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We hope you enjoy this CBA PD presentation We hope you enjoy this CBA PD presentation
Please check with your local law society to determine accreditation requirements when viewing a recorded program.
Speakers:Malcolm Mercer, McCarthy Tétrault LLP, Toronto, ONJean Nelson, Canadian Medical Association, Ottawa, ON
FAQs for In-House Counsel on Privilege and Confidentiality
Presented live on February 7th, 2013
Agenda
1. What is lawyer-client privilege?
2. Exceptions to lawyer-client privilege
3. Lawyer-client privilege and litigation privilege
4. When am I required to go “up the ladder”?
5. Privilege and acting as privacy or compliance officer
6. Providing legal advice as well as business or policy advice
7. Advising members of the corporate family
8. Retaining counsel for a Special Committee of the Board
9. Common-interest and “deal team” privilege
10. Privilege and internal investigations by in-house counsel
11. The FAQs and the checklist
12. Q and A
“a rule of substance applicable to all interactions between a client and his or her lawyer when the lawyer is engaged in providing legal advice or otherwise acting as a lawyer rather than as a business counsellor or in some other non-legal capacity” - Canada (Privacy Commissioner) v. Blood Tribe Department of Health, [2008] 2 S.C.R. 574
To be distinguished from:• the lawyer’s ethical duty of confidentiality• litigation privilege• legal professional and attorney-client privilege as exists outside of Canada• other concepts such as common interest privilege and settlement privilege
What is Lawyer-Client Privilege?
Two recognized exceptions:
1. Public Safety
2. Innocence at Stake
Ontario (Public Safety and Security) v. Criminal Lawyers’ Association, 2010 SCC 23 @ paragraph 53
Exceptions (cont’d)
Public Safety
Where a lawyer believes upon reasonable grounds that there is an imminent risk to an identifiable person or group, of death or serious bodily harm, including serious psychological harm, that would substantially interfere with health or well-being, the lawyer shall disclose confidential information where it is necessary to do so in order to prevent the death or harm, but shall not disclose more information than is required.
CBA Code of Conduct, c. 4 Rule 2Derived from Smith v Jones, [1999]1 SCR 455
Not Caught by Lawyer-Client Privilege
Crime-fraud exception
Communications in furtherance of a crime cannot possibly form part of an ethical
professional relationship. But what is a “crime” for this purpose is not clear. It is
not yet well settled whether the crime-fraud exception applies only to:
• actual crime/fraud
• all unlawful acts including tortious acts and perhaps breach of contract
• true crime/fraud as well as tortious conduct that is akin to fraud
Dublin v. Montessori Jewish Day School of Toronto (2007), 85 OR (3d) 511; 281 DLR (4th) 368 (leave to appeal granted but settled on appeal)
Lawyer-client privilege applies only to confidential communications between the
client and his or her solicitor.
Litigation privilege, on the other hand, can apply to communications of a non-
confidential nature between the solicitor and third parties and even includes
material of a non-communicative nature.
Lawyer-client privilege exists any time a client seeks legal advice from his lawyer
whether or not litigation is involved.
Litigation privilege, on the other hand, applies only in the context of litigation itself.
Lawyer-Client Privilege and Litigation Privilege
Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319
Subject to waiver and limited exceptions, lawyer-client privilege is forever.
Litigation privilege ends with the dispute – but the dispute must truly be over.
Lawyer-client privilege exists because the justice system depends for its vitality on
full, free and frank communication between those who need legal advice and
those who are best able to provide it.
Litigation privilege exists to ensure the efficacy of the adversarial process. Parties
to litigation, represented or not, must be left to prepare their contending positions
in private, without adversarial interference and without fear of premature
disclosure.
Lawyer-Client Privilege and Litigation Privilege (cont’d)
Lawyer-Client Privilege and Litigation Privilege
Lawyer-client privilege applies only to confidential communications between the
client and his or her solicitor.
Litigation privilege, on the other hand, can apply to communications of a non-
confidential nature between the solicitor and third parties and even includes
material of a non-communicative nature.
Lawyer-client privilege exists any time a client seeks legal advice from his lawyer
whether or not litigation is involved.
Litigation privilege, on the other hand, applies only in the context of litigation itself.
Subject to waiver and limited exceptions, lawyer-client privilege is forever.
Litigation privilege ends with the dispute – but the dispute must truly be over.
Lawyer-client privilege exists because the justice system depends for its vitality on
full, free and frank communication between those who need legal advice and
those who are best able to provide it.
