Oral Remarks of Simon Potter - Center for Professional Responsibility

Oral Remarks of Simon Potter,
International Practice of Law Committee of the Canadian Bar Association

Simon Potter, a member of the International Practice of Law Committee of the Canadian Bar Association, was the next speaker. The Canadian Bar Committee of six lawyers looking at the multidisciplinary practice issue met in closed sessions and issued an interim report that was presented to its Council in September 1998. They hope to present a final recommendation in August 1999. Comparable to the U.S. theirs is a joint profession, all lawyers in Canada are both barristers and solicitors and their law firms and accountants operate nearly exactly as their counterparts in the U.S. Mr. Potter offered the Canadian Bar’s approach to the MDP issue. They identified six core values: 1) self-governance of the legal profession, 2) independence of the legal profession, 3) avoidance of conflicts of interest, 4) preservation of the clients’ confidentiality, 5) preservation of solicitor-client privilege, and 6) avoidance of the unauthorized practice of law. The scenarios they examined ranged from outright prohibition of MDPs which is where Canada and the U.S. - other than D.C. - are today, to laissez faire, no attempt to regulate. In order to preserve core values and respond to the changing demands of the marketplace the Committee’s interim position is that MDPs should be permitted to offer legal services as long as the MDP always has a majority of owners who are lawyers and the MDP is controlled by lawyers. Feedback to the interim report from Canadian lawyers is saying control by lawyers doesn’t make sense. Mr. Potter thinks it’s difficult to define what is meant by rendering legal services so it’s difficult to say what control is. Many of the problems of the MDP are posed whether lawyers are in the majority or not. Issues that require attention are: 1) the need to adapt to the changing pressures of globalization, 2) the need to compete in face of the threat of losing work, 3) value to the client when the lawyer’s role is an adjunct to the main game (value of legal work may actually increase if it’s part of a package), 4) value of client’s right to choose his or her own legal counsel, 5) need for commonality of approach. He acknowledged that the American decision on MDPs will have an influence on Canadian lawyers. He explained the CBA Committee’s decision to restrict MDP control to lawyers as premised on assuring the Law Society is able, through its supervisory ethical jurisdiction, to determine what happens within the MDPs, to assure that the attorney-client privilege is safeguarded. The understanding of the need for the privilege - the privilege of the privilege - he believes is on shaky ground. An unstated concern is what will happen to the public’s conception of the privilege, the public’s understanding of the value of it, if suddenly it’s going to repose in firms made up of various consultants? In line with the approach Mr. Jones presented he thinks the incompatibility of certain legal and nonlegal practices is not absolute but relative, as it depends on what kind of law the lawyer does, what kind of MDP is involved and what other things are happening. Also he thinks some of the other professions involved in MDPs have an interest in protecting some of the same values as lawyers. For instance the issue of conflicts as dealt with when a lawyer changes from one firm to another can be dealt with in the same way with MDPs. The courts are also recognizing that other professions have an obligation towards confidentiality. He cited the House of Lords ruling in Prince Jefri Bolkiah v. KPMG 149 NLJ 16 (18 December 1998) where the Prince had retained KPMG for tax advice and litigation support services and now KPMG, in a forensic accounting capacity, wanted to represent Brunei against him; the House of Lords enjoined KPMG from that mandate. Mr. Potter said he is more inclined than other members of the committee to let events follow the market. First, he would remove the current absolute impediment to lawyers practicing in partnership with members of other professions, yet remind lawyers of the values they are ethically bound to protect, especially protection of confidential information and avoidance of conflicts of interest. At times ethics may require a lawyer not to enter a particular MDP because their practices are incompatible, at other times ethics might only require that mechanics be put in place to ensure confidentiality and against the loss of privilege. He sees the impediment as being relative. He urges what he calls the double conflicts rule, that not only the lawyer but also the MDP as a whole be subject to legal conflicts avoidance. He would, however, allow the conflicts to be resolved in the same way some are resolved in the legal profession, such as allowing reasonable internal mechanisms when a lawyer changes law firms (apparently the Canada Supreme Court speaks of ‘cones of silence’ rather than Chinese walls). He thinks a lawyer within an MDP who discloses confidential information to a nonlawyer for purposes other than those required in representation of the lawyer’s client jeopardizes the confidentiality and privilege the lawyer is ethically bound to protect. Privilege likely cannot survive high level disclosure, that is, generalized disclosure within the MDP, although this is an issue for the courts to resolve. He thinks law firms that enter into arrangements that involve sharing of fees or revenues with firms of nonlawyers expose themselves to the double conflicts rule. He tends to think Mr. Jones is right that protections must be addressed by dealing with the lawyers as individuals rather than seeking regulatory jurisdiction over the MDPs because concluding that more is needed looks as if lawyers are trying to protect things as they are against the way clients want them to be.

