In “The Lawyer as Friend,” a famous 1976 law review article, Charles Fried proposed that a lawyer should act as a “special-purpose friend” to each of his or her clients. Within the bounds of the retainer, Fried argued, the lawyer must adopt the interests of the client as their own — just as a friend would.
This analogy helps clarify why conflicts of interest are so toxic to lawyer-client relationships. A conflict of interest usually arises because a lawyer’s loyalty to a client is undermined by the their work for other clients, or by the lawyer’s own personal interests.
A client feels betrayed if they learn (for example) that their lawyer is taking legal fees from the client’s adversary, or learns that the lawyer has some other good reason to want the client’s cause to fail. The stab — like the wound from his friend Brutus that killed Julius Caesar — is especially painful because it’s a stab in the back.
When other people witness such betrayals, the reputation of the enitre legal profession suffers. After all, if people can’t trust us to loyally serve our clients and advance their legitimate interests within the bounds of the law, then what good are we to society?
A Conflict Papered Over?
A large Bay Street law firm has been credibly alleged to have acted in a conflict of interest, thanks to some outstanding investigative reporting by Zach Dubinsky of CBC News.
For several years, McMillan LLP has been a go-to law firm for the Paper Excellence corporation. This large Canadian forestry company has been represented by McMillan on transactions worth over $6 billion, including its acquisitions of Domtar and Catalyst Paper. Those deals would have generated very substantial legal fees for McMillan.
The ethical problem arose when McMillan took on a new retainer, for the Forest Stewardship Council (FSC). That client’s main work is administering the “FSC” certification, which you may have seen stamped on some wood products:
The Certification Business, and its Temptations
This stamp is meant to guarantee to consumers that the wood they are thinking of buying was produced in a sustainable and responsible manner. Certifications like FSC can be helpful to consumers and make a real positive difference in the world, if they are legitimate and based on verified information about the certified products.
The problem is that it’s manufacturers who pay FSC for the right to use the stamp. Using the stamp helps sell more product. And so there is a pecuniary temptation for certifiers like FSC to adopt lax rules, and to look the other way if a fee-paying manufacturer breaks them.
One of FSC’s rules is that, in order to remain certified, a company must not only avoid destructive forest practices, but must also not be “indirectly involved” with companies that do so. In November 2023, Greenpeace Canada complained to FSC that Paper Excellence was indirectly involved with Asia Pulp and Paper. That company had been decertified by the FSC in 2007 for destructive forestry practices. Drawing on the CBC’s reporting, Greenpeace alleged that Paper Excellence was effectively a corporate sibling of Asia Pulp & Paper, insofar as both were controlled by Indonesian forestry company Sinar Mas. This type of corporate relationship, if substantiated, would constitute “indirect involvement” according to FSC rules and disqualify Paper Excellence from using the stamp.
That allegation was contested by Paper Excellence, and so the FSC sought corporate law expertise to conduct a review.
Feeling Conflicted?
The firm that FSC hired was none other than McMillan LLP. As readers will recall, McMillan had cashed a number of cheques from its client Paper Excellence in the past, and probably hoped to do so again in the future. And yet, in this new retainer for FSC, McMillan was to neutrally and dispassionately form an opinion about whether Paper Excellence should lose its lucrative access to the FSC certification.
McMillan LLP concluded that Paper Excellence should keep that certification. Whatever the merits of that conclusion, it is hard to understand how it could have been ethical for McMillan to accept the FSC brief. Large sums in future legal fees from Paper Excellence could have been sucked out of McMillan’s posh Bay Street headquarters, had the firm ruled the other way.
By taking this retainer, the firm effectively became adjudicator of Greenpeace’s case against Paper Excellence. A judge who was very recently employed by a certain corporation should clearly not be assigned to hear a lawsuit involving that corporation (especially if they might be paid by them again in the near future). Likewise, McMillan seems a very problematic choice of adjudicator for this case impugning its former (and potentially future) fee-paying client.
Is Client Consent Enough?
As noted above, the garden variety conflict of interest is problematic because it damages client interests. But in this case, the clients had no problem with it.
FSC told the CBC that it had “conducted a conflict of interest check and found none,” prior to retaining McMillan. It presumably learned of the firm’s prior work for Paper Excellence in conducting this check
But that doesn’t make the conflict of interest go away or render it unproblematic. Consent of the client does not automatically resolve a conflict-of-interest problem, under Canada’s Model Code of Professional Conduct. After all, the question of whether McMillan is a suitable law firm to invetigate Paper Excellence on behalf of FSC doesn’t only affect Paper Excellence and FSC. It affects all consumers who want to be able to rely on the FSC certification as a true sign of ethical forestry practices. It affects every Canadian — whether or not they buy wood — because we all have an interest in upholding a legal profession able to act loyally and professionally.
Will the Law Society Investigate?
I submitted a complaint to the Law Society about this apparent conflict of interest on May 25th 2024. This was very easy to do via the online portal, as the CBC’s investigative reporting team did all the hard work inolved in uncovering the problem. Six months later the LSO case status on my complaint is still “in progress.” I’ll keep you posted!
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