Canada: The Art Of Not Mixing Personal And Professional: In-House Counsel And The Request For Legal Advice

In the workplace, it's clear who we work for—our employer (that is, the company, the organization, the institution, that signs our paycheques). Even if we take direction from a boss or a board, we know that we don't work for them personally, but rather, we work for them exclusively in their professional capacity.

Otherwise put: the days when bosses could direct their staff to wash their cars, pick up their dry cleaning, and organize their social calendars are (or ought to be) over—unless that is actually part of the job.

Yet, when you're a lawyer working in-house (meaning within an organization's legal department), the line between serving the employer and serving the people employed there, is often tested. Of course, while lawyers know where that line is drawn, when put on the spot or when facing a hopeful or demanding co-worker or boss, it can be difficult to bring to mind the rationale for maintaining the necessary boundaries.

This article highlights the three reasons why in-house lawyers cannot provide advice of a personal nature to employees of the organization, including the lawyer's boss:

  • the employment relationship between the lawyer and the organization;
  • the lawyer's ethical obligations; and
  • insurance coverage.

The article also provides guidance for in-house lawyers when faced with employees' requests for advice on personal matters.

Employment Relationship

In-house lawyers are employees too. All employees are subject to their employment contract—in-house lawyers are no exception. An in-house lawyer's employment contract generally requires that the lawyer act only for the employer and not for employees or board members in their personal capacities.

Simply put: the employer is the lawyer's client ... their only client.

Most employers are some variation of a corporation (whether for-profit business corporations, non-profit societies, statutory corporations like universities and colleges, or even government entities like health authorities). As such, most employers have a legal identity that is separate from the people who make up the organization.

So, while an in-house lawyer receives work through the people within the organization, the lawyer must serve and protect the interests of the organization, rather than the personal interests of any particular individual within it.

Ethical Obligations

Related to the employment relationship are the lawyer's ethical obligations as a practicing member of their professional licensing body (called the law society in most provinces and territories). These obligations dictate that there is a fiduciary relationship (a relationship of trust) between the lawyer and the client. Consequently, the lawyer has a duty of loyalty to the client. Since an in-house counsel's only client is the employer, the in-house counsel owes a duty of loyalty to the employer (again, not to the personal interests of its employees).

The duty of loyalty gives rise to the duty to avoid conflicts of interest. Examples of conflicts of interest that in-house legal counsel frequently run into include an employee contacting an in-house counsel to discuss the terms of their employment, or actions that have been taken by the employer against the employee. In closely held corporations, owners may call upon their in-house counsel to address the effects of personal family matters (such as relationship breakdowns, deaths, and marriages) on share ownership, board representation or employment.

In such cases, the interests of the employer will differ from the personal interests of the individuals involved and, in complying with their fiduciary and other ethical duties, in-house lawyers must place the employer first and not act in a way–or give advice–that is inconsistent with the employer's interests.

Insurance

Provincial and territorial law societies insure their members against professional negligence. Such coverage is mandatory for lawyers giving advice to multiple clients, like those practicing at law firms. However, lawyers who give advice exclusively to their employer are exempt from this insurance requirement and, as a consequence, do not have coverage through their law society.

Instead, in-house lawyers are covered by professional liability insurance through their employer, but only to the extent that they are giving advice to their client, the employer.

Coverage would likely be unavailable where the lawyer gives advice to individual employees on their personal matters. Since legal matters are complicated, the stakes are high, and the public reasonably relies upon the advice of lawyers to govern their affairs, lawyers are held to very high professional standards—they are therefore at risk of a claim against them should something go awry. Consequently, insurance coverage–and in particular the lack of insurance coverage—is (and should be) on every lawyer's mind, as it presents a very real threat to the lawyer's own personal financial security.

Guidance

In light of the above, in-house lawyers must avoid trying to juggle the interests of their employer and those of its stakeholders when providing legal support. It is either impossible or (at best) ill-advised for in-house lawyers to formally or informally act for or advise employees on their personal matters. Even if a matter relates to an employee's work, that does not necessarily bring the matter out of the "personal" realm.

At some point, in-house lawyers will likely have an employee ask for advice on a personal or quasi-personal matter. The employee may even divulge sensitive or confidential information when doing so. In such a case, even if it someone in a senior role requesting the guidance, it is well-advised for the lawyer to inform the employee that:

  • the client is the employer;
  • the lawyer represents the employer's interests and not the employee's;
  • there is no solicitor-client privilege as between the lawyer and the employee;
  • the lawyer's personal assets are at risk when advising on personal matters; and
  • the employee should consider securing their own independent legal counsel.

The last two points are particularly important if trouble appears to be on the horizon.

Above all, despite any awkwardness or discomfort that might result from staking the required boundaries, in-house lawyers must honour their duties in doing their work, even if it means saying "no" to valued co-workers and their bosses.

Ultimately, everyone in need of legal advice is only best served when their lawyer is unconditionally "on their side" and has solely their best interests at heart. In-house counsel, trusted and valued as they may be within the organization, are just not in a position to offer that service to employees of the organization.

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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