Professor Daly started off the questioning. Asked about imputation Mr. Potter would not go so far as to allow one office represent one bidder and another office of a multidisciplinary firm represent another bidder for the same license based on screens (‘cones of silence’) alone as he thinks clients must have the ability to object (consent) to the same body handling something that would be a conflict if it were in one outlet in order to preserve public confidence in the protections of confidentiality. He doesn’t think lawyer affiliation or partnership should turn on whether the professional is licensed or unlicensed as some licenses are pretty good and others aren’t and regulatory authorities shouldn’t need to distinguish between licenses. He acknowledged to Mr. Mundheim that the CBA definition of multidisciplinary practice encompasses the fully integrated as well as the contract model, but to the question of whether the lawyer connected to the tow truck operator can use confidential information to collect an unpaid towing fee Mr. Potter said ‘no’ the lawyer should be bound to use the confidential information only for the purposes of the legal mandate. Asked by Professor Haddon how to deal with the lawyer who is not holding out in explicit ways practicing law Mr. Potter said the only way is to have some kind of definition of some things that only lawyers can do (pleading before the courts or signing a legal opinion about what the law is in a given situation) because if you don’t stop people from doing things only lawyers can do lawyers will lose the privilege. He would prosecute for unauthorized practice of law along the lines the public will understand. Nonglobal MDPs, at the moment, are not a problem. He explained that Canadian lawyers are regulated and disciplined at the provincial level and would register with the Law Society of another province in order to practice out of their home jurisdiction. MDPs would pay into the client security fund per lawyer the same way law firms do today. Commenting that the operation of privilege and confidential information would be the same when a lawyer’s working relationship with a nonlawyer becomes a partnership Mr. Potter said it’s the lawyer’s responsibility to preserve the privilege. Although there has been criticism of the Canadian Bar interim report requirement of MDP control by lawyers some committee members consider it important that any MDPs allowed are MDPs in which lawyers are bringing in other people rather than the other way around. Mr. Nelson asked if there is client demand for MDP services and Mr. Potter acknowledged that demand is being generated on the supply side as a cost saving. French investors in Canada using a Paris MDP rather than the Montreal law firm they may have used in the past, however, was presented as an example of client-driven MDP demand. He clarified to Mr. Traynor that the two areas that he believes require definition are the practice area reserved exclusively to lawyers that is justifiable and able to be understood by the public, and the line in the sand beyond which an MDP would be created. He would not limit the scope of attorney-client privilege to those areas of practice reserved exclusively to lawyers but the privilege of the profession should apply to everything the lawyer does. Canada does not recognize issues conflict or positional conflict. To the extent there is a conflict criterion different for some members of the MDP than it is for the lawyer Mr. Potter thinks that only the lawyer can be held to the lawyer standard of conflicts. The problem communicating this to clients should be addressed not by a paternalistic rule but rather by focusing on facilitating client awareness. The public should realize that an MDP is not the same thing as a firm made up exclusively of lawyers. His example was in lieu of a law firm with letters after it indicating it is a particular kind of entity, there could be an indication on the door or letterhead or card, "This is a multidisciplinary practice. We have lawyers, but we also have non-lawyers. You may want to consider issues of confidentiality and privilege." The accountants are using WTO provisions to knock down cross border barriers to their entry into other jurisdictions, especially Asia. Treaty pre-emption regarding delivery of legal services may prove relevant to the lawyer multidisciplinary question. Regarding the Prince Jefri Bolkiah v. KPMG (18 December 1998) ruling that screens needed to have been in place and not just erected for the purpose of litigation Mr. Potter said anticipatory screens defeat one-stop shopping and its heralded convenience.

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