The Law Society’s Ethics Committee recently released the following Professional Conduct Ruling as guidance for the profession. For your convenience, I’ve listed the ruling below but it can also be found in our Professional Conduct Rulings Database.
Ethics Committee Ruling
Client A complained that Lawyer X was in a conflict of interest in connection with Lawyer X’s representation of Client B, who was Client A’s former spouse, because Lawyer X’s law Firm (“the Firm”) had previously acted for Clients A and B on a litigation file.
The following issue was referred to the Ethics Committee:
Is this a conflict that should have been recognized by Lawyer X to the point that Lawyer X would withdraw their services on behalf of Client B and not act for Client B?
Initially, Clients A and B, who were then married, retained Lawyer Y of the Firm to represent them in a lawsuit against them by Party C concerning title to a piece of real property. The file was subsequently transferred to Lawyer Z of the Firm, who took a number of steps in relation to the litigation.
Client A indicated to Lawyer Z that Clients A and B were planning to obtain a divorce, which Client A characterized as non-contentious, and requested that Lawyer Z draft documents for this purpose, including an interspousal agreement. In an e-mail, Lawyer Z responded to both Clients A and B that after consulting the family law practitioners at the Firm, it would not be wise for the Firm to represent either party in the matrimonial matter “regardless of whether the family law issues are contentious or not.” With respect to the litigation with Party C, Lawyer Z continued:
As for our civil litigation matter, I can keep representing both of you this way however it is not without its complications. If you continue to provide me with uncontradictory instructions on how to proceed with both parties in agreement then I can continue providing services. If we get into a situation where you cannot agree on how to proceed then my ability to represent you is hampered significantly and may result in my having to withdraw. Hopefully we don’t get into that situation. Be aware that since you are on a joint retainer there is no confidentiality between any of us when it comes to anything that could bear upon the litigation.
Following this advice, Client’s A and B ceased to have the Firm represent them. It is unclear from the material whether they sought alternative representation for the purpose of concluding an interspousal agreement, but there is reference to such an agreement being signed.
Approximately 8 months after terminating the Firms services, Client B made contact with Lawyer X for advice about enforcing the provisions of the interspousal agreement. According to Lawyer X, advice was provided to Client B, and Client B made some efforts to negotiate with Client A concerning the provisions of the interspousal agreement and the possible proceeds of the action involving Party C. Later, Client B asked Lawyer X to take a more active role in enforcing the interspousal agreement, and Lawyer X drafted a Petition which was served on Client A. The Petition indicated that Client A and Client B’s divorce had been finalized. In the Petition, Client B asked for maintenance as compensation for Client A’s violation of the interspousal agreement, and for payment and disposition of funds and property payable pursuant to the terms of the interspousal agreement.
Client A filed a complaint with the Law Society after being served with the Petition. In the complaint, Client A indicated that the litigation with Party C was ongoing, and that the piece of property at issue in those proceedings was part of the property to which Client B was attaching a claim in the Petition.
In the response to the complaint, Lawyer X began by outlining the history of the interaction between the Firm and Client’s A and B. A portion of the response included the following statement:
At not time were issues relating to marital discord between Client A and Client B ever discussed. At not time was any information in relation to marital issues discussed, disclosed or advanced. Neither Lawyer Y or Lawyer Z are family law lawyers.
Lawyer X went on to refer to the law concerning conflicts of interest as recently stated by the Supreme Court of Canada in Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39,  2 S.C.R. 649 [CNR], and to rely on that decision in support of the position that no conflict of interest arises from Lawyer X’s representation of Client B in relation to Client B’s matrimonial dispute with Client A.
In the CNR case, the Court distinguished between two situations in which a conflict of interest may arise. The first of these is addressed by the “bright line” rule set out in R. v. Neil, 2002 SCC,  3 S.C.R. 631 [Neil], which spells out that a lawyer or law Firm may not concurrently represent clients adverse in interest without obtaining their consent. Since Client A has not been a client of the Firm for a few years, the bight line rule is not applicable in relation to Client A’s complaint.
The Court also considered the second situation addressed in Neil, where the bright line rule is inapplicable, but where there is some question about a lawyer or law Firm’s continuing obligations to a current or former client. The basic principles governing such a situation are based on the Court’s observations in MacDonald Estate v. Martin, 1990 Can LII 32 (SCC),  3 S.C.R. 1235 at 1243:
In resolving this issue, the Court is concerned with at least three competing values. There is first of all the concern to maintain the high standards of the legal profession and the integrity of our system of justice. Furthermore, there is the countervailing value that a litigant should not be deprived of his or her choice of counsel without a good cause. Finally, there is the desirability of maintaining reasonable mobility in the legal profession. The review of the cases which follows will show that different standards have been adopted from time to time to resolve the issue. This reflects the different emphasis placed at different times and by different judges on the basic values outlined above.
In Neil, at paragraph 31, the Court stated that the question that must be asked when the bright line rule does not apply is whether the concurrent representation of clients creates “a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client or a third person.”
In the CNR decision, at paragraph 24, the Court observed that the major consideration to be assessed in the case of former clients is the risk that the access to the former client’s confidential information will prejudice the current legal interests of that client. This suggests that the major question to be considered in relation to Client A’s complaint is whether the access Lawyer X and Lawyer X’s law Firm had to the information in the information in the litigation file for Client’s A and B now pose a substantial risk to the legal interests of Client A.
Our conclusion is that the prior representation of Client’s A and B does not in these circumstances create such a risk. Client A has asserted that the property that was the subject matter of the litigation file will also be at issue in the disposition of matrimonial property; if this is indeed the case, the information concerning the nature and status of the property would have to be fully disclosed in that context. There is thus not a substantial risk that Client A’s interests would be inappropriately affected by the information accessible to members of the Firm.
It might be observed that Lawyer Z took a somewhat more cautious approach to the conflict issue, advising Client’s A and B that he could not represent them both in drafting an interspousal agreement, and also that it would be difficult to be sure that Lawyer Z’s continuing carriage of the litigation file would not be affected by their decision to end their marriage. Though we have found that Lawyer X is not in a conflict with respect to representing Client B, the mistaken assumption in Lawyer X’s response to the complaint that there had been no discussion at all of matrimonial issues while Client’s A and B were both clients of the Firm suggests that Lawyer X might have been less likely to create the risk of conflict if Lawyer X had investigated the Firms relationship with Client’s A and B more thoroughly.
The overall finding is that Lawyer X is not in a conflict of interest in relation to representing Client B.