palmer LLP initially and then sought to retain Bennett Jones as co-counsel. Andrew Little, then a partner at Osler in Calgary, was responsible for representing Nova's interests in the action and the evidence indicated that he was involved in the formative strategic stages of the lawsuit. Mr. Little left Osler to join Bennett Jones in Toronto. Nova complained of a conflict and introduced evidence that it did not "expect a lawyer who was involved to prosecute the dispute on its behalf to join our enemy's law firm."

Bennett Jones sought a declaration that it was able to act on behalf of Dow, notwithstanding that Mr. Little had joined its firm.

In analyzing the issue, the Chief Justice noted that while codes of professional conduct or guidelines are helpful, useful and may be persuasive in a proper case, they were not determinative of whether a conflict exists in a particular case. Instead, the issues must be determined by the court. The ultimate question is whether the public, represented by reasonably informed persons, would be satisfied that no use of confidential information would occur.

Bennett Jones pointed to the fact that although it did represent Nova in an immigration matter, Nova had agreed to allow it to act adverse to Nova and its affiliates in matters unrelated to that and other existing mandates. Nova tendered evidence that the consent previously provided in that regard was never intended to extend to the present situation because it would be unable and unwilling to accept any risk of Mr. Little inadvertently leaking Nova's confidential information to members of Bennett Jones who would be representing Dow. The court recognized that such a generic consent is not contrary to any principle of public policy; however, it suggested that, in certain circumstances, a conflict could be so pronounced that even prior consent could not save a retainer.

The court held that Nova's purported consent did not qualify as the type of generic agreement sufficient to allow Bennett Jones to act without more. In addition, the court held that the specific retainer contemplated was never within the contemplation of the parties when the immigration retainer letter was agreed, and that the waiver was never intended to apply to the present situation in terms of consent.

The court ultimately reviewed the facts of the case and found that Mr. Little, as conceded by both parties, was in possession of confidential information which, if disclosed to Bennett Jones, would be prejudicial to Nova. It found that Bennett Jones had a detailed and thorough Conflicts Policy and that Mr. Little signed an undertaking before he became a partner at Bennett Jones swearing that he had not discussed the relevant Nova retainer with anyone since his arrival there, nor would he in the future. The court held that was not enough in that the public perceives any similar sworn statement of moving lawyers as nothing more than a "trust me" statement which was not, by itself, sufficient. The court held that screening devices are also necessary, absent consent of the other opposing party.

The court also considered the additional safeguards which were implemented by Bennett Jones which included: all members of its team signing undertakings not to disclose information; electronic documents being accessible only to those working on the file; and the implementation of an ethical wall. In light of those safeguards and the circumstances of the case – including the fact that Mr. Little practised in Toronto – the court ultimately found that no conflict existed.

This case emphasizes the importance and necessity of establishing ethical walls and other safeguards to protect confidentiality to avoid potential conflicts of interest.

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