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- Code of Conduct: Guidance on Ethical and Practice Management Issues
Originally published in the Canadian Bar Association – Alberta Branch, Law Matters on Feb. 19, 2021
Balancing a busy practice with the need to keep abreast of developments in the regulation of the profession can be challenging. In delivering legal services in Alberta, lawyers have to be aware of and comply with the Legal Profession Act, the Code of Conduct, and the Rules of the Law Society of Alberta. Jurisprudence establishes additional obligations and requirements. In addition, the Code of Conduct is not a complete Code. Its preface states: “[T]he rules and regulations of the Law Society cannot exhaustively cover all situations that may confront a lawyer, who may find it necessary to consider legislation relating to lawyers, other legislation or general moral principles in determining an appropriate course of action.”
This article provides guidance on some issues which practice advisors are currently seeing with regular frequency.
Rule 7.2-4 of the Code of Conduct prohibits a lawyer from using any device to record a conversation between the lawyer and a client or another lawyer without first informing the other person of the lawyer’s intent to record. The client or other lawyer’s knowledge is necessary even if the recording is otherwise lawful. In this respect, lawyers are held to a higher standard than that imposed by other instruments such as privacy legislation. In this rule, conversation includes in-person meetings, telephone conversations, and videoconferences.
This year, Rule 7.2-4 has risen to prominence with the pandemic normalizing telephone and online meetings, court appearances, questionings and mediations. Before clicking the record button in any virtual or telephone meeting, lawyers should obtain and record from each person in the meeting, their clear consent, or at least an acknowledgement of their awareness. Ideally, everyone can agree in writing prior to the meeting that it will be recorded. That explicit agreement should be included on the lawyer’s file. If a situation arises during the meeting which the attendees agree necessitates the recording, that agreement should be made clear at the beginning of the recording. Situations can conceivably arise where one lawyer may begin recording a meeting or proceeding and the opposing lawyer does not consent to it, but circumstances require that the meeting continue. The objecting lawyer should consider applying to the court after the meeting to have the recording deleted, and for costs.
The rule also applies to regular telephone conversations. Without confirming the other party’s knowledge of the recording, lawyers should not record telephone calls. The party’s advance consent should be maintained on the lawyer’s file.
A lawyer’s duty to report another lawyer to the Law Society arises under Rule 7.1-3. It must be balanced with a potential breach of solicitor-client privilege. In some instances, the duty to report is clear: When another lawyer has misappropriated trust funds, abandoned their law practice, or participated in criminal activity related to the lawyer’s practice. In most instances, it is not clear whether another lawyer’s conduct has reached the level of “must report.” The lawyer’s conduct must be reported when it “raises a substantial question of another lawyer’s honesty, trustworthiness or competency as a lawyer”, when it raises a “substantial question” about the lawyer’s capacity to provide legal services, or when the lawyer’s clients are likely to be “materially prejudiced” by the lawyer’s conduct.
Rule 7.1-3’s underpinning is that unless a lawyer’s departure from professional conduct is “addressed at an early stage, loss or damage to others may ensue” (Commentary para 1). Minor breaches may be symptomatic of more serious issues in that lawyer’s practice. Where a lawyer is uncertain about having to report another lawyer, they should speak with a colleague or practice advisor.
Rules 3.2-11 and 5.2-1(t) prohibit a lawyer from threatening to make a complaint to a regulator, or to lay a criminal charge, in an attempt to gain a benefit for a client in a civil matter. In some cases, settlement offers are accompanied by threats either to report the opposing party to the police, or to report opposing counsel to the Law Society for alleged misconduct. Many lawyers are surprised to learn that including such a threat as an inducement to settle is a breach of the Code of Conduct.
A related question is whether a lawyer can suggest that the opposing counsel’s conduct may be reportable. These often-misunderstood rules do not prevent a lawyer from discussing with another lawyer that their conduct may warrant a report, or demanding that the other lawyer comply with an ethical obligation such as an outstanding undertaking. Lawyers are also not prevented from reporting or making a report to the authorities while a related matter is in litigation or settlement discussions. The issue is whether the threat itself is being used as an inducement to settle or obtain a civil remedy.
A related question is a lawyer’s obligation to self-report. This duty must be balanced against the right against self-incrimination. While the practice advisors strongly recommend that lawyers contact them when potentially facing this issue, in some instances, the obligation is clear.
Law Society Rule 119.34 requires that a lawyer, articling student or applicant for admission to the Law Society immediately report to the firm’s responsible lawyer and to the manager of trust if they are subject to bankruptcy proceedings, or if they have been served with a writ of execution. The report is to ensure the safety of trust funds to which the lawyer may have access.
Law Society Rule 105 requires lawyers, articling students, visiting lawyers, law students or lawyers transferring from another jurisdiction to report to the Law Society any criminal or regulatory charges. The report must be made within a reasonable time after the charge is laid, or after an investigation begins. The lawyer must subsequently advise the Law Society of the outcome of the charge or investigation.
Lawyers in private practice must maintain professional liability and misappropriation indemnification coverage through ALIA (Alberta Lawyers’ Indemnification Association). ALIA’s professional liability coverage generally excludes claims arising from dishonest, fraudulent or criminal acts or from theft or misappropriation (other than limited coverage for innocent additional subscribers), whether perpetrated by a lawyer, law firm staff, or a third party. Where law firm staff or a third party steals money from trust, that theft is not covered by ALIA, because it covers only misappropriation by lawyers.
In addition, ALIA does not cover losses resulting from a cyber-breach (whether fraudulent or not). Law firms require a separate and additional insurance product purchased from an independent insurer to protect them against these risks.
ALIA recommends that sole practitioners and law firms purchase commercial insurance coverage to cover employee theft, for example, as part of a commercial crime policy. Commercial brokers can assist in this area.
ALIA also recommends that both sole practitioners and firms purchase coverage to protect themselves and their clients from cybercrime and social engineering fraud. To make it easier for Alberta lawyers to purchase cyber insurance, in 2018 ALIA arranged with its broker, Aon Reed Stenhouse, to make available a robust cyber policy called the Beazley Breach Response Policy. More information on purchasing this insurance coverage is available by emailing email@example.com. Lawyers Financial, the Canadian Lawyers Insurance Association and most commercial brokers also offer cyber insurance, though products vary and do not all offer the same coverage.
Lawyers who are disbarred or suspended may seek to work in fields that are law-related, or even in law offices. Section 108 of the Legal Profession Act requires approval from the Benchers before the firm may engage a suspended or disbarred lawyer to work as an employee or contractor. Failing to do so will be a breach of the suspended or disbarred member’s obligations and may result in additional penalties and consequences. Any lawyer who has engaged a suspended or disbarred lawyer may also face penalties.
In addressing any of the situations raised in this articles, the facts may contain nuances which make the application of the rules complex. Lawyers, articling students and staff are welcome to contact the practice advisors for assistance with these (and all ethical and practice management-related) issues.