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REGIONAL WRAP-UP CONFLICTS DECISION NARROWS BRIGHT-LINE RULE CN in the class action, the court decided the circumstances did not justify dis- qualification, noting there were other remedies open to CN, such as suing for damages related to the transfer of files or a complaint to the Law Society of Saskatchewan. "Disqualification should not used as punishment of counsel or as an example to deter lawyer conduct as such," wrote Appeal Court Justice Ralph Ottenbreit in his Sept. 28 decision on behalf of a unanimous three-judge panel. "The most important point from my perspective is the Court of Appeal con- cluded that absent a finding of substan- tial risk of material and adverse effect, there was not an illegal conflict," says Malcolm Mercer, a partner at McCarthy NEW EDITION CONSOLIDATED ONTARIO INSURANCE STATUTES AND REGULATIONS 2011 CONSULTING EDITOR: ALAN L. RACHLIN Get convenient access to the most current insurance law – all in one practical resource. WHAT'S NEW IN THIS EDITION This edition includes updates to the latest legislation and regulations, and additional forms such as: • Statutory Accident Benefit Dispute Resolution Forms • Personal Automobile Forms • Garage Automobile Forms It also includes a Table of Concordance for insurance law across Canada. ORDER # 983545-68367 $96 Softcover 1560 pages September 2011 978-0-7798-3545-4 Annual volumes available on standing order subscription Multiple copy discounts available AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. Tétrault LLP and a member of the Canadian Bar Association's task force on conflicts of interest. "That has been, and probably will continue to be, as the jurisprudence evolves, really the essen- tial question in conflicts on whether or not the bright-line rule applies." The bright-line rule arises from Neil be and states: in general "a lawyer may not represent one client whose interests are directly adverse to the immediate inter- ests of another current client," even if the two mandates are unrelated, unless both clients consent after receiving full disclosure. The CBA task force recommended the rule only be engaged where there is a substantial risk where the "lawyer's rep- resentation of the current client would be materially and adversely affected," an approach adopted by the appeal court in Wallace. The decision also strengthened the professional-litigant exception to the bright-line rule envisioned by Justice Ian Binnie in Neil, where consent to act adverse in interest may be inferred by entities such as banks, governments, or large corporations. The appeal court found it was reasonable for the firm to infer CN's consent, despite the fact the company objected when it found out. "Once it is concluded that implied con- sent is reasonable, subsequent express non-consent cannot vitiate the implied consent: otherwise the professional liti- gant exception would be meaningless," wrote Ottenbreit. "There's a lesson there for institu- tional clients who retain multiple law firms that if you want to prevent a law firm acting against you should make it a term of the retainer agreement, because it's likely consent will be implied under the professional-litigant exception," says Gavin MacKenzie, the partner at Heenan Blaikie LLP who represented McKercher. According to Mercer, another valu- able lesson for law firms is that "you don't get to fire clients for business reasons." He says, "Lawyers have a duty of loyalty to clients. That duty can be breached by terminating a retainer with- out a good reason." In three of the four matters that it was acting on for CN, the appeal court said McKercher fell short of its obliga- tions to its client. "It was incumbent on McKercher to continue to act where it could as long as CN wanted it to do so, or at least to explore the possibility of doing so," Ottenbreit wrote. Mercer says the next big develop- ments on the conflicts front are likely to come at the Federation of Law Societies, where a standing committee is drafting model rules for regulators. "This is an area of the law which is still evolving. Things are clearer, but not yet clear," he says. — MICHAEL MCKIERNAN michael.mckiernan@thomsonreuters.com You can find at 10 N O VEMBER / D ECEMBER 2011 www. CANADIAN Lawyermag.com C ontinued fr om pa g e 9 W R ailw a y allaca/s/6lgho. e v. C c anlii.c anadian P acific