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“[No] area of the law governing lawyers consumes more lawyer time, creates more confusion and frustration, or causes lawyers more difficulty in their practices, than the rules governing conflicts of interest.”[1] Yet lawyers inescapably have to address conflicts issues; in recent years the number of law firm mergers,[2] implosions,[3] and lateral hiring of attorneys has dramatically increased.[4] When lawyers join new firms and potentially bring clients or confidential client information with them, conflicts of interest arise and must be resolved.[5] Resolving these issues in the case of a single jurisdiction is no easy task, especially where multiple lawyers are implicated. For example, the recent dissolution of Canadian law firm Heenan Blaikie caused hundreds of partners and associates to look for new firms to join.[6] Those lawyers who choose to join other firms may have limited options of potential firms to join because of conflicts of interest rules. Firms looking to bring in rainmakers or star associates may be unable to hire who they want because the new lawyer’s previous work may be in conflict with the work of an existing firm’s client. Any time a new lawyer is hired or a new client is brought on, there exists a possibility of a conflict. Sometimes this even means that lucrative business must be sacrificed because of the existing presence of a minor retainer.[7] Every time a conflict check is run, firms must decide whether a conflict arises and whether it can be cured. This task is further complicated by complex rules and unique facts.

Having said that, and despite the difficulty that may be encountered in hiring lawyers as a result of the Heenan Blaikie situation, any concerns that may be raised over conflicts of interest are ultimately confined in scope and complexity when they arise in a single jurisdiction or country. This is because a uniform rule is applied. For example, when a Canadian law firm merges or dissolves, the same rule applies regardless of whether the lawyer is joining a new firm in British Columbia, Alberta, or Ontario.[8]

But in a world of increasing globalization and law firm expansion, the situations that give rise to conflicts of interest problems are not always confined to one jurisdiction or country. Consider the following scenario:

Mary is a finance partner who works primarily out of Firm A’s Toronto office. She spends some of her time working out of Firm A’s New York office and is licensed to practice in both Ontario and New York. She has been hired by BorderCo, which is looking to build a pipeline across the Canada—United States border. As part of its development strategy, BorderCo wishes to acquire TexCo, a company specializing in pipeline design and construction. BorderCo is incorporated in and maintains its head office in New York. TexCo’s head office is in Texas but the company is incorporated in Delaware. Midway through the deal, a large national firm dissolves and Mary’s firm has an opportunity to hire Chad, an industry expert in oil and gas acquisitions and divestitures. Chad has a big book of business and would be a great addition to the firm. He has worked for most of his career in Texas, but is also licensed to practice in Alberta. Mary’s firm would like to hire Chad in its Alberta office to do some work for some clients in the oil sands industry. However, on a previous transaction, Chad worked for TexCo on a pipeline development project in the Marcellus Shale in Pennsylvania although the retainer has since been terminated. BorderCo plans to tie in TexCo’s existing Pennsylvania pipeline into BorderCo’s Ontario pipeline networks. TexCo is unwilling to waive conflicts.

Can the Alberta office of Mary’s firm hire Chad? Which jurisdiction’s conflicts of interest rules should apply to determine whether Chad may join Mary’s firm?

If Canadian or Delaware law applies, Chad is free to join Mary’s firm, subject to appropriate institutional mechanisms such as ethical screens so as to prevent the dissemination of TexCo’s confidential information to other members of Mary’s firm.[9] If New York or Texas law applies, ethical screens cannot be applied to cure the conflict and Chad would be prohibited from joining Mary’s firm due to the conflict of interest.[10]

Unfortunately, the current state of the law regarding conflicts of interest in both Canada and the United States does not resolve this problem. No uniformly accepted choice of law rule applies to the law governing lawyers;[11] both lawyers and their law firms have little direction as to how to resolve conflicts of interest problems when multiple jurisdictions and different law-governing-lawyers frameworks are implicated.[12] Every day, modern law firms face new conflicts of interest problems as lawyers move and new clients or matters are taken on. Each time a firm runs a conflicts check that involves another jurisdiction, the question of which laws apply and govern must be addressed, yet lawyers have no guidance as to how to undertake this task.

This paper seeks to address this problem. It attempts to answer the question: when multiple jurisdictions are implicated as a result of multiple licences, which jurisdiction’s law governing lawyers should apply? Part I investigates the three separate issues that arise when a lawyer or law firm has a potential conflict of interest and analyzes them in the context of jurisdiction and extraterritoriality. Part II examines both Canadian and American law dealing with conflicts of interest, noting the commonalities and differences between them. Part III evaluates whether the current choice of law rules for agency or contract may apply as is to the law governing lawyers. Part IV proposes a principled approach, based in the “proper law,” to determine which rule should apply when faced with conflicting rules in the law governing lawyers. Part V applies the proposed framework to the conflicts of interest test scenario above.

I. The Tripartite Conflicts of Interest Problem—Resolving Issues of Jurisdiction and Extraterritoriality

When a conflict of interest issue arises, three separate concerns must be addressed. First, the lawyer or firm may face a motion for disqualification, preventing further representation of a client on the transaction or dispute.[13] Second, the individual lawyer might be subject to disciplinary proceedings in front of a provincial law society or state bar.[14] Third, the client may sue the lawyer or firm for breach of fiduciary duty.[15] Each of these scenarios raises different considerations regarding jurisdiction, extraterritoriality, and ultimately, choice of law. Questions of jurisdiction and extraterritoriality must be addressed before considering choice of law. If a tribunal[16] does not have jurisdiction over either the matter or the parties, then no conflict of laws problem arises—a tribunal without jurisdiction may not affect substantive rights. Thus, in the context of conflicts of interest, without proper jurisdiction, the court cannot disqualify counsel, nor can a disciplinary panel sanction a lawyer. If the laws or rules governing the lawyer’s conduct do not apply extraterritorially, no problem of competing rules or dual obligations arises because the lawyer only has to comply with the law of the jurisdiction in which the lawyer is located.

