‘Minor’ advantage not enough to disqualify former in-house lawyer from case

A British Columbia Supreme Court judge refused to disqualify a lawyer from a case this week even though the lawyer was previously in-house counsel for the company his current client is suing.

It’s unusual for Canadian companies to request the removal of their former in-house counsel from a case on the basis of ‘playbook information,” says Malcolm Mercer.The Manufacturers Life Insurance Co. argued its former in-house counsel Jan Fishman should be removed as counsel of record for the plaintiff in an insurance matter because he has knowledge of Manulife’s business practices, litigation strategies, and how claims personnel perform in examinations for discovery.

Although Fishman worked at Manulife for 10 years, the company did not argue he had anything to do with the plaintiff’s case during his time there. In fact, the plaintiff did not submit an application for long-term disability benefits until 13 months after Fishman’s departure from Manulife.

“Manulife’s application hinges on Mr. Fishman having insight into the personalities and practices of the company. Whether confidential or otherwise, some or all of them would not be known by someone who had not worked at Manulife. The case therefore depends on a nuanced analysis of the potential use of confidential information,” Justice Elliott Myers said in McMyn v. The Manufacturers Life Insurance Co.

After analyzing the facts, Myers said the lawyer’s time at Manulife might give him a “minor” advantage, but it’s not a particularly distinct advantage than one an experienced lawyer in his field might have.

“Knowledge of how Manulife personnel perform in examinations for discovery might provide a minor advantage. But any lawyer who had previously done an examination for discovery or cross-examination in trial of that witness would also have that insight,” said the judge.

“It is to be borne in mind that Manulife as a major [long-term disability] insurer in Canada is an institutional litigator. This is not a one-off claim being made against it. Any lawyer specialising in LTD claims would be expected to act against Manulife multiple times and most likely come up against the same Manulife personnel,” Myers noted.

In the U.S., the kind of information Manulife alleged Fishman had in this case is called “playbook information,” says Malcolm Mercer, a partner at McCarthy Tétrault LLP and member of the Canadian Bar Association’s taskforce on conflicts of interest.

Rather than knowledge of specific information, the allegation in these cases is that “you know how your adversary plays the game,” he said.

It’s highly unusual for companies in Canada to request the removal of their former in-house counsel from a case on such basis, Mercer added.

The ruling in this case was both “thoughtful” and “well-reasoned,” according to Mercer.

“What the judge did was look first at the nature of the information, which was an issue, and he rightly considered whether or not the lawyer had any information that was factually relevant to the case.”

In the majority of cases where lawyers have been successfully disqualified, it was because they had information that’s factually related to the case at hand, Mercer said. A bank, for example, may successfully argue that its former counsel has prejudicial knowledge of when the bank will settle in enforcement matters and when it won’t.

In the Manulife case, the judge did not find any evidence of Fishman having specific insider knowledge. Myers said it was up to Fishman’s client to show that she fell within the terms of a policy, which is public.

“The terms of the policy are certainly not secret. It cannot be argued or assumed that Manulife has some secret interpretation of the policy that Mr. Fishman has knowledge of,” said Myers. “It is hard to see that knowledge of the claims people would have any effect on Mr. Fishman’s train of inquiry on that issue, including the handling of examinations for discovery.”

Mercer says this area of law is a balancing act of three factors:
•    protecting clients from misuse of confidential information,
•    making sure clients are not unnecessarily deprived of their choice of counsel, and
•    permitting reasonable mobility for lawyers.

If you’re going to remove a lawyer, you’ll need “a fair presentation of a real problem,” he adds.

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