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 J U L Y 2 0 1 5 25 I L E D A fter five years spent at ground zero of a spread- ing financial disaster known as the Hollinger newspaper swap, Elizabeth DeMerchant was acutely aware of its toxicity. As the Torys LLP counsel watched from the sidelines, the repu- tations of one director, auditor, or legal coun- sel after another had been laid waste by scandal or suspicion. Still, DeMerchant was dizzy with shock on the day in 2006 when she opened a letter from the Law Society of Upper Can- ada informing her that she was being investigated for her con- duct in connection with the Hollinger transactions. She and Darren Sukonick, a junior colleague DeMerchant mentored, had allegedly failed to declare a conflict of interest during the complex series of commercial transactions. "It was like being hit with a ton of bricks," says DeMerchant. "I was apoplectic." The timing could scarcely have been worse. Two weeks ear- lier, DeMerchant had quietly announced her impending retire- ment. Living through the slow-motion Hollinger implosion had been a searing experience. DeMerchant had exceeded her career goals and then some. Now, she was ready for the simple, stress-free pleasures of home, garden, and family. The Hollinger affair had dominated business pages since 2000, when the group undertook to sell batches of newspapers to Canwest Global Communications Corp. and Osprey Media Group for a total of almost $4 billion. As part of the sale, Can- west had paid $80 million in non-competition agreements to preclude the vendors setting up new publications to compete with those it had sold. Complicating matters was a bewildering welter of tax considerations, set-offs, promissory notes, and varying time periods. By 2004, U.S. authorities were actively investigating Hol- linger's principal executives — Conrad Black, David Radler, Jack Boultbee, and Peter Atkinson — for allegedly failing to obtain informed consent from independent directors in con- nection with the non-compete payments. Radler and Black would be convicted of fraud-related charges in Chicago. Two years after the Chicago trial, the ripples were washing up Bay Street. Law society investigators were looking into whether DeMerchant and Sukonick had improperly provided advice to the Hollinger executives without informing public sharehold- ers at Hollinger International Inc. — a company within the group — that they had a potential interest in the matter. Dead certain that it would blow over, DeMerchant and Sukonick settled in to wait out the investigation. DeMerchant abhorred the media spotlight. Born in the village of Bath, N.B., in 1957, she retained small town values of privacy and humility. Growing up, she lived in a small apart- ment located in the basement of the local school. Her mother taught at the school. Her father was the janitor. By the end of high school, DeMerchant had yet to go to a movie theatre or have an alcoholic drink. She gravitated toward big city life more through happen- stance than by design. After winning a scholarship, she had enrolled in a business program at Queen's University. When the prospect of being an accountant began to bore her, she took law at the University of Toronto. She emerged with a husband — Sean Gosnell, currently a litigation partner at Borden Lad- ner Gervais LLP — and an articling position at Torys. In 1990, she became a partner, specializing in tax and corporate law. Just an inch or two above diminutive, DeMerchant has a grandmotherly appearance that belies her cut-to-the-chase manner. She quickly became a go-to counsel on complicated deals. It was a tribute to her skills that in 1998, the Hollinger Group — a major client since the 1980s — was put under her care. Her duties consisted of a stimulating array of mergers and acquisitions, lendings, and offerings involving Hollinger's multiple media holdings. Led by Black himself, a man with a legendary ego, media presence, and intellect, the Hollinger account required a manager with considerable savvy, patience, and a steady hand. Sukonick, in contrast, was an ambitious live wire with a con- fidently brash manner. Raised in Toronto, he studied math and science at McGill University before returning home to Osgoode Hall Law School. He was called to the bar in 1996. Sukonick spent the summer of 1994 at Torys. He went from there to Palo Alto, Calif., where he worked with a technology firm for two years before returning to Torys in 1998. Sukonick fits a certain Bay Street image; a hyper-alert ball of energy who might run a triathlon between client meetings, his attention glued to a BlackBerry. Sukonick had already attracted his first major cli- ent to the firm. The promise of big money lay ahead. Life was exciting — at least, until the law society's investigation brought his career to a shuddering halt. He soon found himself in the purgatory of Torys' back offices, helping administer its pro bono program and planning a massive office renovation. Unbeknownst to the outside world, Torys had taken a dra- matic step in January 2006, reaching a $30-million settlement with Hollinger to ensure the firm would not become a target of litigation as the case got messier. As DeMerchant said a year later, the move eliminated a source of potential worry for the

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