Joint retainers must be started and ended with caution and conducted with due regard for all of the clients that a lawyer jointly serves.
Recent news reports from the Rogers family litigation provide an example of the risks of conflicts of interest in joint retainers.1
Not all situations will be as headline-grabbing as the Ontario Superior Court Application by three Rogers family members seeking to prevent a Bay Street law firm from acting, but the story serves as a good reminder of the procedures in creating and carrying out the joint retainer.
Is There a Joint Retainer?
Absent a clear retainer agreement, it can be difficult to determine whether a joint retainer exists when counsel is acting, for example, for joint venture partners, a board of trustees, or a committee (as in the Rogers litigation), where the individuals in the client group may change over time. Whether a joint (or any) retainer exists has been an issue in a number of cases. The test is a fact-driven analysis in which the Court will ask:
[...] whether a reasonable person in the position of a party with knowledge of all the facts would reasonably form the belief that the lawyer was acting for a particular party.2
To prevent ambiguity surrounding joint retainer issues, lawyers would be wise to have a written retainer agreement setting out the expectations and requirements of a joint retainer. Those expectations and requirements are set out below.
Lawyers Must Serve the Interests of All Joint Clients
Rule 3.4-5 of the Law Society of Ontario's Rules of Professional Conduct is the starting point for understanding lawyers' obligations in a joint retainer. That Rule stipulates that before a lawyer accepts a joint retainer or acts for more than one client, the lawyer should advise each of the potential clients that:
- The lawyer has been asked to act for all of the clients in a joint retainer;
- No information received in connection with the matter from one client can be treated as confidential so far as the others are concerned. In other words, all information that the lawyer receives in relation to the joint retainer must be shared with all clients and cannot be kept secret from any of them; and,
- If a conflict develops between the clients that cannot be resolved, the lawyer cannot continue to act for all of the clients and may have to withdraw from the retainer completely.
The upshot is that lawyers must explain the potential issues of a joint retainer to their clients before accepting the joint retainer. Doing so in the form of a written retainer agreement that clients are instructed to carefully read and sign is advisable. While the Rules do not require the lawyer to advise clients to seek independent legal advice before agreeing to be part of the joint retainer, the commentary to the Rules indicates that it may be helpful.
No Information is Confidential as Between Joint Clients
In a joint retainer, there can be no privilege or confidentiality between the clients and lawyer. Before accepting a joint retainer, lawyers must explain to their potential clients that no documents or information that any of the clients provide about their matter can be kept secret from the other joint retainer clients.
This principle of joint interest privilege — stated explicitly in Rule 3.4-5(b) — has been affirmed in the Courts generally and in narrower cases. For example, where joint venture partners who have engaged a lawyer as counsel to the joint venture, "there can be no secrets between joint venture parties on matters that may affect the joint venture."3
The Lawyer's Duty of Loyalty Survives the Evolution of the Joint Retainer
Joint retainers may evolve over time to a point where clients' interests may be at odds. Lawyers often take instructions from one person in a client group, but they are acting in the interests of all of the joint retainer clients.
Rule 3.4-5(c) of the Rules of Professional Conduct requires lawyers to warn their clients that if a conflict develops and cannot be resolved, the lawyer may have to withdraw from the retainer completely.
Where contentious issues arise between joint retainer clients, the lawyer cannot advise them on that issue. Rather, Rule 3.4-8(a) requires the lawyer to either: (i) refer clients to retain independent counsel; or (ii) if the clients are sophisticated, advise them that they may settle the contentious issue themselves without the lawyer's involvement. The commentary to the Rule clarifies that the lawyer is not prevented from continuing to advise the clients jointly on non-contentious issues. If the contentious issue is not resolved, the lawyer must withdraw from the joint retainer altogether.
Even if a lawyer withdraws from acting for one joint retainer client, the lawyer's duty of loyalty may prevent them from choosing sides. Rule 3.4-10 prevents lawyers from acting against former clients — which includes joint retainer clients — unless the former client consents. The Ontario Superior Court of Justice has confirmed that the fact that a lawyer's prior engagement was a joint retainer does not diminish this duty of loyalty.4
- Lawyers may take on joint retainers so long as the clients are fully informed.
- Where there is ambiguity as to whether a joint retainer exists the Court will consider whether a reasonable person would believe that the lawyer was acting for a particular person.
- Lawyers under a joint retainer must act in the interest of all clients.
- A lawyer's duty of loyalty survives the end or evolution of the retainer.
4. Moradi v. Baxi, 2018 ONSC 4645 at para. 23.
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.