After a stunning seven-year odyssey, the Law Society of Upper Canada has exonerated Torys LLP lawyers Beth DeMerchant and Darren Sukonick of conflict of interest allegations.
The law society simply didn’t have enough evidence for the charges to stick, according to the hearing panel.
Current Torys partner Sukonick and former partner Merchant were charged with six counts of failing to adequately disclose their conflicts of interest and obtain consent of their clients in breach of Rule 2.04 of the Rules of Professional Conduct. Their case relates to work done by Torys during the 2000 to 2003 period for the Hollinger Group of Companies.
“. . . the general practice followed by outside counsel in both Canada and the United States was followed by the respondents. There is no reason to find that the general practice is against our rules,” wrote hearing panel chairman William Simpson in a 47-page ruling.
“The clients are all considered to be sophisticated and before there is a finding of conflict of interest, there should be some evidence that counsel preferred the legal interestes of one or more litnes to the detriment of another. There was none.”
The LSUC called only one witness, corporate governance and fraud expert Hans Marschdorf and the decision goes on to say: “It is unfortunate that no one who was involved with any of the six particulars testified for the applicant, the Law Society.”
“Dr. Marschdorf’s task was difficult as he was asked to suggest conclusions when not all of the facts were known by him. After his testimony, further evidence showed that many of his suggestions could not be supported.
The two-and-a-half year discipline hearing started in April 2010 and didn’t conclude until December 2012. It took another nine-and-a-half months for the decision to be released.
The proceedings had an inauspicious start for the LSUC in 2009; 168 boxes of materials were unearthed that hadn’t been disclosed by Torys, prompting an adjournment at the get go.
Of the hearing panel’s decision Phillip Campbell, DeMerchant’s counsel, said: “Today’s ruling is a complete victory for her and Darren after an incomplete investigation and a pointless, painful prosecution. The Panel’s careful, closely reasoned decision has important implications for corporate legal practice and for the Law Society’s standards of investigation and prosecution. We will explore those in the weeks ahead; for today we are elated that an ordeal which should never have begun has come to an end.”
DeMerchant retired from the firm in 2006.
Ian Smith, Sukonick’s lawyer said: “While I am obviously delighted with the result in this case, which absolves Mr Sukonick and Ms DeMerchant of any misconduct, it is ?difficult not to feel at the same time a tremendous sense of regret about the fact that these protracted proceedings have detoured Mr Sukonick’s career.
“Unfortunately, Mr Sukonick has, for the past eight years, spent the bulk of his time and energy responding to allegations which should never have been litigated. . . . It has been a terrible waste, not only of the limited money and resources that the law society has to protect the public, but especially of Mr Sukonick’s time and efforts.”
Les Viner, Torys’ managing parnter, said: “We are very pleased that they have been vindicated by the hearing panel’s dismissal of all allegations made against them. We deeply regret the personal toll this process has taken on them. . . . This outcome is justly deserved, and we congratulate them.”
Late Friday, the LSUC sent this reponse to Legal Feeds regarding the decision: “The law society is disappointed by the decision made by the hearing panel, and will study it before commenting further.
“The Law Society agrees that the case was protracted, in part due to difficulties obtaining critical documentation, and in part due to the complexity of the transactions under consideration and the large volume of documents,” LSUC communications manager Lisa Hall said in an e-mail.
Update Oct. 18: Quotes from hearing panel's ruling added. As well pdf of decision attached to article.
Update Oct. 21: Comments added from the LSUC.
Update Oct. 24: Removed comment from LSUC it included in the e-mail statement in error, and has since retracted.