This article analyzes the first and second scenarios as the most prevalent and raising the most uncertainty when it comes to conflict of laws and inter-jurisdictional practice. The third scenario (breach of fiduciary duty) only arises if in fact the conflict of interest resulted in the lawyer or firm failing to fulfill fiduciary duties to the client, and is ultimately addressed by existing choice of law rules for tort and unjust enrichment.[17]

A. Motions for Disqualification

A motion for disqualification as a result of a conflict of interest may arise in litigation or in the context of a transaction. Courts resolve questions of jurisdiction, extraterritoriality, and choice of law differently depending on the circumstances in which the disqualification motion arises, taking into account applicable common law principles.[18] A court’s decision may also be informed by the codes of professional conduct, but a court is not bound by them.[19]

1. Litigation

The motion for disqualification based on conflicts of interest most frequently arises in the context of litigation.[20] In this situation, the court is already seized of a dispute and is adjudicating the matter between the parties before it.[21] The court’s power to disqualify counsel arises from its inherent power to control the matters before it—to ensure the fair administration of justice.[22] Because the court exercises jurisdiction over the administration of justice, traditional conflict of laws questions of jurisdiction and extraterritoriality need not be raised. This is because the question of jurisdiction over the parties will have already been resolved—the dispute is already ongoing before the court and thus the court will already have determined that it has the necessary personal jurisdiction over the parties (and therefore the lawyers) before it. The jurisdiction exercised in the disqualification motion is over the administration of justice itself (i.e., the fairness of the proceeding) and thus is not affected by extraterritoriality or choice of law concerns given the proceeding’s inherent connections to the forum.[23] In this situation the disqualification of a lawyer or law firm occurs because the court is ensuring that the proceedings do not impugn the integrity of the legal system as a whole—the court is concerned with how it and the justice system is perceived in the eyes of the public. In comparison to the transactional situation discussed below, the protection of the client becomes almost a secondary focus. The primary motivation for the disqualification of the lawyer is the maintenance of fairness and integrity of the judicial process. Thus, in the context of litigation-based disqualification motions, no conflict of laws concerns regarding jurisdiction or extraterritorial application of laws are raised because ultimately the court will apply its own law (the lex fori) following the long established principle of private international law that “procedure” is governed by the law of the forum.[24]

2. Transactions

The situation is different in a transactional setting. Unlike the litigation context, the court is not already seized of a matter and as such the motion for disqualification must be brought before it by way of originating an application or complaint. The aggrieved client requests that the court disqualify the lawyer or law firm.[25] Because this is a new proceeding and not an interlocutory motion, the court must determine whether it may assume jurisdiction over the parties (i.e., the law firm or lawyer).[26] In most contexts this is easily done, as both parties are present in the jurisdiction;[27] however, in an inter-jurisdictional context, the court must satisfy itself that the constitutional requirements for assumed jurisdiction are met.[28] Only then may it assume jurisdiction over the dispute.

The assumption of personal jurisdiction over the parties is important in the transactional context and ultimately has significant implications for the law it will apply to determine whether the law firm or lawyer must be disqualified. In the litigation context, the court focuses on the administration of justice for the matter before it, concerned with the public’s perception of its fairness.[29] In the transactional context, the heart of the dispute is the relationship between the client and the law firm and so the primary concern becomes protecting the client from potential harm resulting from the lawyer’s actions.[30] Most disqualification motions are governed by forum law (because no other law or jurisdiction is implicated), but in the situation where a lawyer is licensed in multiple jurisdictions, the court may have to determine which law governs the dispute.[31] In the litigation context the law of the forum dictates the substantive law applied because the court is concerned about the administration of justice—how it will be perceived in the eyes of the public if it allows this alleged conflict to continue.[32] In a transaction the court may find that the law of another jurisdiction should apply instead of the forum’s law—a determination it is free to make because the focus of the inquiry is less on the appearance of fairness in the forum, and more on protection of the rights of the client.[33] Concerns over the administration of justice may still factor into the court’s analysis,[34] but ultimately the court will likely look to the law governing the lawyer-client relationship, as this is the law at the heart of the dispute and therefore the mechanism by which the matter is brought before the court.[35]

For example, if a Michigan company chooses to file a disqualification application in an Ontario court because the company’s former lawyer is now acting for an Ontario business in a transaction where the Ontario business takes an adverse legal position to the Michigan company, the Ontario court will face the application of two possible rules: the Michigan rule or the Ontario rule. The only way to determine which law should apply is through a choice of law rule[36]—a rule that this article argues should be informed in the transactional context by an evaluation of which jurisdiction has the closest connection to the relationship between the lawyer and the client.

B. Disciplinary Proceedings

Law societies and state supreme courts may discipline a lawyer for breaching his or her duty to avoid conflicts of interest.[37] While prosecutions for conflicts of interest breaches are rare, the possibility of discipline provides a context in which to evaluate conflict of laws issues as they relate to professional discipline in general. In a professional discipline case, the disciplinary body is concerned with the actions of the individual lawyer,[38] and as such the questions of jurisdiction and extraterritoriality are different than those posed by the disqualification motion. In a disciplinary proceeding the disciplinary body applies the rules of professional conduct to determine whether the lawyer has violated the obligation to avoid conflicts of interest.[39]

It is trite law that an adjudicative tribunal may only determine the rights of a person subject to the tribunal’s jurisdiction.[40] In the context of lawyer discipline, the jurisdiction of the law society or state supreme courts arises from the lawyer’s law licence.[41] Thus, a Canadian law society may not discipline a lawyer licensed only in the United States for conduct occurring in Canada and vice versa.[42] However, when a lawyer is licensed in two jurisdictions (for example, Ontario and New York), the lawyer, by virtue of his or her membership, submits to the jurisdiction of both the law society and the state bar.[43] This creates a potential conflict of laws problem.

The dually licensed lawyer is now subject to two rules of professional conduct. One will always apply extraterritorially, proscribing the manner in which the lawyer must act.[44] For example, a lawyer who is licensed in both Ontario and New York is subject to the rules promulgated by the Law Society of Upper Canada (LSUC) and the New York State Court of Appeals (New York’s highest court). If the lawyer lives in New York, then the Ontario rules apply extraterritorially. Under textbook private and public international law, the laws of one nation may not apply within the borders of another nation.[45] To do so would infringe on the State sovereignty of the other nation.[46] Because of this principle, Canadian and American constitutional principles limit the ability of provinces and states to legislate extraterritorially.[47] Thus, it appears that Ontario would not be permitted to proscribe the conduct of the lawyer living in New York.

