RSS FeedReputation Management Law is the Next Big Thing
Tony Wilson, of Boughton in Vancouver, wrote in this week’s issue of Lawyer’s Weekly,
Reputation matters… But it’s not just companies and trade-mark owners who have reputations to protect. We all do, and these days, much of our personal reputation is on the web for all the world to see.
Like many professionals, physicians in Canada operate by word-of-mouth referrals, largely based on the personal experiences of patients or other referring physicians. RateMDs has become an increasingly popular site for patients to share experiences about their physician.
It’s become enough of a concern to physicians that Sam Solomon provides some advice to MDs in this month’s edition of Parkhurst Exchange:
- Ask for the review to be taken down
- The Medical Justice approach of providing patients a contract allowing them to only post reviews on sites that confirm poster identity
- Sue
- Encourage patients to post positive reviews
- Use the criticism as an opportunity to improve practice
It’s unclear whether option 2) would hold up in court, and 1) is rarely effective, either due to confidentiality issues, site administrative policies, or simple refusal.
RateMDs was founded by the same people who made RateMyProfessors.com, RateMyTeachers.com, and the Ratingz.net network of rating sites that includes LawyerRatingz.com. It seems quite a few of my law professors are up there. A quick survey reveals that many Canadian attorneys have been rated, and most not favourably.
Assuming that the only people to ever review professionals are clients who have utilized their services is far too presumptuous. Competitors, business rivals, people with personal vendettas, and even opposing parties in lawsuits can pose as a client in an attempt to portray the person in a negative light.
It can and has happened. Solomon points to the case of Dr. Mohamed Foda of Leduc, Alberta, who forced RateMDs to provide information about a negative poster through the California Northern District Court in Foda et al v. RateMDs, Inc. On April 28, 2008, the Edmunton Sun covered the story,
An Edmonton urologist has launched a $12-million defamation lawsuit against two unidentified people for allegedly posting bogus poor ratings about him on the California Internet site RateMDs.com. In a March 31 statement of claim, Dr. Mohamed Foda alleges the postings were not made by actual patients of his, but by someone who has a “malicious” motive to harm his medical business, and states he will seek to identify the unknown defendants by searching for their computer identifying information. Foda claims the defamatory comments have caused irreparable harm to his reputation and medical practice and caused him emotional distress and anxiety.
The posts in question stated:
“This doctor prescribed me an antibiotic that causes birth defects after I clearly told him I was 4 months pregnant!! Apparently he made a ‘mistake.’” — Posted on RateMDs.com on October 1, 2007
“I found Dr Foda to ignore problems until drastic measures were required. Had to call numerous times to get an appointment. Felt that Dr Foda did not do required follow up in a timely manner. Did not inform patients of what he did in the OR [such as] remove tumours. Would have died if not for another [doctor].” — Posted on RateMDs.com on May 26, 2007
Administrator of RateMDs, John Swapceinski, says that the site gets letters from lawyers once a month. Not surprisingly, they do not comply with the requests. The site does serve an important public function for consumers of healthcare. But Swapceinski also said that Dr. Foda’s suit is the first time a lawyer has actually followed through and sued the site, and he indicated he would cooperate with a subpoena to release the information if one was provided.
In light of the Cohen v. Google and York University v. Bell Canada Enterprises cases I’ve covered previously, it’s probably no great surprise that the court did reveal the identity of the poster.
What is also unique about this case is that the person identified as the RateMDs poster was involved in different lawsuit on the other side of Dr. Foda in Foda v. Capital Health Region, [2007] A.J. No. 22; 2007 ABQB 19, where he was making a claim for breach of contract, conspiracy, harassment, defamation, and direct interference with economic relations.
The Court of Appeal ([2007] A.J. No. 668;2007 ABCA 207) upheld a motion to add a party to his statement of claim, but the defamation claim agains this party was struck for lack of evidence using the test in Botiuk v. Toronto Free Press Publications Ltd.,
62 …it is sufficient to observe that a publication which tends to lower a person in the estimation of right‑thinking members of society, or to expose a person to hatred, contempt or ridicule, is defamatory and will attract liability. See Cherneskey v. Armadale Publishers Ltd., [1979] 1 S.C.R. 1067, at p. 1079. What is defamatory may be determined from the ordinary meaning of the published words themselves or from the surrounding circumstances. In The Law of Defamation in Canada (2nd ed. 1994), R. E. Brown stated the following at p. 1‑15:
[A publication] may be defamatory in its plain and ordinary meaning or by virtue of extrinsic facts or circumstances, known to the listener or reader, which give it a defamatory meaning by way of innuendo different from that in which it ordinarily would be understood. In determining its meaning, the court may take into consideration all the circumstances of the case, including any reasonable implications the words may bear, the context in which the words are used, the audience to whom they were published and the manner in which they were presented.
