Law Times

Page 4 January 27, 2014 Law Times • NEWS Same clients targeted Prof touts law firm regulation Continued from page 1 Continued from page 1 noise" about expanding their services, according to Furlong, who notes the recent moves mark the beginning of a full-scale entrance into the legal industry. The accounting firms' growing range of services to the same client base law firms are targeting should be a wake-up call to the legal industry, says Furlong. "The main strategic difference I have seen between law firms and accounting firms is that law firms have always marginalized or restricted themselves in terms of the narrowness and the focus of their offer," he says. "Accounting firms don't do that, and that's why, in a lot of ways, this is not a fair fight. From a business perspective, legal services are just one part." Law firms can, if they choose, offer business services as well, he adds, noting even Deloitte's acquisition of ATD is a lost opportunity for the legal industry. For ATD, Deloitte's interest is a validation of a practice that's only at a nascent stage in Canada. While outsourcing document review or due-diligence tasks to overseas operations is common, there were few companies that did the work locally when ATD launched its practice on Soho Street in Toronto. "It was a model that was seen worldwide but not in Canada before I started ATD. There are a few players but not anywhere near the scale we see it in the broader world," says Shelby Austin, founder of ATD. "People weren't sure such a concept could work, that it could exist. Now a company like Deloitte has gotten involved in providing additional support to law firms and Canadian corporations. It certainly suggests that the idea itself is a good one for law firms and their clients as well." For Canadian clients who are still uneasy about having their files handled abroad, a local solution is a crucial aspect, says Dent. "Of importance to many clients in Canada is that their data remains in Canada so their data doesn't end up in the United States, it doesn't end up in India, it doesn't end up in some other jurisdiction," he says. It's all about recognizing the various needs clients have, says Furlong. "That's exactly what law firms could have, should have been doing. But law firms, for the most part, don't see themselves in those broad terms. They see themselves in one particular channel and that's the law channel," he adds. "And what Deloitte is saying, I think, is: 'We are interested in providing [services] in all possible channels,' and that is in law, accounting, and for all we know it includes IT." LT address a possible conflict of interest it might have with the client and would understand that such advice might be obtained from within the firm itself. As such, that practice would not violate the duty of loyalty." In the United States, where the American Bar Association's model rules of professional conduct recommend the use of inhouse counsel to improve the "ethical atmosphere," the law when it comes to privilege is in flux, according to Pitel. To date, there's no Canadian jurisprudence that deals with whether privilege applies to communications between ethics counsel and other lawyers in a firm. Like in other industries, Pitel said the courts should recognize that some information should be kept from clients. "Law firms should not be treated differently in this regard than other service firms like those in accountancy, insurance, banking, finance, and telecommunications," he wrote in his paper. "Beyond this basic principle, the difficulties then lie in working out, on a case-by-case basis, whether the appropriate preconditions to privilege exist and whether the privilege is defeated by any exceptions." Although Pitel endorsed the idea of designating an in-house counsel, he says law firms should be careful about who they select for the job and should take steps to mitigate bias towards them. "It is true that most ethics counsel are partners at their firm, and are likely to be concerned about the firm's bottom line, which will affect their ultimate compensation. However, the degree to which ethics counsel with an equity partnership will be affected by the dissatisfaction or loss of a given client will be much less than the partner or associate who is handling the client," according to Pitel. "Further, many ethics counsel are paid exclusively for their ethics work. Their function is one of risk management, not client satisfaction or partner gratification. They are therefore in a unique position within the firm to offer frank advice to a lawyer whose misconduct has come to their attention. They are concerned with managing the risk to the firm, not with providing the best outcome for the individual lawyer." Pitel's views were among several ideas proposed at the recent conference on ethics in the law firm context. For University of Ottawa Prof. Amy Salyzyn, regulating law firms could improve ethics among lawyers. When it comes to regulation, looking at individual lawyers often misses what Salyzyn called "the bigger picture" issues