However, this is not the case. Nations do infringe on the sovereignty of other nations.[48] In most cases, so long as the infringement on sovereignty is slight, and is not an exercise of a nation’s enforcement power, the aggrieved State will not be offended by the infringement.[49] Thus, in reality, and despite the constitutional and international law limitations on extraterritorial application of laws, provinces and states are able to regulate the conduct of member lawyers outside of their borders. This is permitted because the enforcement of the proscriptive rules occurs within the forum State (of which the lawyer is a member) and the adjudication affects only the licence granted by that State. Thus, the LSUC is permitted to discipline the dually licensed lawyer for her New York conduct, because the disciplinary proceeding only affects her Ontario licence.[50] While this addresses the questions of jurisdiction and extraterritoriality, a problem arises if the two applicable rules are in conflict with or diverge from each other.[51] The lawyer in this situation faces a dilemma: compliance with one rule means breaching the other. Without further guidance the lawyer is uncertain of how to act and which obligations to uphold. Choice of law rules provide a measure of certainty for dually licensed lawyers, helping to identify which rules will apply in a disciplinary proceeding.

II. The Multijurisdictional Dilemma for Conflicts of Interest

While determining when conflicts arise may be difficult for the individual lawyer (and is often the focal point discussed by academic commentary on conflicts of interest),[52] the difficulties increase when it comes to performing conflicts of interest analysis for law firms with transborder or international practices.[53] As the practice of law becomes increasingly international, and as law firms continue to expand, open new offices, merge with other law firms, and most importantly, cross jurisdictional borders, broader and more difficult conflicts of interest issues arise.[54] When lawyers and law firms enter into new jurisdictions, they become subject to the new forum’s conflicts of interest rules.[55] These rules may be substantially different than the rules of their home jurisdiction and have the potential to create serious problems—disqualification as counsel, disciplinary action, or civil suits.[56]

This section explores the rules for both current and past conflicts as applied in Canada and the United States. It notes that despite seemingly stark differences between the concurrent conflicts rules, the Canadian and American rules are substantially in agreement. The rules regarding past clients are potentially more disparate depending on whether the individual state in question has adopted the 2009 amendments to ABA Model Rule 1.10.

A. Current Clients—Substantial Uniformity

Both Canada and the United States generally prohibit representing two clients with adverse interests at the same time.[57] This comes as no surprise given that such a representation would cause a lawyer to breach his or her fiduciary duty to one if not both of the clients.[58] On a first reading, it appears that the Canadian and American rules diverge, but a deeper analysis of the two rules indicates that in application, the rules are substantially the same.

The Canadian view on the prohibition on representing concurrent clients with adverse interests is expressed in the cases of R v. Neil, Strother v. 3464920 Canada Inc., and McKercher v. Canadian National Railway. The Supreme Court of Canada identified a bright line rule, which states that

a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client—even if the two mandates are unrelated—unless both clients consent after receiving full disclosure ... and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other.[59]

This rule has been incorporated into the various provincial codes of conduct as well as into the Federation of Law Societies of Canada’s Model Rules of Professional conduct.[60]

The American rule regarding concurrent client conflicts is found in ABA Model Rule 1.7 and section 128 of the Restatement of the Law Governing Lawyers.[61] Both provide that there is a concurrent conflict of interest if:

  1. the representation of one client will be directly adverse to another client; or

  2. there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client.[62]

On first impression it appears that there are distinct differences between the two rules—most notably the inclusion of “immediate” in the Canadian rule, and the absence of an explicit material limitation as seen in section 128 of the Restatement.[63] However, in reality these two rules are virtually identical. First, what impact does the inclusion of “immediate” have on the bright line rule? While the Supreme Court of Canada has included it in the test, the Court has provided no context as to how it is to be interpreted or applied. It is possible that the inclusion of “immediate” in the test is superfluous, as any conflict of interest between two current clients cannot be anything but immediate.[64] Consider the following example: Sam is representing and has an ongoing retainer with Company A. Company B approaches Sam about doing some legal work for them that is directly adverse to, and potentially undermining the legal work Sam is performing for Company A. Because Sam has an ongoing retainer with Company A, any adverse work that Sam does by Company B would be immediately in conflict with Company A’s legal position. It would then fall within the realm of the concurrent client rule articulated in Neil.[65] Moreover, if Sam’s retainer with Company A was only for a fixed period of time, and has expired by the time Company B approaches Sam to do adverse legal work, Sam’s conduct is governed by the rule regarding conflicts between past and present clients.[66] Thus, in any situation of concurrent retainers, any adverse legal positions between two clients will result in an immediate conflict.

Second, in Neil, Justice Binnie adopted the Restatement’s definition of “conflict,” which applies when the bright line rule is inapplicable.[67] In doing so he incorporated the “material limitation” concept from § 128 of the Restatement and Model Rule 1.7 into the Canadian law on conflicts of interest. While the Court’s articulation in McKercher uses the words “substantial risk”[68] and ABA Model Rule 1.7 uses “significant risk,” it is unlikely that there is a true distinction between these two adjectives.[69] Moreover, the Restatement uses “substantial risk” to evaluate conflicts of interest—yet another indication of the similarities between the two rules.[70]

Third, Comment 6 to ABA Model Rule 1.7 clearly indicates that the directly adverse prohibition includes matters that are wholly unrelated to each other, thereby matching yet another perceived discrepancy between the two articulations of the rule.[71] The Supreme Court of Canada has also confirmed that the bright line rule only applies to a client’s “legal” interests,[72] not to its economic interests, a distinction echoed in Comment 6 to ABA Model Rule 1.7.[73]

Thus, it appears that the Canadian and American rules are in agreement for concurrent client conflicts. It must be noted, however, that the recent decision of the Supreme Court of Canada in McKercher has confirmed an exception regarding “professional litigants” that is not currently present in the American rule:[74] “the bright line rule does not apply in circumstances where it is unreasonable for a client to expect that its law firm will not act against it in unrelated matters.”[75] The Court noted that only exceptional cases will fall within the professional litigants category, and courts must consider them on a case-by-case basis.[76] It itself offered no example of the sort of case that would do so and concluded that, on the facts, the exception was not applicable. It did so despite the fact that the applicant, Canadian National Railway, had numerous files with numerous lawyers and had been viewed as a professional litigant by the Saskatchewan Court of Appeal. Thus, while the professional litigants exception exists as an area of divergence between the Canadian and American rules, and accordingly, creates a possible area of conflicting obligations, the nature and extent of this divergence is not especially clear and seems unlikely to be particularly significant. As a consequence, and despite this one area of divergence, the two sets of rules on concurrent client conflicts are substantially the same.[77]

