September 7, 2011

Clients cannot waive the public interest in professionals who allow conflicts of interest

Professional Regulation

Conflicts of interests which amount to professional misconduct can be confusing when the issue of waiver arises. Can clients waive conflicts of interests so that they do not amount to misconduct?  For example, the law permits lawyers to act for both a mortgagee and a mortgagor in the conveyance of real estate, subject to full disclosure, consent of the parties, and proper structuring of the legal relationship. But what about a more ethically-contentious issue? Can a client waive a conflict of interest arising from his or her engaging in a romantic/sexual relationship with their professional?

The recent decision of the Court of Appeal in the Law Society of Newfoundland and Labrador v. Regular, 2001 NLCA 54, is helpful in clarifying that clients cannot waive the public’s interest in professionals refraining from conflicts of interests, even though they can waive their own private interests.

Mr. Regular and the complainant, S.G., engaged in a consensual sexual relationship for approximately 15 years. During that period, Mr. Regular acted for S.G. in various legal matters, including her separation from her husband. The relationship between Mr. Regular and the complainant ultimately turned acrimonious when he would not separate from his wife as promised and co-habit with the complainant, and when attempts were made to remove her from one of the properties where Mr. Regular had arranged for her accommodation. She attempted to assert a proprietary interest in the property, and made her complaint to the Law Society.

The original complaint resulted in Mr. Regular being found guilty of failing to comply with his duty of integrity on two accounts. First it was found that he had failed in his duty to avoid questionable conduct for having initiated a sexual relationship with his client within the confines of a solicitor-client relationship. Second, he was found guilty of failing in his duty to avoid a conflict of interest, and of questionable conduct, by representing his client in a family law matter at the same time he had a personal and sexual relationship with his client.

Mr. Regular went on to appeal his case to the court, and was successful at first instance in overturning the finding of a conflict of interest. The trial judge found that uncontested testimony, which the Law Society ignored, established that Mr. Regular fully disclosed his conflict of interest to the client, and she had full knowledge of the potential conflict of interest relating to Mr. Regular’s personal interests (para. 11; para. 77 of trial decision). For this reason, the trial judge was satisfied S.G. had effectively waived any conflict of interest that might have existed. But the Court of Appeal restored the Law Society’s verdict in finding a conflict of interest.

The Court of Appeal found no flaw with the trial judge’s finding the complainant “had full knowledge of her rights and unequivocally and intentionally abandoned them” (para. 65).  However, S.G. could only waive the conflict of interest to the extent of any risk to her own interest in Mr. Regular effectively discharging his duties. The interest of society in maintaining integrity in the administration of justice went beyond the complainant’s interests, and could not be waived by her alone (para. 77). The Court of Appeal noted that lawyers owe duties to the court, to other members of the profession and to the public, in addition to their duties to their clients, and these duties were also put in jeopardy by Mr. Regular’s unprofessional conduct (paras. 78-81).

Law Society of Newfoundland and Labrador v. Regular, 2001 NLCA 54