Court approves law firm’s ethical screen

When a lawyer for an opposing party joined its firm, Lloyd Burns McInnis LLP faced a real possibility of removal from a case due to a conflict of interest. But in an exemplary case of a timely ethical screen, the firm was allowed to stay on the case this week despite its small size and close working relationships between its lawyers.

Lloyd Burns McInnis is representing AIG Insurance Co. in a class action coverage dispute with the Ontario government. The firm’s new lawyer, Michael Foulds, represented Ontario in the same matter while he worked at Theall Group LLP. Foulds now spends 50 to 60 per cent of his time working with his colleague Douglas McInnis, who is representing AIG in the Ontario-AIG matter. In fact, McInnis and Foulds work together on other files involving AIG.

Despite the province’s argument there’s a high risk of an inadvertent leak of confidential information from Foulds to McInnis, Justice Alfred O’Marra found Lloyd Burns McInnis put up a sufficient ethical screen at the right time to significantly reduce this risk.

“LBM has been pro-active in minimizing the risk of disclosure of confidential information,” the judge said.

“In considering the timely and comprehensive compliance by LBM with the institutional measures set out in the guidelines, in addition to appointment of a supervising senior partner, and isolating Mr. Foulds from any Ontario-AIG matters, I find that a reasonably informed person would be satisfied that the use of confidential information had not occurred or would likely occur, and it is in the interests of justice to allow Mr. McInnis to remain as AIG’s counsel of choice.”

Lloyd Burns McInnis also consulted with Theall Group about its ethical screen before Foulds’ arrival at the firm. It banned all communication between Foulds and other staff regarding the case with serious penalties for breaching the ban.

Davis LLP lawyer Gavin MacKenzie, who represented Lloyd Burns McInnis, says even large law firms can take notes from the steps the firm took in this case.

“I think it’s a good example for small firms and large,” he says, adding if large firms follow the same approach, “it’s highly likely” that the courts will be satisfied.

O’Marra said the requirement for a sufficient ethical screen is not a complete lack of interaction between the tainted lawyer and other lawyers working on the case, which would be impossible in a small law firm context.

“Even with the ethical screen in place, the absolute prevention of inadvertent disclosure can never be assured,” he said. “Inadvertent disclosure could occur in even the most structured of professional environments. The issue is whether reasonable precautions have been taken to minimize the risk.”

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