In the Supreme Court of Canada's recent decision in Canadian National Railway Co. v. McKercher
LLP, the Chief Justice of Canada writing on behalf of the
entire Court re-asserted the importance of the "bright line
rule" for conflicts of interest faced by legal
In that case, McKercher LLP had acted as primary counsel to CN
Rail for some time. McKercher accepted a retainer to sue CN for
$1.75 billion class action, and began ending its retainer
agreements with CN. CN only discovered that McKercher had been
engaged to act against CN's interests when it was served with
the claim. Upon this discovery, CN applied to strike McKercher as
solicitor of record in the class action.
The Court responded to these facts with a detailed analysis of
the lawyer's duty of loyalty to the client. This duty
encompasses the duty to avoid conflicts of interest, the duty of
commitment to the client's cause and the duty of candour to the
client. Ultimately, the Court found that McKercher had breached
every one of those duties, and returned the case to the Queen's
Bench for determination of whether McKercher could remain as
counsel to the class action.
With respect to the duty to avoid conflicts, the rule from R
v Neil was reaffirmed. This "bright line rule" is
based on the inherent conflict resulting from certain situations of
concurrent representation. The rule requires that a lawyer not
represent two clients whose immediate legal interests are directly
adverse, and applies to both related and unrelated matters. The
main exception to this rule is where the party invoking the rule
has done so for tactical purposes. Of course, the rule does not
apply where both clients have consented to be represented in the
circumstances. The rule also does not apply to "professional
litigants," such as the government or chartered banks, which
are presumed to have given implied consent.
If the "bright line rule" is found not to apply, then
the relevant question is whether concurrent representation creates
a substantial risk that the representation of either client would
be adversely affected. The Court describes this risk as one where
"the situation is 'liable to create conflicting pressures
Moving on to counsel's duty of commitment to the
client's cause, the Chief Justice notes that this duty is
closely tied to the duty to avoid conflicting interests. This duty
is supposed to prevent a lawyer from "soft peddling" the
interests of one client in order to gain an advantage for another
client. It also has the effect of preventing a lawyer from simply
ending the relationship with a client in order to pursue a more
lucrative opportunity, as occurred in this case.
Finally, the Court notes that where a lawyer is planning to
represent a new client who is adverse in interest to the existing
client, the duty of candour requires the lawyer to disclose this to
the existing client. Such disclosure will also require the consent
of the new client to give sufficient detail about the new retainer
to the existing client, so that the existing client can make an
informed decision as to whether they wish to continue their
retainer. If the new client will not consent to this disclosure,
then the lawyer cannot be retained by them.
This decision provides practical advice to a lawyer or law firm
that is faced with a potential conflict of interest. It should be
required reading for every newly minted lawyer. The foundation of
the principles engaged by this case are succinctly stated by the
Court, quoting Lord Brougham from the Trial of Queen
[A]n advocate, in the discharge of his duty, knows but one
person in all the world, and that person is his client[.]
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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