But if the party Dr. Foda was seeking to add in the Alberta case – a Donna Canart, Surgical Clinic Coordinator at Leduc Community Hospital – is the same person identified in the California proceedings, this evidence may now be available. Canart allegedly filed a report against Dr. Foda according to the Capital Health Corporate Workplace Respect Policy, raising issues in the Alberta case of malicious prosecution. However, similar defamation claims in Alberta were made against co-defendant Linda Scott. The California case has only had two hearings to date, and Dr. Foda only spoke in general terms to Sam Solmon, so it is difficult to ascertain which specific party was behind the RateMDs posting.
Even when a claim is substantiated, it is possible for either party to turn malicious. The Foda case highlights that litigants in lawsuits can and will attempt to affect the reputation of the opposing party online, something I’ve predicted repeatedly. All types of litigation will invariably cross over into this specialized area of law.
Some of these rating sites allow the professors to respond to their students, even with video. Or, as they put it,
Your professors have been reading your comments on RateMyProfessors.com. Now it’s their turn…
I don’t see other professions going the same way, given the nature of client solicitation. So where do people turn for help?
Wilson concludes,
Just like there was no such thing as Internet law before the Internet or franchise law before there were franchises, a new and growing niche area is “reputation management law.” It straddles libel, slander and defamation law, freedom of speech, privacy law, copyright and trade-mark law, employment law and the rules governing Youtube, Facebook, Twitter and other social media. And like environmental law 25 years ago, it has nowhere to go but up…
Either way, it’s clear that online reputation management is the next big thing that everyone will have to deal with.
Everyone reading this is now searching their name on LawyerRatingz.com, or other sites like CanLaw. They’re probably wondering what they would do if they were deliberately maligned, and trying to figure out who is the best”reputation management lawyer” they know, if any.
And that’s assuming that you waited until the end of the article to do so.
Being Tardy Will Cost You…
It just goes to show you that being late for court can hurt more than your client’s chances. A Thunder Bay judge has fined a veteran lawyer with what can be arguably described as habitual lateness.
Although disappointed with the $250 fine, he assured the court that it was not without excuse.
In the end, it just goes to show for all veteran and aspiring lawyers out there, being late can impact more than your client’s pocketbook.
Using a Norwich Order to Reveal Gmail Accounts
The Ontario Superior Court of Justice released its decision on an application in York University v. Bell Canada Enterprises this Friday. The case is based on an allegedly defamatory e-mail about the President of York University, Mamdouh Shoukri, saying he had “perpetrated an outrageous fraud.”
A group calling itself “York Faculty Concerned About the Future of York University” protested the appointment of Martin Singer of the new Faculty of Liberal Arts and Professional Studies, questioning his credentials and attaching a letter from other academics who did disclose their names.
But the University is more interested in the identity of the unsigned e-mail, presumably by York faculty, sent from a Gmail account, yfcfyu@gmail.com.
G.R. Strathy J. approved a Norwich order against Bell Canada Enterprises and Rogers Communications Inc. to disclose the identity of the account owners. A previous order had been approved against Google back in May, which identified the two ISPs as the holders of the information.
A Norwich order is a pre-action discovery mechanism that is described by Spence J. in Isofoton S.A. v. The Toronto-Dominion Bank,
Requests for Norwich relief are largely unfamiliar to Canadian courts. A Norwich order essentially compels a third party to provide the applicant with information where the applicant believes it has been wronged and needs the third party’s assistance to determine the circumstances of the wrongdoing and allow the applicant to pursue its legal remedies.
The 5 elements identified in this case for granting such an order include:
(i) Whether the applicant has provided evidence sufficient to raise a valid, bona fide or reasonable claim;
(ii) Whether the applicant has established a relationship with the third party from whom the information is sought such that it establishes that the third party is somehow involved in the acts complained of;
(iii) Whether the third party is the only practicable source of the information available;
(iv) Whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure, some [authorities] refer to the associated expenses of complying with the orders, while others speak of damages; and
(v) Whether the interests of justice favour the obtaining of disclosure.