B. Past Clients: The Canadian Rule—MacDonald Estate v. Martin

In MacDonald Estate v. Martin, the Supreme Court established the rules governing the conflicts of interest analysis for past clients or past matters. Its approach has been incorporated into the various professional codes of conduct.[78] In MacDonald Estate, Justice Sopinka held that Canadian courts should apply a test based upon the possibility of mischief (i.e., the potential misuse of confidential client information) and traced the rule to the duty of loyalty and the idea that “the public represented by the reasonably informed person would [need to] be satisfied that no use of confidential information would occur.”[79] Thus, when evaluating potential conflicts of interest regarding past clients, if

there exist[s] a previous relationship which is sufficiently related to the [new] retainer ... the court should infer that confidential information was imparted unless the solicitor satisfies the court that no information was imparted which could be relevant.[80]

A rebuttable presumption is created, and it is for the lawyer (or law firm) to prove “on the basis of clear and convincing evidence, that all reasonable measures have been taken to ensure that no disclosure will occur by the ‘tainted’ lawyer to the member or members of the firm who are engaged against the former client.”[81]

In sum, in Canada courts and law societies presume that confidential knowledge will be shared with other members of the firm; however, firms may use institutional mechanisms such as ethical screens to rebut the presumption of sharing confidential client information.[82] While each of the law societies, as noted, have incorporated the rule in McDonald Estate into their respective codes of conduct,[83] the Federation of Law Societies Model Code has perhaps the most comprehensive overview of the MacDonald Estate rule. The Model Code also discusses the rule’s implications for law firms hoping to use institutional mechanisms to avoid imputation of confidential information.[84] The Model Code’s guidelines call for a purposive analysis in determining whether the institutional mechanisms are sufficient.[85] At the heart of the investigation lies the determination of whether the confidential client information has been protected and isolated from those who might be in a position to improperly use it. These guidelines include prophylactic suggestions which include: physically isolating and restricting the tainted lawyer’s access to files; not discussing the new matter with those who are not directly involved; physically placing the tainted lawyer and the lawyer’s work station in a different area than the lawyers working on the new matter; using different associates and support staff; signing affidavits and undertakings; and distributing the matter if possible to a different office.[86]

C. Past Clients: The U.S. Rules–Imputation and the Onset of ABA Model Rule 1.10

The rules regarding past client conflicts of interest in the United States are much more disparate than the Canadian rule.[87] This is because not every state has adopted the current version of ABA Model Rule 1.10; certain states use the pre-2009 version of ABA Model Rule 1.10 (or the state’s functional equivalent).[88] Thus two scenarios arise: states that have adopted current ABA Model Rule 1.10 and states that employ the “historical” American past conflicts of interest rule.[89]

Current ABA Model Rule 1.10 (and the courts that follow it) allows firms to avoid the imputation of confidential information to other lawyers within a firm so long as the firm has preemptively employed screening mechanisms to ensure that the tainted lawyer does not share or have access to confidential client information that would result in a conflict of interest.[90] This article refers to this rule as the “presumptive rule.” In this situation, the Canadian and American rules are harmonious.[91] Both result in a rebuttable presumption of sharing confidential information unless the law firm can establish that sufficient mechanisms have been implemented to protect the confidential information prior to the creation of the conflict of interest.[92] Thus, if the offices of firms involve jurisdictions that apply the “presumption” found in MacDonald Estate and current ABA Model Rule 1.10 (for example, Canada, Delaware, and Michigan), no problem arises with respect to competing conflicts of interest rules.[93]

However, not all states have adopted the 2009 amendment to ABA Model Rule 1.10.[94] Historically, American courts (and the ABA Model Rules) have adopted a strict application of partnership and agency law to impute the knowledge of one lawyer to the other lawyers in the firm.[95] This rule, sometimes referred to as the “substantial relationship” test,[96] disqualifies the entire firm from representing a client based on the joining of a single tainted lawyer, regardless of whether the lawyer works in the same office or in a satellite office halfway across the world.[97] This article will refer to this rule as the “historical rule.”

Interestingly, the Supreme Court of Canada expressly rejected the historical American past conflicts rule as being too rigid in its MacDonald Estate decision.[98] The Court was worried that situations might arise where it could conclusively be established that no relevant confidential information would be disclosed.[99] This was especially worrisome given the modern tendency for lawyers to move from firm to firm and for law firms to grow both in regard to the number of lawyers and the number of domestic and international offices.[100] Accordingly, for firms with offices in jurisdictions that apply the historical rule (for example, California, New York, and Texas), and other offices in jurisdictions that apply the presumptive rule (for example, Canada, Delaware, and Michigan), the firm will face the decision of which conflicts of interest rule should be applied.[101]

III. The Conflict of Laws Problem and Currently Proposed Solutions

As Part II illustrates, there are a number of situations where the American and Canadian rules on conflicts of interest may be in opposition. The question that inevitably arises is, which one should be applied? While this issue has been the subject of debate, much of the commentary has focused either solely on the conflict of laws issues or the issues in the law governing lawyers.[102] This creates a problem as consideration of both substantive areas dramatically impacts the available solutions to resolving the competing rules. This part first identifies some of the currently proposed solutions that exist outside of the realm of conflict of laws: uniform lawyer regulation and double deontology. It then looks at the application of existing choice of law rules. Uniform lawyer regulation is problematic because it does not address the broader scope of the law governing lawyers and does not address the situation internationally. Double deontology and existing choice of law rules are problematic because they do not recognize the unique problems implicated by the law governing lawyers (i.e., that the relationship between a lawyer and client is neither one of pure agency nor pure contract). Given these unsatisfactory solutions, this article concludes that a new framework must be developed.

