Fine Increased For Corporate Conflicts Of Interest

The British Columbia Law Society Review Board increased the fine imposed for a corporate counsel's conflicts of interest

The matter before this Review Board is the appropriateness of the $5,000 fine assessed against the Respondent for professional misconduct.  The Respondent was found to have participated in conflicts of interest over the course of several years, in multiple situations involving his role as corporate counsel, while simultaneously acting for opposing shareholders.  As well, he acted as legal counsel in a divorce for one of the shareholders, and in matters involving the arrangements concerning his client’s addiction issues.

The misconduct was serious

In this matter, the Respondent acted for and against different shareholders of a company in two separate share sales while still purporting to act as corporate counsel.  The Respondent also acted on behalf of one of the shareholders (“WD”) in a divorce proceeding from his wife, who was another shareholder, where the valuation of the company and the value of the shares would impact all the shareholders.  Indeed, the Respondent’s ties to WD were further problematized when at one point, the Respondent held a power of attorney for WD for the sale of the matrimonial home.  Finally, the Respondent acted in matters arranging for WD’s drug rehabilitation treatment program.

 The Review Board finds that the failure of the Respondent, as a senior lawyer, to identify and avoid these conflicts of interest is serious misconduct.

Good intentions

In the consideration of intention as a mitigating factor, we find the hearing panel erred in placing too much weight on the Respondent’s “good intentions”.  While the hearing panel noted that the Respondent did not stand to gain financially or otherwise, the Respondent, as an experienced lawyer, had other legitimate and viable options to avoid the conflicts of interests.  The Respondent could have referred out the work or advised the clients to obtain independent legal advice.  The Respondent wanted to resolve the client’s financial difficulties and considered the matter urgent, but that objective did not necessitate the Respondent acting contrary to his professional obligations.

The Respondent’s altruistic intention to help his client overcome financial difficulties is considered by the Review Board as a mitigating factor, but not to the level of being “highly” mitigating as found by the hearing panel.

Sanction

The Review Board finds that the hearing panel in the present matter erred in departing from the joint submission.  The $12,000 fine proposed in the joint submission was fair and reasonable, particularly having regard to the nature and gravity of the Respondent’s misconduct and his PCR.  Further, the proposed fine would not bring the administration of justice into disrepute and is not otherwise contrary to the public interest.  The acceptance of this fine would not lead reasonable and informed persons, aware of all the relevant circumstances, to believe that the proper functioning of the Law Society disciplinary system had broken down.

The Review Board orders that the $5,000 fine is set aside and that a fine of $12,000 be substituted in its place.

(Mike Frisch)