[emphasis added]
The privacy interests of the alleged wrongdoer were overcome by the last element, the interests of justice, because of the applicant’s equitable right to information. Spence J. pointed to Alberta v. Leahy and Bankers Trust Orders (from Bankers Trust Co. v. Shapira) indicating that court orders can override confidential information, even for financial records, and Glaxo-Wellcome PLC v. M.N.R. that the privacy interests of alleged wrongdoers is somewhat diminished.
What is troubling about the latter citation is that the rationale used by the Federal Court of Appeal was that the information could not be considered especially sensitive since it had passed through several hands. Although the York case does demonstrate that multiple parties may be involved in identifying a defendant, many privacy watchdogs would be concerned that IP information loses its privacy value simply because it is shared.
However, Spence J. did point to other reasons why the privacy expectation may be overridden, because the information is limited by terms of the order for specific purposes and the use of this information is not absolute. Additionally, a strong case of fraud removes the possibility of a frivolous or vexatious application of the order.
G.R. Strathy J. also discussed the necessity of granting the order for York by citing GEA Group AG v. Ventra Group Co,
…there is no suggestion in the established jurisprudence that [necessity] is a stand-alone requirement for the granting of a Norwich order…
In my opinion, the precise placement of the necessity requirement in the inventory of factors to be considered on a Norwich application is of little moment. The important point is that a Norwich order is an equitable, discretionary and flexible remedy. It is also an intrusive and extraordinary remedy that must be exercised with caution. It is therefore incumbent on the applicant for a Norwich order to demonstrate that the discovery sought is required to permit a prospective action to proceed, although the firm commitment to commence proceedings is not itself a condition precedent to this form of equitable relief.
…The crucial point is that the necessity for a Norwich order must be established on the facts of the given case to justify the invocation of what is intended to be an exceptional, though flexible, equitable remedy.
G.R. Strathy J. then pointed to a number of other ways that this information could be obtained without the Norwich order, including the pre-action disclosure in the now-infamous Cohen v. Google Inc. Although both ISPs had privacy policies for the customers, these could be overridden by s. 7(3)(c) of PIPEDA to comply with a court of law.
Given the recently ruling, and assuming it’s not overturned in the future, it’s likely were going to see more Norwich orders used for the purposes of identifying Internet activity.
Deadly insulation: Zonolite Lawsuit deadline Aug 31.
Don’t mess around with the insulation in your house. It may be Zonolite. It’s made from minerals naturally laced with asbestos, the deadliest type of asbestos known as Tremolite.
It costs money to remove it. A lot of it. If you get a jump on things and get involved with the lawsuit, depending on where your house is located (U.S. or Canada), homeowners can get some assistance. In the U.S., up to $7500 and in Canada homeowners can also get some money, some good gas money. $300 to those who can prove the presence of Zonolite and costs incurred to contain the insulation, plus an additional $600 for those who’ve taken major remedial measures like removal. And the average cost of removal is $7000 to $8000.
The company that developed Zonolite, W.R. Grace has filed for bankruptcy and the terms of settlement are outlined above. However, Aug. 31 is the deadline for any Canadian home lined with Zonolite to bring a claim, whereas homes in the U.S. can still bring a claim after Aug. 31.
http://www.yourhome.ca/homes/newsfeatures/article/685245
Taser International
Taser maker to file suit over inquiry
… “The assertion is that commission breached basic principles of fairness and fundamental justice,” Mr. Neave said in an interview with CTV at his Vancouver office. “They were biased in the sense that a substantial body of science and medical study we provided to the commission was not considered.”
Interesting. A commission of inquiry does not administer justice. It’s a “study” commission. How can it breach principles of fairness and fundamental justice?
Does The Future Of The Revised US-Swiss Double Taxation Treaty Depend On The Outcome Of The UBS Case?
First posted on Commercial Law International on July 13, 2009.
UBS, the world´s largest wealth manager, has found itself embroiled in a diplomatic row between Washington and Bern. At issue is the interpretation of the current US-Swiss double taxation treaty and at stake is the newly inked, yet to be ratified, revised US-Swiss double taxation treaty.
Does the future of the revised US-Swiss double taxation treaty depend on the outcome of the UBS case?
