Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m M A r C h 2 0 1 5 3 hile no lawyer was ever affected by the stringent reporting rules in the federal government's money-laundering legislation that some said would turn them into "agents of the state," last month's unanimous ruling from the Supreme Court of Canada has literally set lawyers apart from other professionals on this front. The law would have required lawyers to record their clients' financial transactions and make them available to the Financial Transactions and Reports Analysis Centre of Canada. It also would have given investigators search-and-seizure powers to obtain those records without a warrant. In ruling that the provisions — which allow for imprisonment and hefty fines — are unconstitutional, the top court created, by a 5-2 margin, a "duty of commitment to a client's cause" as a fundamental principle of justice. Chief Justice Beverley McLachlin and Justice Michael Moldaver agreed with the overall outcome but did not support creating this new constitutional principle. Enshrined solicitor- client privilege was enough protection, the dissenters said. Reacting to the decision, Tom Conway, president of the Federation of Law Societies, said: "The Supreme Court of Canada has recognized that a lawyer's duty of commitment to the client's cause is a fundamental principle of justice. That's a very important statement about core principles that are at the heart of Canada's legal system." The FLSC, supported by a variety of intervenors including the Canadian Bar Association and the Canadian Civil Liberties Association, has been fighting the provisions in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act for years. The friction that led to the court battle had two prongs: primarily it's that the legislation abused the notion of solicitor-client privilege. The second is Canadian law societies held they already undertake regular audits of member activities to ensure lawyers are complying with "no-cash" and "know-your-client" rules to identify and avoid fraudulent and illegal activity. Lawyers across Canada and notaries in Quebec are all bound by rules prohibiting them from accepting $7,500 or more in cash, and detailed know-your-client obligations. The Supreme Court agreed the impugned provisions violated lawyers' Charter rights to be protected from unlawful search and seizure and the undue deprivation of their liberty. "The regime authorizes sweeping law office searches which inherently risk breaching solic- itor-client privilege," wrote Justice Thomas Cromwell for the court. He noted that retaining information as the law required was "not necessary for ethical legal representation and pro- vide inadequate protection for the client's confidences subject to solicitor-client privilege." And perhaps most importantly he stated: "Solicitor-client privilege must remain as close to absolute as possible. There must be a stringent norm to ensure protection and legislative provisions must interfere with the privilege no more than absolutely necessary." Cromwell said the rules governing legal practice and ethical standards were enough to ensure lawyers would not "unknowingly assist in or turn a blind eye to money laundering or terrorism financing." While all other financial institutions and professionals are still bound by the law and must track their clients' money trails and may be subjected to warrantless searches by government authorities, the unique role of lawyers and the legal profession's independent role in the justice system has been recognized. Lawyers will not be forced to choose between their obligations of confidence and undivided loyalty to their clients and their legal obligations to the state. On a final note, a shout out should go to all the esteemed counsel who worked on this case, for the most part pro bono, for the benefit of all in the profession. Director/Group Publisher: Karen Lorimer karen.lorimer@thomsonreuters.com Editor in Chief: Gail J. Cohen gail.cohen@thomsonreuters.com Staff Writer: Shannon Kari shannon.kari@thomsonreuters.com Copy Editor: James Kang Art Director: Bill Hunter Production Co-ordinator: Catherine Giles catherine.giles@thomsonreuters.com Contributors: Jean Sorensen, donalee Moulton, Pascal Elie, Geoff Ellwand, Marg. Bruineman, Jennifer Brown, Jim Middlemiss, Yamri Taddese, Richard Foot, Peter Small, Stephen Lautens. Canadian Lawyer is published 11 times a year by Thomson Reuters Canada Ltd. All rights reserved. Contents may not be reprinted without written permission. The opinions expressed in articles are not necessarily those of the publisher. 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For all circulation inquiries and address changes send a copy of your mailing label or labels along with your request in writing to Canadian Lawyer, One Corporate Plaza, 2075 Kennedy Rd., Toronto, ON. M1T 3V4 Indexed in the Canadian Periodical Index E D I t o r ' s D E s k By Gail J. Cohen @canlawmag W gail.cohen@thomsonreuters.com Recognizing lawyers' unique role

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