Litigation privilege exists to ensure the efficacy of the adversarial process. Parties
to litigation, represented or not, must be left to prepare their contending positions
in private, without adversarial interference and without fear of premature
disclosure.
Lawyer-Client Privilege and Litigation Privilege (cont’d)
Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319
Up the Ladder - When?
A Perilous Journey? No doubt.
But remember “The smartest guys in the room” & Enron
Keep in mind—who is the client?
Federation Model Rule 3.02 (3) Although a lawyer may receive instructions from an officer,
employee, agent or representative, when a lawyer is employed or retained by an organization,
including a corporation, the lawyer must act for the organization in exercising his or her duties
and in providing professional services.
Keep in mind—fidelity to law
Model Rule 3.02 (7) When acting for a client, a lawyer must never knowingly assist in or
encourage any dishonesty, fraud, crime or illegal conduct, or instruct the client on how to
violate the law and avoid punishment.
In other words -- gird your loins and channel Gary Cooper in “High Noon”!
Let’s conduct a poll now…Let’s conduct a poll now…
Up the Ladder - When? (cont’d)
1) Your client wants to bribe a foreign diplomat. Can you assist?
a) Yes 0%
b) No 100%
Polling Questions
2) Must you report up if the client won’t stop?
a) Yes 91.67%
b) No 8.33%
3) Must you withdraw?
a) Yes 83.33%
b) No 16.67%
4) Can you report to the authorities?
a) Yes 26.26%
b) No 73.74%
Federation Model Code
3.02 (8) A lawyer who is employed or retained by an organization to act in a matter in which the lawyer knows that the organization has acted, is acting or intends to act dishonestly, fraudulently, criminally or illegally, must do the following:
Up the Ladder - When? (cont’d)
a) advise the person from whom the lawyer takes instructions and the chief legal officer, or both the chief legal officer and the chief executive officer, that the proposed conduct is, was or would be dishonest, fraudulent, criminal, or illegal and should be stopped;
b) if necessary because the person from whom the lawyer takes instructions, the chief legal officer or the chief executive officer refuses to cause the proposed conduct to be stopped, advise progressively the next highest persons or groups, including ultimately, the board of directors, the board of trustees, or the appropriate committee of the board, that the proposed conduct was, is or would be dishonest, fraudulent, criminal, or illegal and should be stopped; and
c) if the organization, despite the lawyer’s advice, continues with or intends to pursue the proposed wrongful conduct, withdraw from acting in the matter in accordance with Rule 2.07.
Privacy Officer/Compliance Officer
I wear several ‘hats’ – in-house lawyer, privacy officer, compliance officer
Does lawyer-client privilege protect my internal communications in all of these
functions? Complying with law as the client representative vs advising the
client on legal matters.
Is privileged information accessible under FOI?
• Check the privacy legislation in your jurisdiction to determine the ability to refuse
disclosure
• Review the case law - Statutory authority did not grant Privacy Commissioner
access to privileged documents Canada (Privacy Commissioner) v. Blood Tribe Department
of Health, [2008] 2 S.C.R. 574
• Privacy Commissioner (Ont) practice direction - not a waiver of privilege to
produce when compelled to do so
Office of the Information and Privacy Commissioner of Ontario, Practice Direction #1,
August 2000, at para. 6
Privacy Officer/Compliance Officer (cont’d)
Business and Policy Advice
Business or policy advice and lawyer-client privilege
If an in-house lawyer is conveying advice that would be characterized as privileged,
the fact that he or she is “in-house” does not remove the privilege, or change its
nature. Pritchard v. Ontario (Human Rights Commission), [2004] 1 S.C.R. 809 at para. 21
But, lawyer-client privilege does not extend to communications where legal advice
is not sought or offered. The role of in-house counsel is not always a purely legal
role. Not all communications with in-house counsel involve legal advice.
Practical Tip: think of your headgear—what hat are you wearing?
Advising Members of the Corporate Family
Joint clients
Privilege exists for the benefit of all of the joint clients equally as against the entire
outside world
It takes all of the joint clients to waive privilege
Joint clients and the lawyer’s duty of candour
In corporate “families”, there is potential for joint retainers without that fact
being recognized. As there can be no confidentiality between joint clients,
there can be no privilege as between them.
IN RE: TELEGLOBE COMMUNICATIONS CORPORATION, et al.,
While this does not permit access by third parties, if the interests of the
members of the corporate family diverge, then there is the potential that
otherwise privileged information could be used in litigation between them.