A. Uniform Regulation

The resolution of the variances between ethical rules of various jurisdictions has been the subject of considerable academic commentary.[103] Many scholars, particularly in the United States, have advocated for either a blanket adoption of the ABA Model Rules,[104] or the creation of a federal regulator or federal ethics code for lawyers.[105] Canada has done this with a fair amount of success through the efforts of the Federation of Law Societies.[106] In theory, both of these solutions address the disparity between various states’ ethical rules; in the United States, however, the practical limitations of implementing either solution across all fifty states are staggering.[107] Additionally, neither solution addresses the problem on an international level, nor is applicable to the wider body of obligations contained in the law governing lawyers. Even if all states adopted the ABA Model Rules, or a federal regulator were created, there would still exist the problem of differing rules and laws regarding lawyers’ professional responsibilities internationally.[108] It is possible that an international organization to govern lawyers globally could be created,[109] or that countries could sign onto a multilateral treaty similar in scope and purpose to the Agency Convention[110] produced by the Hague Conference of Private International law,[111] but in reality the solution is much more likely to be found in examining where the lawyer-client relationship fits within the choice of law inquiry.

B. Double Deontology

Another possible solution outside of the scope of conflict of laws is what some courts and some academic commentators have termed the double deontology rule—that, where applicable, the harsher rule should be followed.[112] The double deontology rule has two strong benefits: (1) it ensures compliance with both legal rules; and (2) it provides a much greater degree of certainty in the application of the two legal rules.[113] The double deontology rule avoids the need for a choice of law analysis. However, in the context of conflicts of interest, the application of double deontology leads to the disqualification of a firm in many more situations than the application of the presumptive rule.[114] This is hardly desirable in an age of globalization, sophisticated international corporate clients, and large international law firms.[115] The list of lawyers with experience and expertise to advise these sophisticated clients in international deals is extremely small. Forcing lawyers to comply with the strictest conflicts of interest rules effectively eliminates the choice of counsel for these types of clients, as the pool of lawyers from which to draw is already small.[116] Applying the strictest of conflicts rules prevents clients from obtaining the legal advice they need. Additionally, because of the number of practitioners involved in large mega-transactions or large litigations is so small, a forced application of the strictest rule by virtue of double deontology could be used by counterparties to deprive “opponents of the services of the small field of experts capable of acting competently in the matter or, if not, significantly to delay the resolution of the main dispute.”[117] Nor should only the most lenient rule or law apply. To do so would risk forgetting completely some of the policy considerations that weigh so heavily in the stricter laws. A compromise between the two is preferred—it allows for flexibility where needed, yet protects the interests that need protecting (especially when parties are less sophisticated).[118]

Moreover, double deontology does not address the issue of how a lawyer should proceed in a case where two rules or obligations are in direct conflict.[119] While less of an issue in conflicts of interest where the worst outcome is that the lawyer is precluded from acting for the client, double deontology poses a much larger problem in other areas of the law governing lawyers. One such example is in the case of confidentiality where the international obligations of lawyers differ greatly. In some countries a situation may exist where disclosure is required, yet in others secrecy is necessitated. This situation is aggravated where breach of each of these obligations is coupled with a criminal offence.[120]

Additionally, forcing individual lawyers and firms to comply with the historical rule ignores the other State’s public policy considerations and does so in circumstances where that State’s rules may be more appropriately applied given the connection of the lawyer-client relationship to that jurisdiction.[121] The double deontology approach effectively permits individual States to tell neighbouring States that their considerations and weighting of jurisprudential values is of less importance or validity.[122] This might be acceptable within a single State (although, given the comments of the Supreme Court of the United States in Pennoyer v. Neff regarding sovereignty and equality of U.S. states, highly unlikely[123]), but it is surely unacceptable on the international stage where the value of comity is increasingly important.[124] A better mechanism must be identified to deal with the conflict between the presumptive rule and the historical rule. Some might argue that one State’s policy considerations will always be placed over those of another State any time two laws or rules differ. The difference is that an application of double deontology makes it so the stricter State always wins and never considers the fact that the more flexible State has valid considerations. While ultimately one law or rule will be chosen to apply, the approach advocated for in this paper—a choice of law rule—at a minimum takes into account the policy considerations of both States before selecting which law or rule to apply. It recognizes comity considerations instead of blindly applying a mechanistic rule.[125]

C. Existing Choice of Law Rules

Another possible solution is to look to existing choice of law rules.[126] Choice of law rules are used by courts to identify which substantive law should apply to a dispute involving multiple jurisdictions. There are existing choice of law rules for many substantive areas of the law including tort, contract, agency, unjust enrichment, marriage, divorce, trusts, and moveable and immovable property. Ultimately, the court must decide whether the applicable law is its own law (the law of the forum) or the law of the other jurisdiction. As the law governing conflicts of interest is grounded in the law of fiduciary duties (i.e., stemming from the duty of loyalty),[127] a possible choice of law rule is that of agency.[128] The lawyer is a special kind of agent for the client, so it makes sense that the choice of law rule for agency might be applicable. The lawyer-client relationship is also established in part by a retainer agreement.[129] Given that the retainer agreement is a contract, it is also possible that contract choice of law rules could be applied. Ultimately, we will see that both of these choice of law rules in their current form do not address some of the unique elements presented in the lawyer-client relationship. To apply to the law governing lawyers, each of these must be modified. These modifications are discussed in Part IV in the form of a proposed new framework for choice of law in the law governing lawyers.

1. Choice of Law Rules for Agency

Unfortunately, the choice of law rules for agency are very unsettled. Courts have utilized a variety of different rules,[130] some focusing on the place where the agency relationship was created,[131] while other courts have focused on the place where the agency was performed,[132] or on the relationship’s centre of gravity.[133] Peter Hay, Patrick Borchers, and Symeon Symeonidea indicate that the practical result of the “most significant relationship” test articulated in section 291 of the Restatement (Second) of Conflict of Laws is the application of the law of the forum (lex fori).[134] In short, there is no uniform approach to how choice of law rules are applied in the context of agency.

