Law Times

Page 4 June 6, 2016 • Law Times www.lawtimesnews.com NEWS Law Society changes duty to report rules BY ALEX ROBINSON Law Times N ew law society rules will require lawyers and paralegals to re- port other legal pro- fessionals whose conduct raises "substantial questions" about their honesty, trustworthiness, or competency. The Law Society of Upper Canada adopted rule changes at convocation in late May that will expand "duty to report" rules. Previously, the rules required lawyers to submit complaints with the LSUC whenever they were aware that another legal professional was misappropri- ating trust monies, abandoning a practice, or participating in criminal activity. "It may not be obvious, but reporting is important in the law society system because most conduct matters that the law society investigates it does as a result of a report made or a complaint made," says Malcolm Mercer, chairman of the LSUC's professional regulation com- mittee report. "Ensuring or achieving ap- propriate reporting is an impor- tant part of the way the law soci- ety works." Mercer says the rule changes are important for public protec- tion, as instances where a licens- ee's honesty was in doubt were not necessarily being reported before. "The issue here isn't whether the law society would investi- gate but whether it would know to investigate." Convocation also adopted a rewording of a section of the old rules that required lawyers and paralegals to report a fellow licensee whose "mental instabili- ty" was having an affect on his or her ability to represent a client. The rule, which previously said a lawyer should report "the mental instability of a licensee of such a serious nature that the licensee's clients are likely to be materially prejudiced," was re- placed by "conduct that raises a substantial question about the licensee's capacity to provide professional services." Some law societies and legal ethics academics have expressed concerns about the language of the old rules, which described mental instability as miscon- duct, according to the commit- tee's report on the rule changes. "It is suggested that this lan- guage could be perceived as dis- criminatory," the report said. Mercer says the commit- tee's intention was to use less stigmatic terms, but William Trudell, who has represented lawyers in law society tribunals, says the wording of the new rules is too vague. "There seems to be sort of a backgrounder here to try and be more sensitive to people who are suffering from issues that af- fect capacity like mental illness, but I don't think it accomplished that," he says. Trudell says the language used in the expanded rules does little to help clear up when a legal professional should or should not report another licensee, as it is too open to interpretation. "What does 'capacity' mean? What does a substantial ques- tion about a licensee's capacity mean?" he says. "It's almost impossible to inter- pret and it leaves it open to indi- vidual subjective interpretation." Mercer, however, says obliga- tion to report situations are in- herently subjective. "The rules have to address sit- uations that are rarely black and white. It's not surprising judge- ment is required," he says. Trudell says the law society should create an ombudsman to help licensees determine when they should and should not re- port another lawyer or paralegal. "They need someone at the law society — an office, an om- budsman — that is established by the law society, paid by the law society, but owes their alle- giance to the profession and to the licensees to help interpret the rules, give help, and give guid- ance," he says. The law society decided to expand the rules to harmonize them with the model code of professional conduct developed by the Council of the Federation of Law Societies of Canada. Other changes included revi- sions to rules that regulate trans- actions with clients. Ordinarily, lawyers and cli- ents just deal with each other on the legal issues that are the subject matter of a retainer, but when lawyers do enter into transactions, there are rules that regulate them, Mercer says. "What the lawyer should do in that circumstance is not nec- essarily intuitively obvious," says Mercer, who added the rule re- visions clarify what lawyers can and cannot do when entering these transactions. "Our ref lection when we looked at the existing rule was that it was awfully hard to read. So much of what we've done is an attempt to make it easier to work with," he says. Lawyers can't enter transac- tions with clients unless it's "fair and reasonable" to the client, the rules say. "This is significant because you might think lawyers are just as entitled to look to their own interests in transactions, but they're not," Mercer says. Previously, transaction rules said that if a lawyer enters a transaction with a client, he or she must require the client to obtain independent legal repre- sentation. The revisions say the lawyer need not require or recommend that his or her client obtain in- dependent counsel in some cir- cumstances, such as when he or she borrows from a client. Sometimes, it is only necessary to require or recommend inde- pendent legal advice rather than representation. "Instead of an absolute gen- eral rule, it provides different requirements in different cir- cumstances that are designed to be more practical," Mercer says. "Imagine the lawyer who is doing some work for someone in their community, and instead of paying money the person offers to shovel their driveway during the winter. It doesn't make a lot of sense to have another lawyer to be involved in that transaction." Lawyers also cannot ordi- narily borrow from clients un- less that client is a bank or re- lated person. The rules also prohibit lawyers from indirectly borrowing from clients from whom they are not allowed to do so directly. Lawyers are not allowed to try to get an intermediary — such as a spouse or family member — to borrow money from a client that is not a bank or another related person. Mercer urged all lawyers who are entering transactions with clients to read the revised rules carefully so that they know what they can and cannot do. "Of course, it's simpler if you just don't enter into transactions with clients," Mercer says. LT There seems to be sort of a backgrounder here to try and be more sensitive to people who are suffering from issues that affect capacity like mental illness, but I don't think it accomplished that. William Trudell Malcolm Mercer says 'ensuring or achieving appropriate reporting is an important part of the way the law society works.' 7KHXOWLPDWHVRXUFHIRUWRGD\·VOHJDOSURIHVVLRQ 2QH

• Cover