As much was indicated by Doris Leuthard, the Swiss Economy Minister, as she called for a speedy resolution of the case. What the Minister is expressing in her pronouncements is simply the reality of the situation. Swiss maintain that the issues in the case are diplomatic and ought to be resolved in forum more appropriate to friendly relations between nations – face-to-face closed door negotiations – rather an the public spectacle of a courtroom. Secondly, while the treaty has been finalized it has yet to be ratified by the Swiss Parliament, a parliament that will be slow to give its blessing if it is dissatisfied with the outcome of the case.
So what exactly is going on in this case? This is a very good question for I myself was a bit confused for two reasons. The first is that UBS already plead guilty to assisting thousands of Americans to evade US taxes in a case brought by the Department of Justice (DOJ) in February of this year. In the same case it also paid fines of $750 million and disclosed 250 names of its US clients. So the case ought to be over, right? Well, yes and no. This was the criminal leg of the – and I am going to substitute strategy here for case to avoid any legal confusion – US authorities strategy to gain the names of as many as 52,000 believed to be evading US taxes.
The current case before the courts is the civil leg of the strategy brought by the Internal Revenue Service (IRS). They have served on UBS a John Doe subpoena in an effort to force UBS to reveal the names, so those people can in turn answer to the authorities.
While I know that criminal and civil matters are wholly different creatures, this smacks of double prosecution – persecution if you will. Or is it?
The second thing that was puzzling me was this IRS case seems to have stepped outside the four corners of the existing double taxation treaty. The treaty only requires UBS, through Swiss authorities, to co-operate with US tax evasion investigations if the IRS can provide the specific names of the holders of secret offshore accounts. It is clear from the IRS´s actions, issuing a John Doe subpoena, that it clearly does not know the names of the suspected tax evaders. So that should be the end of it, right. Well, clearly not.
Now, what the IRS is doing is clearly is not only not double prosecution/persecution, it is well within, I believe, the scope of the treaty. In fact I would go as far as saying that it is share genius. This was revealed to me in a brief filed by the IRS in response to one filed by UBS. To see what I mean just take a look at section 2 of the brief, the head tells it all: ¨Nothing in the Tax Treaty Limits the IRS´s Authority to Enforce a Duly Authorized Summons Issued to a Third-Third Party Witness within the United States, or Requires the IRS to Exhaust its Treaty Rights With a Foreign Government Before Seeking to that Summons.¨
Unfortunate for UBS, and as rightly pointed out by the IRS ¨the existence of a treaty….does not limit the rights granted to the United States under the laws of this country¨ (the bold being original). Well, that is in part, it should read doesn’t limit those laws so limited by treaty obligation.
What the IRS has done is not too circumvent the treaty but simply not to bring it into the equation at all. It has kept the issue entirely domestic. As I said, share genius.
In any event the prospects are dim for UBS if a negotiated settlement is not reach soon. If UBS loses, which it looks increasingly probable, it will be faced with either defying US law by refusing to reveal the names or reveal the names and be in violation of Swiss banking law which carries with criminal sanction.
Now that a Floridia judge has agreed to postone the case the excutives at UBS will surely be working over time to reach an amecible resolution of the case.
L´Oreal Found Guilty Of Racial Discrimination
This is part of the Middle Passage Law Series and is cross posted on Commercial Law International.
Now I know I have not posted a piece in this series in quite some time and for that I apologize – I have no excuse.
It may seem that I am either picking on L´Oreal, as I have tracked their recent legal battles with eBay on Commercial Law International, either that or I have an obsession with makeup. Let me assure you that neither in the case. With that over, let´s go to the story.
The La Cour de Cassation, the highest court in France, upheld the ruling by the Paris Court of Appeal, finding L´Oreal guilty of racial discrimination. The court also found Adecco, a temp-employment agency, involved through its Districom division, guilty and fined both it and L´Oreal €30,000. The court however, sent back to the Court of Appeal for its reconsideration the €30,000 each in damages payable to SOS Racisme, an anti-racism public interest group that brought the case.
The ruling ends three years of legal wrangling and is no doubt a huge blemish for L´Oreal.
The main issue of fact in the case was BBR. Yes, BBR. What in the world is BBR, you ask?
