HUMAN RIGHTS TRIBUNAL OF ONTARIO
B E T W E E N:
Marcello Parete
Applicant
-and-
Paragon Protection Ltd.
Respondent
INTERIM DECISION
Adjudicator: Bruce Best
Date: February 25, 2016
Citation: 2016 HRTO 250
Indexed as: Parete v. Paragon Protection Ltd.
WRITTEN SUBMISSIONS
Marcello Parete, Applicant
Self-represented
Paragon Protection Ltd, Respondent
Daniel Chodos, Counsel
1The applicant is seeking an order removing the respondent’s law firm, Whitten & Lublin (“the law firm”), as counsel for the respondent. He claims that he sought to retain the law firm and provided confidential information specifically relating to this Application to an administrative staff person employed at the firm, and that, as a result, it would be a conflict of interest for the law firm to continue acting for the respondent.
2The respondent acknowledges that the applicant contacted the law firm seeking legal advice, but claims that there was never a solicitor and client relationship, that it received no confidential information from him relating to the Application, and that the applicant was screened out prior to any contact with a lawyer. The respondent filed affidavits from the two individuals confirming that none of the information received from the applicant has been conveyed to a lawyer, and, as a precaution, the firm has taken measures to ensure that no documents related to the applicant’s communication can be accessed by any lawyer in the firm.
The Test for Disqualification
3The main authority on the issue of disqualification of a law firm due to a conflict of interest is MacDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235, (“MacDonald Estate”). As stated by Sopinka J. at paras 44-45:
(. . .) the test must be such that the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur. That, in my opinion, is the overriding policy that applies and must inform the court in answering the question: Is there a disqualifying conflict of interest?
Typically, these cases require two questions to be answered: (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client?
4The respondent argues that the answer to the first question in the MacDonald Estate test is no, as the test requires that a lawyer, not staff member, has received confidential information. The law is clear, however, that the rules apply equally to lawyer and non-lawyer staff of a law firm. See Hildinger v. Carroll, 2004 CanLII 13456 (ON CA) (“Hildinger”) at para 14. This is also clear in the Law Society of Upper Canada (“LSUC”) Rules of Professional Conduct (“LSUC Rules”) respecting conflict of interest. See Rule 3.4-20, (Commentary para [3], guideline 6), and Rule 3.4-23 (Commentary para [2]).
5The applicant seeks to distinguish the cases put forward by the respondent, such as MacDonald Estate and Lukasik v. 611554 Ontario Inc. o/a Palm’s Court Restaurant, 2013 HRTO 115 (“Lukasik”) on the basis that they deal with different issues than are raised in the present Application, namely those cases involved a lawyer transferring between firms, and did not involve a dispute as to whether confidential information had been communicated. It is true that the LSUC Rules and most of the case law respecting conflict of interest deal with the transfer of staff from one law firm to another. However, the courts have applied the same principles in cases involving an informal consultation or a brief initial interview with a lawyer, which are analogous to the present case. See Rosenstein v. Plant, 2010 ONSC 502 (“Rosenstein”), and Achakzad v. Zemaryalai, 2010 ONCJ 24 (“Achakzad “).
Was confidential information attributable to a solicitor and client relationship provided?
6In MacDonald Estate, the court noted the dilemma facing a decision maker when deciding on a case such as this. By the nature of the question, the decision maker cannot review the information in question to determine whether it is confidential or not, as such a review may itself require an individual to breach the solicitor and client relationship. The Court held, at paragraph 46:
(. . .) once it is shown by the client that there existed a previous relationship which is sufficiently related to the retainer from which it is sought to remove the solicitor, the court should infer that confidential information was imparted unless the solicitor satisfies the court that no information was imparted which could be relevant. This will be a difficult burden to discharge. Not only must the court's degree of satisfaction be such that it would withstand the scrutiny of the reasonably informed member of the public that no such information passed, but the burden must be discharged without revealing the specifics of the privileged communication.
7As indicated in Rosenstein and Achakzad, above, an initial consultation can amount to a “previous relationship”. It is not disputed that the applicant’s contact with the law firm was with respect to the present Application. Though I cannot conclude as a fact that confidential information passed from the applicant to the law firm’s staff, the onus is on the respondent to demonstrate that no confidential information was communicated, and it has been unable to do so. In the circumstances, I will assume, for the purposes of deciding this motion, that some confidential information was in fact communicated.