such as overbilling practices at law firms. "You really need to look at the SCC sends clear message in summary judgment decision BY DAVID DIAS Law Times T ExaminE a rangE of rEmEdiEs for ChartEr violations New editioN CoNsTITuTIoNal RemedIes IN CaNada, 2Nd edITIoN KeNt W. RoACh oRdeR # 804659-65203 $289 1 volume looseleaf supplemented book Anticipated upkeep cost – $236 per supplement 2-4 supplements per year Supplements invoiced separately 978-0-88804-659-8 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AvAilAble RiskFRee FoR 30 dAys order online at www.carswell.com Call toll-Free: 1-800-387-5164 in toronto: 416-609-3800 Frequently cited by the Supreme Court of Canada, Constitutional Remedies in Canada offers authoritative coverage of the judicial remedies available for constitutional wrongs. Updated and rewritten, this new edition offers convenient access to the latest case law and expert analysis that brings context to your research. New IN ThIs edITIoN • Rewritten and updated chapters to reflect fundamental changes such as R. v. Grant (2009 S.C.C.) on exclusion of evidence • R. v. Conway on jurisdiction • Downtown Eastside Sex Workers Supreme Court of Canada decision on standing • Ward v. Vancouver (City) on damages • New material on the emergence of the innovative "declaration plus" • New material on the range of remedies for violation on the duty to consult Aboriginal peoples • New material on use of sentence reductions as a Charter remedy • New material and new organization to assist in understanding when courts will suspend declarations of constitutional invalidity www.lawtimesnews.com entity level; you need to look at the structural level," she said. Another problem with the current model is that it relies on complaints and "the limitations of that become quickly clear," she added. "You wouldn't have the discipline if you didn't have the error at all." In Australia, law firm regulation resulted in a significant drop in complaints against lawyers, Salyzyn noted. "What would the made-in-Canada solution look like?" What's needed, she said, is "a proactive, management-based regulation" that educates law firms, finds the regulatory gaps, and promotes best practices. One of the biggest challenges when it comes to regulating law firms is the lack of resources. But according to Salyzyn, the possibility that law firm regulation could be "a meaningless, box-checking process" is also a concern. Still, the idea will become even more important as nonlawyers are joining law firms, Salyzyn said. When it comes to designing a model for law firm regulation, "we have not only the ability to think creatively but to share from other industries that have thoughts about this," she added. LT he Supreme Court of Canada issued a pair of rulings on Thursday that create what some lawyers are calling a "new world order" of summary judgments for major civil suits that potentially opens the floodgates to these kinds of motions. Both cases — Bruno Appliance and Furniture Inc. v. Hryniak and Hryniak v. Mauldin — stem from an alleged fraud by Ontario businessman Robert Hryniak, who met with investors and allegedly induced them to put millions of dollars into an investment company he owned. The money disappeared and the investors sued, filing motions for summary judgments, which were granted. In Ontario, expanded powers to issue summary judgments took effect in January 2010 and there were serious questions about how the courts should apply them. Even in this seemingly single instance of fraud, the Ontario Court of Appeal ruled in favour of summary judgment for the Mauldin group but against summary judgment for Bruno Appliance. The Supreme Court, in any event, upheld both judgments, ruling the appeal court was correct in denying summary judgment for one while allowing it for another. Despite the differing outcomes, the unanimous ruling, written by Justice Andromache Karakatsanis, provides a clear and ringing endorsement for summary judgment. "These reforms embody the evolution of summary judgment rules from highly restricted tools used to weed out clearly unmeritorious claims or defences to their current status as a legitimate alternative means for adjudicating and resolving legal disputes," wrote Karakatsanis. McCarthy Tétrault LLP's Sarit Batner represented Hryniak before the appeal court and the Supreme Court. Batner is astounded by the rulings, which she says leave multimillion-dollar civil suits to the "instinct" of the motions judge. "Basically, what they're saying is: 'Listen, if two sides tell you their story and you have enough confidence based on what you see to make a decision . . . you have to come to one. If you read this decision, it's hard to imagine what case requires a trial based on their definition. They've not identified a single kind of case that would ever not be amenable to summary judgment." Batner says the rulings essentially leave motion judges to their own devices — and without any true test — when determining whether to grant summary judgment. LT

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