BBR or blue, blanc, rouge – the colors of the French flag. Now if you were to ask me I would have simply thought that this was a general patriotic gesture, however, it hides a much more sinister meaning. It, as the Times reports is an expression ¨widely recognized in the French recruitment world as code for white French people born to white French parents.¨ This would of course exclude not only the 4 million ethnic minorities current living in France but also any whites not born of pure French stock, including presumably none other than the French President himself Nicolas Sarkozy whose father is Hungarian.
It would seem that word got out that L´Oreal did not want any black, Asian or Arab sales staff to promote Fructis Style, a hair care product made by its Garnier division. Only BBR would do, I guess – because they are worth it – to play on L´Oreal´s because you are worth it ads. But, why?
And this for me is the most troubling aspect of this case. The BBR move by L´Oreal hints at a much larger and disquieting issue in French society. Yes, racism, this is very obvious but much more than that it is brand of racism that operates not just on the fringes of society but at its heart – in the labour and retail markets – while at the same time managing to remain in the shadows .
How is it that this BBR policy that so pervades the French employment and retail markets is only now seeing the light of day?
Like I said, very troubling indeed.
However, a silver lining to all of this is that BBR has now been fully exposed in a court of law. From now on the racial prejudice that operates in the French labour and retail markets can no longer be subject to denials of anecdote or conjecture. The court record stands as an official record by the state that BBR does exist and is a proven fact.
As for L´Oreal, this cannot be good for its brand management. For a company that so fiercely defends its brands, just take a look at its battles with eBay, this was not only a poorly conceived recruitment drive but also incorrectly defended case – this is not to be read as a dig at L´Oreal´s lawyers, not at all, I am sure they represented their client the best way they could, however, I am unreservedly criticizing L´Oreal.
L´Oreal forgot that it´s all about the brand. What they sell is much more than simply a product, it is a lifestyle, it is instant gratification, it is control and it is improved self-confidence through a line of beauty products designed for one thing – to improve the true beauty that is you. Nothing can be allowed tarnish the brand less they lose sales and market share.
If this is the basic market reality of the L´Oreal brand, and for that matter any brand, why would you maintain the spectacle of a public trial for three years with a case that even if it comes out in your favor could still blemish the brand?
There is no doubt that L´Oreal´s PR team is hard at work trying to figure out how to either make this go away or finding an angle on how to spin this. A word to the wise, L´Oreal, you have already been found guilty, it would be an exercise in futility to deny any part of this. In fact such a denial, in whole or in part, direct or indirect, could result in a backlash against the brand. It would be better to fully accept culpability, say sorry and take positive and no doubt public steps in order to combat BBR or other forms of discrimination. That my friend is your angle.
Mau Mau to sue the British Government
First Posted on Commercial Law International on June 24, 2009.
Concentration Camps
By Charles Wanguhu
The above move by the Kenyan freedom fighters to sue the British government has elicited some very interesting responses from some readers of the times online paper:
This is all about money and bashing the UK. Africa does not want to take responsibility for its current problems
Also if this happened in the 50’s so why have they waited till now?
Lawyers and Money again: A poisonous mix. Why after so long drag up these horrors. The Mau Mau allegedly used to drink the blood of the white farmers they killed. The British allegedly tortured Mau Mau. What good can come of this knowledge now? Time to put these things back in the box of history
While the above sentiments may be of a few it may be worth placing their arguments in a context. Firstly during the emergency in Kenya loads of kikuyu men were rounded up and accused of being Mau Mau based on accusations by guards who were collaboratoring with the british. We can therefore not claim that all those held in prison camps tortured and killed were indeed Mau Mau fighters.
Secondly what is more at stake is the recognition by the UK government that it was official colonial policy to run concentration camps and that it was sanctioned at the top.
In the article :
Professor Anderson states that is doubtful the lawsuit in its current form — targeting the state rather than those surviving individuals who allegedly carried out the abuse — will succeed.
“There can be no doubt that torture was used by British Forces . . . but the question remains ‘who is responsible?’,” he said.
Whoever this notion is flawed in that when a criminal offence occurs it is not the role of the victim to seek evidence against the offender and then bring in criminal charges against them. When a state decides to open up institutions of incarceration it is the states responsibility to ensure that the inmates are treated in a humane way and not subjected to torture. In this instance the British colonial state failed in their duty and they should therefore be brought to account for their inaction when it was clear what is happening. The Imperial Reckoning: The Untold Story of Britain’s Gulag in Kenya by Caroline Elkins is an account of the atrocities carried out on the Kikuyu population in Kenya and is worth a read for any individual prior to defending the british actions.