Is there a risk the information will be used to the prejudice of the applicant?
8The second part of the test in MacDonald Estate is whether there is a risk the information will be used to the prejudice of the client. The Court noted, at paragraph 49, that it should be left to the governing bodies of the legal profession, in Ontario’s case the LSUC, to develop standards and rules respecting conflict of interest. Following the MacDonald Estate decision, the LSUC did so, and the current LSUC Rules set out rules and guidelines on conflict of interest that may arise when a lawyer or other staff member transfers law firms. Rule 3.4-20, in particular, states:
Law Firm Disqualification
3.4-20 If the transferring lawyer actually possesses confidential information relevant to a matter respecting the former client that may prejudice the former client if disclosed to a member of the new law firm, the new law firm must cease its representation of its client in that matter unless
(a) the former client consents to the new law firm’s continued representation of its client; or
(b) the new law firm has
(i) taken reasonable measures to ensure that there will be no disclosure of the former client’s confidential information by the transferring lawyer to any member of the new law firm; and
(ii) advised the lawyer’s former client, if requested by the client, of the measures taken.
9The commentary to LSUC Rule 3.4-20, now reads, in part:
Commentary
[1] It is not possible to offer a set of “reasonable measures” that will be appropriate or adequate in every case. Instead, the new law firm that seeks to implement reasonable measures must exercise professional judgment in determining what steps must be taken “to ensure that no disclosure will occur to any member of the new law firm of the former client’s confidential information”. Such measures may include timely and properly constructed confidentiality screens.
[3] The guidelines that follow are intended as a checklist of relevant factors to be considered. Adoption of only some of the guidelines may be adequate in some cases, while adoption of them all may not be sufficient in others.
Guidelines: How to Screen/Measures to be taken
The screened lawyer should have no involvement in the new law firm’s representation of its client in the matter.
The screened lawyer should not discuss the current matter or any information relating to the representation of the former client (the two may be identical) with anyone else in the new law firm.
No member of the new law firm should discuss the current matter or the previous representation with the screened lawyer.
The firm should take steps to preclude the screened lawyer from having access to any part of the file.
The new law firm should document the measures taken to screen the transferring lawyer, the time when these measures were put in place (the sooner the better), and should advise all affected lawyers and support staff of the measures taken.
These Guidelines apply with necessary modifications to situations in which non-lawyer staff employees leave one law firm to work for another and a determination is made, before hiring the individual, on whether any conflicts of interest will be created and whether the potential new hire actually possesses relevant confidential information.
10The above guidelines are designed to apply to a broad range of scenarios, and as indicated in para [3] of the Commentary not all may be relevant or necessary in a given case, or in some cases implementing all of them may be insufficient. The question of what would be reasonable in the circumstances is decided by asking the question put by Sopinka J. in MacDonald Estate, namely, if the measures were put in place, would a reasonably informed person be satisfied that no use of confidential information would occur.
11As noted above, Rule 3.4-20 specifically applies only to the case where a lawyer or staff member worked on a case at their previous firm, and subsequently transferred to another firm representing an opposing party in the same manner. It does not directly apply to the present situation. However, as also noted above, the principles applicable in such a situation are equally applicable to the present case in determining whether there is a conflict of interest even though the potential conflict did not arise from a transfer of lawyers or staff between firms.
12In my view, a reasonably informed person would be less concerned about confidential information being used in this case than in a case such as Lukasik where a lawyer with active involvement in a file transferred firms. The reasonable measures necessary to ensure no confidential information would be used may well be different in the two scenarios.
13The law firm has taken steps to ensure no documents relating to the applicant’s inquiries are accessible by lawyers in the firm, and that none of the information related to the Application provided to its two staff members will be communicated to any lawyer in the firm. I find that these are reasonable measures in the circumstances, and that a reasonable person would be satisfied that any confidential information conveyed would not be used to the prejudice of the applicant.
14Whitten & Lublin may continue to represent the respondent in this Application.
15I am not seized.
Dated at Toronto, this 25th day of February, 2016.
“signed by”
Bruce Best
Vice-chair