Law Times

Law Times • JuLy 11, 2016 Page 3 www.lawtimesnews.com Proposed rules confusing for lawyers, says LSUC New awards policy for whistleblowers under fire BY ALEX ROBINSON Law Times D espite concerns voiced by the Law Society of Upper Canada, lawyers could be eligible for new awards granted to whistle- blowers that report wrongdoing to the Ontario Securities Com- mission. The OSC is set to release and implement a new whistleblower award program and policy on July 14. The awards are financial in- centives of up to $5 million for whistleblowers who provide the OSC with information that leads to sanctions against an individu- al or company that violates secu- rities law. The proposed policy, which was unveiled last fall, said inter- nal counsel would be eligible for such awards in certain circum- stances. However, lawyers say it is hard to imagine circumstances in which disclosing information to the OSC would not be a breach of law society rules. Securities lawyer Jim Boyle, of Boyle & Co. LLP, says includ- ing lawyers in the whistleblow- ing policy is simply inconsistent with the integrity and ethical standards to which lawyers hold themselves. "The lawyer's ethical standards are much higher than the regula- tory standard, and the lawyer's rules of professional conduct are pretty clear," Boyle says. "Confidentiality and the solic- itor-client relationship are para- mount." If the proposed policy is ad- opted as is, internal counsel may be eligible for awards if he or she has "a reasonable basis" to believe that disclosing the information is necessary to stop someone from "engaging in conduct that is like- ly to cause substantial injury to the financial interest or property of the entity or investors." The second exception would be if the lawyer has a reasonable basis to believe that person is acting in a way that is impeding an investigation of misconduct. The last exception would be that if the lawyer has reported misconduct to a supervisor or chief legal officer and no action is taken after 120 days, he or she would be eligible for an award if he or she relays that information to the OSC. External counsel will be ex- cluded from the policy "unless disclosure is permitted by appli- cable provincial or territorial law society rules." Caitlin Sainsbury, a commer- cial litigator with Borden Ladner Gervais LLP who recently spoke at a panel discussion about the new policy, says the limited na- ture of these exceptions will make it unlikely that any inter- nal lawyers could be whistle- blowers, even if they are eligible according to OSC policy. "Pursuant to the law society rules, an in-house lawyer likely still remains unable to make the kind of whistleblower report con- templated by the policy," she says. "Arguably, a lawyer could be a whistleblower, but the way the rules of professional con- duct currently stand, it's hard to conceive of a case where a lawyer could be a whistleblower in keeping with our obligations under the rules." When it was first released, the proposed policy set off alarm bells for the law society, which had concerns about making law- yers eligible for such awards. Graeme Hamilton, a com- mercial litigator with BLG, says the difference in policy is due to a difference in the two entities' mandates. "From the securities commis- sion's standpoint, its public in- terest mandate involves protec- tion of the capital markets and reporting of these issues to the extent possible," he says. "From the law society's per- spective, what's important is upholding the standards of the legal profession. "And one of the obligations of a lawyer that is considered the most sacred is that with respect to solicitor-client privilege," adds Hamilton. In its consultation process, the OSC asked for input as to whether internal counsel should be included. In response, the former trea- surer of the law society, Janet Mi- nor, sent a letter, saying including counsel in the awards policy could create confusion for lawyers. "Our view is that this would create uncertainty for lawyers in fulfilling obligations to main- tain confidentiality of client in- formation and protect privileged information, and may offend the lawyer's duty of commitment to the client's cause," she wrote. Minor noted that lawyers' ethical rules expand past solicitor and client privilege, and include requirements to protect the confi- dentially of client information. The Rules of Professional Conduct say that while lawyers shall not knowingly assist or en- courage dishonesty, fraud, or ille- gal conduct, they are not allowed to disclose a client's information unless certain narrow exceptions apply. These exceptions include be- ing required to do so by law, or when a lawyer believes disclo- sure is necessary to prevent "an imminent risk of death or seri- ous bodily harm." Other exceptions include if another lawyer has committed a criminal offence. "We find it hard to conceive when the confidentiality rules would permit disclosure of con- fidential client information in a whistleblowing context," Minor said. Minor also expressed con- cern that the policy to include counsel could create a conf lict between a lawyer's commitment to a client and his or her own in- terests. LT NEWS Caitlin Sainsbury says a lawyer could be a whistleblower, but would be very unlikely to do so under current rules of professional conduct. MATTER CREDENTIALS TORONTO I BARRIE I HAMILTON I KITCHENER 1-866-685-3311 I www.mcleishorlando.com A Noticeable Difference ™ Choosing a personal injury lawyer is one of the most important decisions an injured person will make. 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