The Mau Mau atrocities cannot be denied and were definitely atrocious. It is however pretentious to claim that they were on a similar scale as the colonial state with their better equipped and organised forces. In addition the fact that they used Machetes and not guns is akin to declaring that the British killings were undertaken in a humane way.
The question is should it be placed in history and forgotten about? Well while seeming to take a leaf from its predecessors the Kenyan Government extra judicially killed up to 400 Kikuyu young men accusing them of being Mungiki (a group not too dissimilar to the Mau Mau if not claiming their inspiration from the Mau Mau) should we forget about them as well.
While it is in the interest of majority of British people to be forward looking, the victims of atrocities still seek justice. History appears to be relative as the World Cup win in 1966 is considered fresh enough to be brought up at every opportunity but atrocities committed six years earlier than the win are too far to be worth remembering.
The issue is not so much monetary compensation but recognition that it was official British Gvt policy to carry out such atrocities and that indeed the victims of these actions were in some instances innocent people who happened to be members of the wrong ethnic community at the time.
The Cozy Bank-Law Firm Relationship May Not Be So Cozy After All…These days Anyway, Part II.
First posted on Commercial Law International on June 17, 2009.
This is case that has the potential to redefine the very cozy relationship law firms have with their banker clients. No longer will bankers be given blanket coverage under conflict of interest rules to prevent law firms from being representatives in claims brought against them.
The operative word here being potential, as you shall will see.
The relevant facts of the case in brief are as follows: the defendants in the case included the underwriting syndicate of Gammon Gold´s public share offering. Two member of the syndicate included BMO Nesbitt Burns Inc. and TD Securities Inc., both subsidiaries of BMO and TD respectively. It just so happens that Siskinds, who represented the representative plaintiff, McKenna, in the class action, was concurrently retained by BMO and TD to undertake debt enforcement and personal bankruptcy matters. As a result the defendants raised the issue of conflict of interest, seeking to get Siskinds removed from the case.
The judge in the case, Madame Justice Lax, was having none of it; holding that there was no conflict. In her ruling Justice Lax made it clear that ¨the underwriters and banks are separate and sophisticated business and legal entities that are individually governed and autonomous. She went on to say further that ¨the banks had no reasonable expectation that their subsidiaries would be treated as clients.¨
And rightly so. While I fully agree with the judgment, it still remains unclear how it will be received by banks but more importantly, law firms. This is why I said it has the potential to redefine the bank-law firm relationship. It will all depends on how it is read. If the case is read very narrowly and confined to the particular facts of the case, that is where there is a parent and subsidiary relationship and they are separate, sophisticated business and legal entities, individually governed and autonomous, then there is no conflict. This is the extreme and I don’t believe that it will be this narrowly read. However, I do believe that there is the strong potential for it to be read narrowly enough as to preserve largely if not totally the existing regime. It will all depend on the mood (i.e. economic conditions) of the law firms I guess.
On the other hand, if the decision is read more globally, it could usher in a new era of freedom to act o the part of law firms. I hope it is the latter; however, I would not be surprised if it is some form of the former.
In a passing note in Part I of this post I referred to lawyers as attack dogs, this was meant as no offence – I even referred to myself as an attack dog in training. However it was said to provoke some self examination and self evaluation on the part of myself and those more senior in the profession. All too often clients see us in that role and we sometimes do little or nothing to disprove this perception. While I know that I have a long way to go in the profession, I am after all only an articling student, for me; a lawyer is an advocate, a professional that aggressively safeguards the interest s of their clients, however, this dusty must be balance against other professional and personal considerations.
Am I wrong or just being naive?
The Cozy Bank-Law Firm Relationship May Not Be So Cozy After All…These Days Anyway, Part I
First posted on Commercial Law International on Jun 5, 2009.
In Canada an Ontario Superior Court of Justice ruling (McKenna v. Gammon Gold Inc.) has the potential to go viral like the latest YouTube sensation and challenge what can only be called one of the most incestuous relationships in the commercial world.
What am I talking about?
Well I am referring to the relationship, the very close relationship, between banks and law firms.