Advising Members of the Corporate Family (cont’d)
Polling Questions
1) In-house counsel is advising the parent and a subsidiary in financial difficulty. The subsidiary falls under control
of noteholders and later goes bankrupt. Was there a joint retainer?
a) Yes 100%
b) No 0%
2) Can the subsidiary use the privileged information against the parent when controlled by the noteholders?
a) Yes 84.38%
b) No 15.63%
3) Can the trustee in bankruptcy do so?
a) Yes 47.87%
b) No 52.13%
Goal: avoid the conflict issues that could arise and waiver of privilege
Clarify at the outset who is retaining external legal counsel?
• Is the client the special committee of the board on behalf of the company?
This is usually the case.
• Are members of the special committee seeking personal assistance? This is
relatively rare.
Clarity as to identity of the client with external legal counsel
Boreta v. Primose Drilling Ventures Ltd., 2010 ABQB 383
Special Committee of the Board
Generally, communication of privileged information to third parties waives privilege.
For corporations, lawyer-client communication must be through employees or other
intermediaries. A third-party can be an intermediary for this purpose.
Sometimes, special expertise is required either for communication to the lawyer or
interpreting the advice received. The classic example is the accountant.
“Deal team” privilege extends these concepts and recognizes that teams are
assembled for complex deals and that the team members require legal advice for
the deal.
“Deal Team” Privilege
Barrick Gold v. Goldcorp, 2011 ONSC 1325I accept the general principles set out in the reasons of Justice Doherty in General
Accident Asssurance Co., [1999] O.J. No. 3291 (C.A… which emphasize the limitation on third-party privilege that “extends to a function which is a central to the existence or operation of the client-solicitor relationship, then the privilege should cover any communications which are in furtherance of that function and which meet the criteria for client-solicitor privilege.”
…
I do not accept that there is to be expected a “deal team” extension of solicitor/client privilege in every complex commercial transaction where there is not a specific protocol that has been executed. In each instance the context, the parties and the framework for the establishment and maintenance of privilege must be established to the satisfaction of the Court. In this case from the review of documents, it does.
“Deal Team” Privilege (cont’d)
Barrick Gold v. Goldcorp, 2011 ONSC 1325
“Deal Team” Privilege (cont’d)
I accept the comments apply to this case from the recent decision of the British Columbia Supreme Court in Camp Development Corp. v. South Coast Greater Vancouver Transportation Authority, 2011 BCSC 88 at para.64:
The nature of the interrelationship and of the dealings between [the client, the consultant and the lawyer] are a practical reality in major commercial projects where teams of individuals with focused expertise are assembled. All functions are not performed under a single roof, and the solicitor, though retained by a single client, may be required to give advice to different members of the team who work for the client.
The parameters of “deal team” privilege remain uncertain. Without a proper protocol, it is all too easy to involve third parties that truly don’t need to be involved and to lose privilege.
Thinking carefully and clearly up front is important to maintain privilege and avoid
becoming a witness
Who is the client? Just the company or also the ‘target’?
What is the purpose of the internal investigation? Only for the purpose of briefing
counsel to obtain legal advice?
Who will do the investigating?
Will interviews be recorded? How?
Practical tip: consider external counsel; stronger presumption of legal assistance
If US angle, consider retaining US counsel
Privilege and Internal Investigations
Polling Question
1) You are in-house counsel for a public company. The auditors are requiring a major restatement. The board wants to
know how this came about. Is an investigation by in-house counsel for the purpose of briefing the board privileged?
a) Yes 61.68%
b) No 38.32%
2) If the purpose of the investigation is to brief counsel to obtain legal advice, is an interview of a target employee solicitor-client privileged?
a) Yes 96.97%
b) No 3.03%
3) If your notes from that interview are an amalgam of what was said, your impressions and your thoughts - are your notes privileged even if what was said is not?
a) Yes 82.47%
b) No 17.53%
Guidance on strategies to protect privilege including avoiding:
waiver of privilege
claims that the information/documents were not kept confidential
claims that the communications were not for the purpose of obtaining
legal assistance or for the purpose of litigation
FAQs and the Checklist
Polling Questions
1) Your client wants to bribe a foreign diplomat. Can you assist?
a) Yes 0%
b) No 100%
2) Must you report up if the client won’t stop?
a) Yes 91.67%
b) No 8.33%
3) Must you withdraw?
a) Yes 83.33%
b) No 16.67%
4) Can you report to the authorities?
a) Yes 26.26%
b) No 73.74%