Canadian Lawyer

26 J U L Y 2 0 1 5 w w w . C A N A D I A N L a w y e r m a g . c o m firm. "At the heart of the settlement was a very bare financial calcu- lation. You can quickly imagine how winning could cost more than settling. If your option is to settle with no admission of wrongdoing and move on, it begins to look good." To hawk-eyed investigators at the law society, however, the settlement amounted to a tacit admission of fault. What had Torys done wrong to prompt the settlement? And who was responsible? It aimed to find out. As the professional regulator of Ontario's 44,000 lawyers and 4,000 paralegals, the law society cannot go after law firms; it can only prosecute individual lawyers. Disciplinary action is almost always complaint-driven, but not in this case, and decidedly not a job for the thin-skinned. When the LSUC is not being slain in the press for purportedly favouring the interests of lawyers, it is undergoing attack from within the profession for being as vigilant and cold-blooded as an income tax auditor having a bad day. Critics frequently condemn it for focusing on Little Guys and leaving Big Law alone. Yet, on many occasions where it has tried to go after big game, prosecutions turned into ongoing nightmare proceedings that blow up in its face. Added to that, those who care about the institution are ever aware that the spectre of government regulation hovers in the background should the law society appear to be incapable of minding its affairs. Amid this unending debate, the Hollinger protection was freighted with import. To proceed to a full hearing, a case must first obtain the approval of a panel of benchers on the law society's Proceedings Authoriza- tion Committee. Somewhat akin to a grand jury, the PAC decides if there is sufficient evidence to ground a prosecution. DeMerchant and Sukonick had pinned their hopes on the PAC perceiving the case as dangerously thin. However, as inches-thick books of inter- rogatories kept arriving at Torys and weeks turned into months, the two lawyers felt increasingly queasy. "The tone of the interrogatories revealed a mindset that was antagonistic," DeMerchant recalls. "They were asking for production of every document or e-mail ever produced." To their horror, the PAC approved a prosecution. DeMerchant, who had already begun to use the services of a fellow U of T law stu- dent from her year, Phil Campbell, in connection with the Chicago case, asked Campbell to act in the law society matter. A burly man who appears more biker than barrister, Campbell had vaulted up the ranks of the criminal law bar based on a rare combination of dogged research, skillful writing, and tactically superb oral advocacy. He accelerated his immersion into a stagger- ingly complex case in a field of law about which he had known virtu- ally nothing. At the same time, Campbell recommended Sukonick hire Ian Smith, an equally strong advocate and writer who had been a provincial prosecutor in the '90s, prior to four years at the Ontario Securities Commission. Their opponents were law society investigator Jay Naster, a tena- cious investigator and prosecutor whom Smith had worked with at the Crown Law Office; and Paul Stern, a well-respected lawyer known for his even temper and considerable experience in most areas of criminal law. The hearing was launched on April 26, 2010, with a series of mind-numbing legal motions. And from there, it went steadily downhill. The prosecution strategy relied on documents obtained through disclosure, which Stern used to probe and extract admis- sions under cross-examination. Campbell and Smith opted to put DeMerchant up first, believing Stern would find her tough and unflappable. She would be followed by a string of corporate officials, experts on conflict and, lastly, Sukonick. DeMerchant ended up being on the witness stand for 32 days spread out over an excruciat- ing eight-month period — two days more than Sukonick would testify. Her anxiety, impatience, and sense of outrage ramped up steadily. Stern's questions struck her as being tortuously repetitive, irrelevant and, at times, down- right insulting. "It was like being forced to sit at a never-ending Mad Hatter's Tea Party where you can't stop it and you can't get away from the table," she said. "Day after day, they tried to find a smoking gun. Sometimes, it seemed to me, they would concoct new theories overnight." Each time Stern insinuated that DeMerchant had acted as an enabler for underhanded shenanigans it cut her to the bone. "I felt that I was being treated like a dirty lawyer," she said. "To suggest that we would have given advice that was wrong in the hope it would never be caught was just a ridiculous argument." Ever polite and methodical, Stern hammered away at the defendants' failure to have directly notified Hollinger's indepen- dent audit committee that they had a potential conflict of interest. They countered that their main liaison at Hollinger, Peter Atkin- son, had routinely acted as a conduit for information that ought to go to shareholders. Campbell and Smith were becoming increasingly alarmed that the prosecution had misidentified ordinary transactions as being somehow spurious. In addition, they were expected to remember every detail. "Putting together a deal like the sale of Hollinger assets to Canwest, with hundreds of moving parts, was an enormous achievement for any lawyer," Campbell observed. "It was day-and-night work with a to-do list that would stagger most litigators." The defence team were flabbergasted that Naster and Stern had not come up with experts to guide them through the nuances of corporate law. They were equally appalled officials at Canwest and Osprey, who could have shed valuable light on the case, had not been interviewed. Instead, the prosecution seemed to be using the hearing as an investigation through inquisition in hopes that a viable case would emerge. To the defence team, the day of Nov. 15, 2011, is known as, "Beth's Dark Day." In the morning session, DeMerchant had responded to "DAY AFTER DAY, THEY TRIED TO FIND A SMOKING GUN. SOMETIMES, IT SEEMED TO ME, THEY WOULD CONCOCT NEW THEORIES OVERNIGHT." Beth DeMerchant D E R A I L E

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