G A R F I N Z E I D E N B E RG

LLP

- L A W Y E R S S I N C E 1976 Yonge-Norton Centre, 5255 Yonge Street, Suite 800, Toronto, Ontario M2N 6P4 Tel: (416) 512-8000 ⋅ Fax: (416) 512-9992

To: From: Date: Re:

All Lawyers Jonathan Keslassy March 11, 2010 Independent Legal Advice vs. Independent Legal

Representation

INTRODUCTION The purpose of this memo is to determine the difference between the concepts of “independent legal advice” and “independent legal representation” and outline the circumstances in which one ought to be used over the other. CONCLUSION The wording within the Law Society’s Rules of Professional Conduct implies a distinction between “independent legal advice” and “independent legal representation”. Independent legal advice is more appropriately used as a precaution in an ongoing relationship in any given file between a lawyer and client, for instance, where: • A lawyer seeks to obtain a client’s consent to act on their behalf, despite an actual or potential conflict of interest; • A joint retainer is contemplated; • A client wishes to transfer his or her interest in property to the lawyer as a means to pay his or her legal account; or • A lawyer arranges for a person to be an investor in a syndicated mortgage or loan where the lawyer is also an investor. Alternatively, independent legal representation suggests the requirement for a client to obtain continued services from another lawyer, for instance, where: • The opposing party to the transaction or proceeding is unrepresented; or 1 of 5

06 (2.2). before the lawyer accepts joint employment for that client and another client in a matter or transaction. Joint Retainer 2. a lawyer should recommend independent legal advice in the following scenarios: 1. Avoidance of Conflicts of Interest 2. the lawyer shall recommend but need not require that the client receive independent legal advice before accepting a retainer.2). other than a nonmaterial interest in a publicly traded enterprise. the lawyer cannot continue to act for both or all of them and may have to withdraw completely. (b) no information received in connection with the matter from one can be treated as confidential so far as any of the others are concerned.04 (7) Except as provided in subrule (8. the lawyer shall advise the clients that (a) the lawyer has been asked to act for both or all of them. 2. where a lawyer accepts employment from more than one client in a matter or transaction. INDEPENDENT LEGAL ADVICE According to the Law Society’s Rules of Professional Conduct.04 (6) Except as provided in subrule (8. in some cases. 3. her or its lawyer a share.• The lawyer engages in business with the client. especially those in which one of the clients is less sophisticated or more vulnerable than the other.04 (3) A lawyer shall not act or continue to act in a matter when there is or is likely to be a conflicting interest unless. Transfer of Interest as a Retainer 2. after disclosure adequate to make an informed decision.1) When a client intends to pay for legal services by transferring to his. the lawyer shall advise the other client of the continuing relationship and recommend that the client obtain independent legal advice about the joint retainer. where a lawyer has a continuing relationship with a client for whom the lawyer acts regularly. the client or prospective client consents. Although the above subrules do not require that a lawyer advise the client to obtain independent legal advice. and (c) if a conflict develops that cannot be resolved. 2. participation or other interest in property or in an enterprise. the lawyer should recommend such advice to ensure that the client's consent is informed. 2 of 5 .

partnership.06 (6) A lawyer engaged in the private practice of law in Ontario shall not directly. other than an ownership interest of a corporation or other entity offering its securities to the public of less than five per cent (5%) of any class of securities (a) hold a syndicated mortgage or loan in trust for investor clients unless each investor client receives (i) a complete reporting letter on the transaction. or other entity in which the lawyer or a related person has a financial interest.genuine. or arrange mortgages or loans for. 3 of 5 . (ii) a trust declaration signed by the person in whose name the mortgage or any security instrument is registered. and uncoerced. syndicate. (b) arrange or recommend the participation of a client or other person as an investor in a syndicated mortgage or loan where the lawyer is an investor unless the lawyer can demonstrate that the client or other person had independent legal advice in making the investment. Lawyers in Loan or Mortgage Transactions 2.04 (14) When a lawyer is dealing on a client's behalf with an unrepresented person. and (iii) a copy of the duplicate registered mortgage or security instrument. the following subrule requires independent legal advice: 4. INDEPENDENT LEGAL REPRESENTATION Independent legal representation is mandatory in the following circumstances: 1. competence. trust. or (c) sell mortgages or loans to. Unrepresented Persons 2. or indirectly through a corporation. and integrity usually expected of a lawyer in dealing with clients. Conversely. the lawyer shall (a) urge the unrepresented person to obtain independent legal representation. clients or other persons except in accordance with the skill.

or partnership in which either the lawyer or the lawyer's spouse has. the lawyer shall obtain the client's written consent. or (b) the client is a related person as defined by the Income Tax Act (Canada) and the lawyer is able to discharge the onus of proving that the client's interests were fully protected by the nature of the case and by independent legal advice or independent legal representation. financial institution.1). before accepting any retainer (a) shall disclose and explain the nature of the conflicting interest to the client or. and (c) make clear to the unrepresented person that the lawyer is acting exclusively in the interests of the client and accordingly his or her comments may be partisan. trust company or any similar corporation whose business includes lending money to members of the public. and (c) where the client requests the lawyer to act. Guarantees by a Lawyer 2. in which money is borrowed from a client by a lawyer's spouse or by a corporation. insurance company.06 (5) In any transaction. 4. in the case of a potential conflict. how and why it might develop later.06 (2) Subject to subrule (2. syndicate. (b) shall recommend independent legal representation and shall require that the client receive independent legal advice. a substantial interest.(b) take care to see that the unrepresented person is not proceeding under the impression that his or her interests will be protected by the lawyer.06 (4) A lawyer shall not borrow money from a client unless (a) the client is a lending institution.06 (10) A lawyer may give a personal guarantee in the following circumstances: 4 of 5 . where a client intends to enter into a transaction with his or her lawyer or with a corporation or other entity in which the lawyer has an interest other than a corporation or other entity whose securities are publicly traded. 2. 3. directly or indirectly. Investment by Client where Lawyer has an Interest 2. Borrowing from Clients 2. the lawyer. 2. other than a transaction within the provisions of subrule (4). or both of them together have. the lawyer shall ensure that the client's interests are fully protected by the nature of the case and by independent legal representation.

Role of Mediator 4. the lawyer's spouse.(a) the lender is a lending institution. financial institution. and (b) although communications pertaining to and arising out of the mediation process may be covered by some other common law privilege. but rather should encourage the parties to seek independent legal representation during the mediation process or independent legal advice with respect to a draft agreement. ensure that the parties to it understand fully that (a) the lawyer is not acting as a lawyer for either party but. to provide a guarantee. parent. insurance company. as mediator.07 A lawyer who acts as a mediator shall. NOTE Commentary under Rule 4. and the lender is directly or indirectly providing funds solely for the lawyer. either individually or together with other members or supporters of the institution. is acting to assist the parties to resolve the matters in issue. or (c) the lawyer has entered into a business venture with a client and the lender requires personal guarantees from all participants in the venture as a matter of course and (i) the lawyer has complied with rule 2.07 insists that a lawyer acting as a mediator should not offer legal advice. at the outset of the mediation. they will not be covered by the solicitor-client privilege. trust company or any similar corporation whose business includes lending money to members of the public.04 (Avoidance of Conflicts of Interest) and this rule (Doing Business with a Client). (b) the transaction is for the benefit of a non-profit or charitable institution where the lawyer as a member or supporter of such institution is asked. 1. and (ii) the lender and participants in the venture who are or were clients of the lawyer have received independent legal representation. or child. 5 of 5 .

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