However, a possible solution may be found in articles 5 and 6 of the Agency Convention created at the Hague Conference on Private International Law.[135] Both articles deal with the internal law creating the agency relationship between the principal and agent.[136] If no internal law is explicitly chosen, the convention dictates that the applicable law for the agency relationship shall be the law of the state where, at the time of formation of the agency relationship, the agent has his business establishment (or habitual residence).[137] Interestingly enough, article 6 also provides for situations where either the agent or principal has more than one business establishment. In that case, the governing law will be the law of the state where the business establishment most closely connected to the agency relationship is situated.[138] It appears that following the convention’s approach, in a multiple office situation, the location of the office with which the client has its primary dealings will determine the law that applies to the agency relationship.

2. Choice of Law Rules for Contract

While the lawyer-client relationship is at its core an agency relationship,[139] it is also a relationship that is strongly defined by contract.[140] Both the Supreme Court of Canada and the Restatement (Second) of Conflict of Laws agree that when choosing the law applicable to a contract, the proper law should be applied.[141] If the contract does not include a choice of law provision, the contract is governed by the law of the State that has the most significant relationship to the transaction and the parties.[142] Both Canadian and United States courts apply a multi-factor balancing test to determine the applicable law, taking into account, inter alia: the place of contracting; the place of performance; the location of the subject matter of the contract; and the domicile, residence, nationality, and place of business of the parties.[143] The problem with this approach is that the polycentric nature of the inquiry leads to a great deal of uncertainty on the part of both the lawyer and the client.[144] It would be preferable for both parties to be able to proactively choose which law will govern their relationship.[145]

However, the question that then arises is: to what extent can the fiduciary duties of the lawyer be modified or limited by contract? Will the law even permit the lawyer and client to choose an applicable law? In short, the answer is yes. Both Canadian and American courts have permitted lawyers and clients to define the scope of their relationship through the retainer agreement.[146] The fiduciary obligations imposed on the lawyer arise out of the fact that the lawyer is acting as an agent for the client.[147] It is trite law that the scope of the agency relationship is based upon the authority that the principal has granted to the agent, and also by the degree to which the agent has agreed to act for the principal.[148] Either party may terminate the agency relationship.[149] It is also black letter law that contracts may be used to define the scope of the agency relationship.[150] Thus, it makes sense that the lawyer and client would be able to choose which law would apply to their relationship so long as the fiduciary duties themselves are not eliminated.[151] It is likely that under both Canadian and American law, lawyers and clients would be able to choose which jurisdiction’s conflicts of interest rules should apply to their relationship.

This idea is already starting to take effect. The ABA proposed an amendment to section 1.7 of its Model Rules. This proposed amendment allows lawyers and clients to determine which jurisdiction’s rules will govern conflicts of interest provided that the client gives informed consent and has a reasonable opportunity to consult independent counsel. The selected jurisdiction must also be substantially related to the matter, and be one which applies the principle of informed consent.[152] This is a positive step forward. It recognizes the roots of the lawyer-client relationship and also finds backing in clients’ ability to consent to future conflicts of interest. Moreover, an explicit choice of law provision in a retainer agreement makes it much easier to determine the “proper law” for choice of law purposes.[153] Similar provisions should be added to sections 1.9 or 1.10, or to both, as section 1.7 only deals with current conflicts.[154]

3. Why Not Use One of These Two Rules?

The problem with these two rules is that they do not provide a “one size fits all” way to resolve situations of conflicting ethical rules. The agency rules would appear to be an obvious choice, given that the lawyer-client relationship is at its heart an agency relationship.[155] However, courts do not consistently apply choice of law rules to agency situations.[156] Until a uniform solution is found, agency choice of law rules provide an unsatisfactory solution for lawyers licensed in multiple jurisdictions—there is little assurance when the lawyers do not know which rules will be applied. Additionally, the agency rules as applied in North America do not take into account the ability of the parties to define the lawyer-client relationship. The approach of the Hague Conference addresses this and is simple in its application, but it does not address the fact that each lawyer-client relationship is different and unique. Instead, it focuses solely on the location of the business of the lawyer. This lawyer-centric approach ignores the client’s interests in exchange for predictability. Any choice of law rule for the law governing lawyers should not ignore this fundamental consideration.

The problem with contract choice of law rules is that contractual principles are only applicable to the lawyer-client relationship by virtue of the retainer agreement. It becomes much more difficult to apply a contracts rule to a situation where no physical retainer is signed and yet a lawyer-client relationship exists, or where the client has a reasonable belief that the lawyer is acting as their lawyer but no actual lawyer-client relationship is created.[157] The concern with using the contract choice of law rules is that the lawyer-client relationship entails many more duties than those present in ordinary contractual relationships (i.e., the duty of loyalty, the duty of candour, the duty of commitment).[158] A choice of law rule applicable to the law governing lawyers should be able to account for these other non-contractual duties and also be applicable in scenarios where a lawyer-client relationship exists but no formal retainer agreement is signed.

Rather than being forced to choose between these two tests, this article recommends that lawyers, judges, and disciplinarians not be consumed with labels or categories, and instead focus on substance over form. It suggests that the more appropriate response is not to try to shoehorn a legal ethics problem into the discrete rules of agency or contract, but instead look to the heart of both rules and the objectives they try to reach. A choice of law rule ultimately tries to resolve the issue of which State’s interests should govern the dispute before the decision maker. When faced with a situation involving conflicting ethical rules, decision makers should look to the principles underlying the proper law of the lawyer-client relationship and utilize the spirit of the agency and contracts choice of law rules to guide their determination as to which law applies. This approach is outlined and discussed in Part IV.

IV. Using the Proper Law Approach to Determine the Applicable Law for Multijurisdictional Disputes Involving the Law Governing Lawyers: A New Framework

How, then, should one approach a choice of law inquiry involving the law governing lawyers? In determining which law should be applied, one must remember that the ultimate goal of a choice of law rule is to achieve justice between the parties, and as Pitel and Rafferty indicate, proximity is central to this inquiry.[159] Any rule or analytical framework for choice of law must therefore be assessed with regard to how well it ensures that there is a close connection between the applicable law and the dispute.[160] This means that choice of law rules should operate as the parties expect them to, and that they will produce uniform results when applied across different jurisdictions.[161] Moreover, any rule applied in a legal ethics situation must reflect the constraints of the law governing lawyers (i.e., the different fora and situations where it may operate). It must be applicable in disciplinary proceedings as well as in civil suits and interlocutory motions.

