Cassels Brock recently won a complicated motion to remove
opposing counsel for conflict of interest in a wrongful dismissal
matter. In doing so, Cassels Brock obtained an extremely rare cost
award against the plaintiff's law firm on a substantial
indemnity basis. John McGowan and Anne-Marie Naccarato represented
the defendant with the assistance of articling student Stephen
In November 2010, the defendant terminated the employment of its
Vice-President of Communications. In December 2010, the
plaintiff's law firm served the defendant with a statement of
claim for wrongful dismissal for $6.3 million. However, at the same
time, another lawyer at the plaintiff's law firm was already
acting for the defendant on mediating serious internal workplace
Despite the obvious conflict of interest, the plaintiff's
law firm repeatedly refused to remove itself from the record
claiming, without any evidentiary foundation, that the mediation
work was not "legal work" and that its own lawyer was not
truly a member of the firm. The defendant was forced to bring a
motion to remove the plaintiff's law firm from the record. In
his decision dated January 12, 2012, Justice Thomas ruled that the
position of the plaintiff's law firm was "untenable,"
"doomed to fail" and that it should have recognized the
conflict of interest immediately and withdrawn accordingly.
In a rare step, Justice Thomas ordered the plaintiff's law
firm (and not the plaintiff) to pay the defendant's costs on a
substantial indemnity basis in the amount of $65,500. In coming to
this amount, Justice Thomas ruled that the plaintiff's law firm
failed to provide the plaintiff with proper disclosure about the
true nature of its work for the defendant, such that she could not
make an informed decision to instruct her lawyer to oppose the
motion. Moreover, the plaintiff's law firm "failed to come
to grips with their responsibility" to recognize the conflict
of interest, advise their client, and withdraw accordingly. The
"intransigence" of the plaintiff's law firm caused
the defendants to incur substantial costs in preparation for the
motion against which the plaintiff's law firm had "no
This case demonstrates the serious risk a law firm assumes when
it neglects its professional obligation to identify conflicts of
interest, and puts its desire to cling to a lucrative case ahead of
its duty of loyalty to its client.
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