Exonerated lawyers sue LSUC for $22 million

Two former Torys LLP partners exonerated of professional misconduct accusations are suing the Law Society of Upper Canada for $22 million.

Dorothy DeMerchant and Darren Sukonick have brought a lawsuit against the provincial regulator for negligent investigation and malicious prosecution after the two former lawyers successfully fought allegations they had acted in a conflict of interest when representing Conrad Black’s Hollinger group of companies in the sale of its CanWest Global newspaper assets.

The two former partners, who have both since left the profession, have also claimed misfeasance in public office, abuse of process and libel.

“Any honest, competent investigator, with understanding of transactions involving corporate groups, would have known that there were no breaches of the Rules by the plaintiffs in the Transactions,” said the statement of claim that was filed on March 28.

After investigating DeMerchant and Sukonick, the law society accused them of acting in a conflict of interest on a number of transactions between 2000 and 2003. Eight years later and after 138 days of hearings, a disciplinary panel found that there was “no evidence to counter that put forward by the [plaintiffs].”

In 2013, the law society then launched an appeal of the hearing panel’s decision. The law society’s tribunal appeal division later dismissed the appeal and recently awarded the two lawyers $1.3 million in costs, which lawyers have said was the highest costs ever awarded against the law society.

The process grew into an 11-year ordeal for the two former lawyers, who claim it had adverse effects on their health, reputation and livelihood.
The appeal division panel that awarded costs to DeMerchant and Sukonick found that the proceedings were not unwarranted at the beginning, but they became so after the law society failed to provide evidence to contradict testimony by an expert witness that held the two were following standard practice in the corporate bar.

In their statement of the claim, the lawyers said the law society had enough evidence after its investigation to conclude that they had not acted in a conflict of interest and that they had not breached the Rules of Professional Conduct, and yet the regulator pursued a hearing that the lawyers said was “entirely unnecessary.”

The claim said that the law society felt compelled to initiate and continue the investigations against DeMerchant and Sukonick because of public pressure it was facing at the time to discipline lawyers that had worked on the transactions.

“ . . . As would later become apparent, the Law Society had resolved to conduct a show trial and to see it through to a conclusion no matter how frail its case,” said the statement of claim.

The defamation part of their claim concerns a statement the law society made after they were exonerated, which the lawyers said was meant to “mean that the plaintiffs were in fact guilty of professional misconduct.”

The two lawyers are pursuing $20 million in special damages, $1 million in general damages, $500,000 in aggravating damages and $500,000 in punitive damages.

Sue Tonkin, a spokeswoman for the law society, said the law society has been served with the lawsuit and is currently reviewing it.

Free newsletter

The Canadian Legal Newswire is a FREE weekly newsletter that keeps you up to date on news and analysis about the Canadian legal scene. A separate InHouse Edition is delivered every two weeks, providing targeted news and information of interest to in-house counsel.

Please complete the form below to receive the weekly Canadian Legal Newswire and/or the Canadian Inhouse Legal Newswire.

Recent articles & video

Daphne Dumont to receive CBA’s Cecilia I. Johnstone award

Quebec taking harsh line on cannabis edibles

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?

Copyright law: set for an overhaul?

Corporate Counsel Survey 2019 closes on Monday, Aug 26

When Legal Aid is a political prop, Access to justice suffers

Most Read Articles

Canadian Judicial Council seeks leave to SCC in Girouard case

The Ontario government is destroying university legal clinics

Quebec taking harsh line on cannabis edibles

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?