Some options for a choice of law rule for the law governing lawyers include single factor bright line rules such as: the law of the jurisdiction where the lawyer has his or her principal practice; the law where the client resides or where the client’s principal place of business is located; the law of the forum; or the law of the jurisdiction where the work is to be performed or executed.[162] The benefit of a bright line rule is its certainty. Everyone knows what the rule is and how it will be applied. However, bright line rules are inherently rigid, severely limiting the discretion of a decision maker. They make it difficult to account for unique factual situations that may require other interests to take precedence.[163]

Rather than apply a bright line choice of law rule, this article advocates for a bifurcated balancing approach that finds its roots in the proper law choice of law analysis used in contract cases.[164] This proposed framework consists of two steps, designed to account for the three different scenarios where a law governing lawyer problem may arise (i.e., conflicts of interest). In the first step, the decision maker determines whether the dispute arises out of already instituted proceedings (i.e., an interlocutory motion for disqualification of counsel in an existing lawsuit). If answered in the affirmative, the inquiry ends. This is because the tribunal is already seized of the matter and jurisdictional questions will have been addressed. The tribunal will apply its own law (the law of the forum) in these situations because the tribunal will be concerned with the administration of justice before it. This means that any interlocutory application for disqualification of counsel can be resolved without a choice of law analysis. Here the concern over the administration of justice in the forum trumps any concerns of extraterritoriality or comity. There are no concerns about forum shopping with respect to the disqualification motion because the motion arises out of the substantive suit already before the court.

The second step occurs only if the first step is answered in the negative (i.e., the matter arises on its own merits). This will most commonly occur for disqualification motions in a transactional setting or in the case of disciplinary proceedings. In the second stage of the approach, the tribunal applies the proper law to the substantive issues before it. In applying the proper law, the tribunal will first look to see if the lawyer and client have contemplated a specific jurisdiction’s substantive law to govern their relationship.[165] If no law can be identified, then the tribunal will apply the law of the jurisdiction with the closest connection to the lawyer-client relationship in question.[166] The evaluation of the closest connection is a polycentric inquiry, evaluating multiple factors such as: the location of the lawyer’s principal place of business; the location of the client’s principal place of business or his residence; the location where the work is to be performed or executed; the location where the work product is to have effect; the substantive law that will govern the work; the interests of the individual States in regulating their own lawyers (i.e., considerations of the duties of loyalty, confidentiality, and candour); considerations of State sovereignty and international comity; and concern over the administration of justice in the forum.[167]

In many ways, this proper law stage of the test is similar to that of the contract choice of law rule. It follows the same basic form and even uses a few of the same factors. However, it differs from the contract choice of law rule in its explicit considerations of elements unique to the lawyer-client relationship, the work the lawyer does for the client, and to the repute of justice in the forum.

The benefit of the proper law approach is that it takes into account the overarching considerations of fundamental justice and helps to ensure that the law to be applied has the closest connection to the dispute.[168] It also allows the parties to have a much greater role in choosing the law to be applied, furthering the policy goal of ensuring party expectations.[169] Additionally, by incorporating and balancing the various factors that might otherwise serve as their own choice of law rule, the proper law approach maintains an inherent fairness in the analysis, ensuring that no one factor substantially outweighs another.[170] In theory, a proper law approach would also produce uniform results across jurisdictions; however, in practice, the polycentric nature of the rule may lead to a greater variance in the results that ultimately would make the rule less predictable.[171] Despite this fact, the ability of the parties to actively select the law to be applied to the relationship helps to overcome this deficiency and produce much more predictable results.[172]

I make one comment regarding the ability of the parties to select the law governing their relationship. Built into the choice of law rule itself is a consideration of the jurisdiction’s connection to the dispute.[173] Thus, any jurisdiction selected by the parties must have some connection to the parties and their relationship. The ABA has already addressed this in their proposed version of Model Rule 8.5; however, the commentary does not explain why this is a necessary inclusion.[174] The necessity of connection to the jurisdiction in question is at the heart of a choice of law rule.[175] Thus, if an Ontario client hires a lawyer licensed in both British Columbia and Washington state to perform work in Seattle, it should not be open for the lawyer and the client to choose English law as the governing law of their relationship.[176] There is no connection to the United Kingdom in their relationship or the work being done, and as such the proper law rule should not permit this. Instead, the proper law rule should override the choice of English law[177] and instead facilitate the polycentric balancing to select among Ontario, British Columbia, and Washington as the applicable law.

The reason for this override is to prevent exploitation of an unsophisticated party. By requiring a connection to the chosen jurisdiction, the choice of law rule implicitly ensures that the client is not waiving rights unawares. Requiring a connection to the jurisdiction ensures that the client has at least some familiarity with the law that will apply to his or her lawyer-client relationship. It prevents them from having some unknown law govern the relationship—a necessary protection, especially in the case of unsophisticated parties. However, this power to overrule party autonomy is a power that courts must not use lightly, as in exercising this power the court is usurping the expectations of the parties and adding a considerable degree of uncertainty to the analysis.[178] The overruling of the parties’ choice should only be done in the most exceptional circumstances, where there is truly no connection (or a de minimis connection) to the selected jurisdiction and there is a fear of the client losing fundamental protections or unknowingly waiving fundamental rights.

V. Applying the Choice of Law Framework: Conflicts of Interest Test Case

We return now to the scenario presented in the introduction, where Mary’s firm is looking to hire Chad for its Calgary office. It is reproduced for convenience here:

Mary is a finance partner who works primarily out of Firm A’s Toronto office. She spends some of her time working out of Firm A’s New York office and is licensed to practice in both Ontario and New York. She has been hired by BorderCo, which is looking to build a pipeline across the Canada—United States border. As part of its development strategy, BorderCo wishes to acquire TexCo, a company specializing in pipeline design and construction. BorderCo is incorporated in and maintains its head office in New York. TexCo’s head office is in Texas but the company is incorporated in Delaware. Midway through the deal, a large national firm dissolves and Mary’s firm has an opportunity to hire Chad, an industry expert in oil and gas acquisitions and divestitures. Chad has a big book of business and would be a great addition to the firm. He has worked for most of his career in Texas, but is also licensed to practice in Alberta. Mary’s firm would like to hire Chad in its Alberta office to do some work for some clients in the oil sands industry. However, on a previous transaction, Chad worked for TexCo on a pipeline development project in the Marcellus Shale in Pennsylvania although the retainer has since been terminated. BorderCo plans to tie in TexCo’s existing Pennsylvania pipeline into BorderCo’s Ontario pipeline networks. TexCo is unwilling to waive conflicts.

The problem as presented brings five jurisdictions into the analysis (Alberta, Delaware, New York, Ontario, and Texas). If Alberta, Ontario, or Delaware law are found to apply, then Chad will be able to move to the Calgary office so long as the firm has taken the necessary protective measures—such as ethical screens, segregation of files, and cones of silence—to ensure that TexCo’s confidential information is protected.[179] However, if New York or Texas law is found to apply, then Chad will not be able to join Mary’s firm because both New York and Texas law imputes Chad’s confidential knowledge regarding TexCo to the rest of the members of the firm. Neither New York nor Texas law permit the use of institutional mechanisms to protect confidential information.[180]

Using the choice of law framework developed in Part IV, we see that this scenario does not arise out of an existing litigation. Thus, the first stage of the inquiry is answered in the negative and the second stage is engaged—a proper law, choice of law analysis must be performed.[181] Given that it is TexCo’s confidential information as held by Chad that we are concerned about protecting, the relationship that must form the basis for application of the choice of law rule is the lawyer-client relationship between Chad and TexCo. The situation as presented creates a past client conflict. BorderCo is a current client of Mary’s firm. TexCo is a past client of Chad’s. If Chad were to join Mary’s firm, a client-client conflict would occur because of the two representations and the fact that TexCo and the bank are on opposite sides of the transaction. This raises the possibility of misuse of confidential information, which is at the heart of the past client conflicts rule.[182]

In applying the proper law analysis that comprises the second stage of the inquiry, we first determine whether Chad and the client have agreed on a set of ethical rules to govern their relationship.[183] In the proposed scenario (and likely in most real world situations) there is no provision in the retainer agreement that identifies which jurisdiction’s ethical rules will govern. As such, the analysis must proceed by a polycentric balancing where consideration must be given to each of the connecting factors between the relationship and the jurisdictions in question. In this situation, the critical moment in time is the formation of the lawyer-client relationship between Chad and TexCo. At that moment the two are as close to consensus ad idem as possible; thus, it is from that moment that the connecting factors should be evaluated.

Chad is licensed in both Texas and Alberta, so at the time of formation of the relationship it would be possible for both jurisdictions to govern the relationship.[184] Both Texas and Alberta have an interest in ensuring that Chad is practicing according to their articulated professional standards and upholding their respective codes of conduct.[185] Chad’s practice is primarily based out of Texas. This weighs in favour of Texas law applying. On the other hand, TexCo is incorporated in Delaware, so it is possible that Delaware law might best govern the relationship. For example, if Chad had been retained to complete a corporate restructuring, or to provide counsel on a merger or acquisition to be performed under Delaware law, there would be a strong pull toward Delaware law governing the relationship because the advice Chad would give would be about Delaware law. However, here the previous work that Chad did was a pipeline development project—something most likely substantively governed by Texas law (given the depth of Texas law relating to oil and gas issues). This again weighs in favour of Texas law governing the relationship.[186] Additionally, TexCo’s head office is in Texas, the retainer agreement was likely signed in Texas given the location of TexCo’s head office, and Chad’s practice is primarily located in Texas. Chad likely performed most of the work in Texas, and the impact of Chad’s legal work would be realized by TexCo in Texas by virtue of the sale being completed in Texas (despite the fact that the assets were physically elsewhere). Here, the connecting factors weigh so strongly in favour of applying Texas law to govern the relationship that there are minimal concerns about infringing on Alberta’s sovereignty, and the risk of offending international comity is nominal. Thus, a weighting of the connecting factors indicates that Texas law should govern the relationship between Chad and TexCo, thereby precluding Chad from joining the Alberta office of Mary’s firm.

But does this make sense in light of the conditions of the modern world, where lawyers are increasingly mobile and increasingly members of multiple bars? If Chad is moving to a jurisdiction that would permit him to use ethical screens and cones of silence to protect TexCo’s confidential information, should our law not permit him to do so? While this rationale has some merit, stemming from the policy rationale of permitting clients to have their own choice of counsel, this argument forgets two fundamental considerations. First, it flies in the face of notions of comity and State sovereignty, by stating in essence that one State’s policy choices are inferior to another State’s.[187] Second, it encourages forum shopping, as it allows parties to escape prior obligations by moving to jurisdictions with more permissive rules.[188] This is different than choosing a rule to govern the relationship at the outset, which instead encourages the fulfillment of the mutual expectations of both parties. To argue that Chad should be able to join Mary’s firm because of the value of lawyer mobility and of allowing clients to have their counsel of choice allows Chad to escape the commitment and duties he owes to TexCo. Moreover, if lawyer mobility is truly a necessary element, the lawyer may include a provision to that effect in the retainer agreement. Thus, the proposed rule not only takes into account the expectations of the parties while trying to provide a predictable outcome, it also builds in considerations of fairness, comity, and State sovereignty—values that are at the heart of private international law.[189]


Neither Canadian nor American law resolves the question of how to address conflicting rules in the law governing lawyers for attorneys licensed and practicing in multiple jurisdictions. These lawyers are subject to multiple regulatory regimes and ethical obligations, some of which can be in direct conflict. Additionally, by virtue of their licences, these lawyers are subject to the proscriptive rules and adjudicative jurisdiction of each State in which they are licensed. In order to provide some clarity and predictability as to how the lawyer should act in these situations, a choice of law rule for the law governing lawyers should be developed. This article has advocated for the proper law approach, to allow lawyers and clients to predetermine which law will govern their relationship. If the lawyer and client do not proactively choose a jurisdiction to govern their relationship, then a polycentric inquiry should be performed, looking to the connecting factors between the lawyer-client relationship and the jurisdictions in question. This helps to fulfill the mutual expectations of the parties and also account for fundamental justice and international law considerations such as fairness, comity, and respect for State sovereignty.