Ever wonder why, if and when, a bank or other financial institution is being sued it is very rare to find a big name law firm representing the plaintiff but they are very much present to represent the defendant bank? This my friends is no coincidence, it is a deliberate strategy on the part of the banks and other financial institutions. They set out to exploit the conflict of interest rules that lawyers are bound by – a lawyer may not generally represent two clients on opposite sides on the same matter – and they do a very good job of it. This is evidenced by the fact that banks and other financial instructions will spread the legal work they have around to as many international, national, regional and local based (powerhouse) law firms as they can in any market they operate.
The strategy is simple but effective: tie up the biggest, the brightest, the best and if need be the most belligerent legal talent out there. The benefits of this strategy accrue to banks in two significant and interconnect ways. The first is that they have the best legal talent working for them on ordinary transactions while at the same time having them in reserve ready to be unleashed like a pack of attack dogs. The second, which flows from the first, is that having such well trained and impressive attack dogs – oh sorry, I mean lawyers – at the ready will and does inspire fear in not only prospective claimants but other lawyers as well (though most would not admit it).
The law firms are not entirely innocent here, in fact not at all. They are willing subjects or is that objects of the strategy to exploit the conflict of interest rules. They enter this relationship; in fact they actively seek to forge these links, with their eyes, arms and billable hour’s dockets´ all wide open. Law firms know that the work from the banks is not only constant but very lucrative as well, so they are more than happy to be attack dogs for hire.
However, we now live in different times, as this once cozy relationship is being undone or at least it has hit a rocky patch called the current global recession. Whoever first said: it´s all about the money was so right. It is indeed all about the money for both banks and law firms. The former having less work to spread around now is also lacking a commercial rational that would satisfy shareholder costs´ accountability of having such high paid attack dogs in reserve. Consequently, the banks are now looking to cut costs and have aggressively gone after external legal costs reducing the number of attack dogs – sorry, I mean lawyers – it holds in reserve and how much it pays them.
The law firms for their part, seeing the writing on the wall have, have begun to seek out other clients. In fact this has resulted in the once impossible, law firms, well at least in this case, have begun to represent claimants against the banks.
The conflict of interest rules once untested and applied broadly, I would say too broadly, to the bank-law firm relationship is now set for realignment. No longer will law firms simply refuse or not actively seek out work, simply because a suit might be brought against one of their clients. I know I am only an attack dog in training- pardon me, I should say student at law – but my reading of the conflicts section of the Ontario Rules of Professional Conduct does not support such a broad application. Provided the issues are not related, the clients’ information in possession of the lawyer bares no relevance to each other and the lawyers that handle each client´s matter are different, it is difficult to see where a conflict of interest would be created.
Thankfully I don’t have to stand alone in my opinion. I now have Justice Lax in McKenna v. Gammon Gold Inc. to back me up when she ruled that Siskinds should not be disqualified for a conflict of interest from prosecuting a class action against an underwriting subsidiary of a client bank that it acts for in separate matters.
And how so? Well you are just going to have to stay tuned for part two.
Shell & The Elephant In The Room
First posted on Commercial Law International on June 9, 2009.
By Charles Wanguhu
A report by the Economist Intelligence Unit indicates that protecting a firm’s reputation is the most important and difficult task facing corporations. With the development of global media and communication channels, managing reputational damage is seen as crucial with events undertaken in even the remotest areas affecting the international brand of a corporation.
For Shell the stark reality of reputational damage is all too clear. After years and years of denial and expressing its innocence of the Ogoni affair (it still maintains its innocence), Shell has decided to settle a case brought against it out of court for a sum of 15.5 Million US $. The lawsuit had accused the company of colluding with Nigeria’s former military regime over the execution of Ken Saro-Wiwa and other peaceful anti-oil protesters.
Like Nike before it Shell remains in many minds as the poster child of a lack of corporate responsibility especially in big multinationals. The Saro Wiwa case is largely sited not only in commercial classrooms but across NGO conferences worldwide. Multinationals are viewed as bulldozing their way with the help of corrupt and dictatorial regimes to fulfill their interests with complete disregard to vulnerable communities.
The perception of Shell as the irresponsible corporate persists despite the fact that it has invested millions in engaging communities in areas that it works in and has increasingly taken on human rights in its business models and stakeholder engagement strategies.
In response to the case filed Malcolm Brinded, Shell’s executive director for exploration and production, was quoted,
“While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region.”
The settlement could be seen as a magnanimous move by Shell in some quarters with some already hailing the move as groundbreaking in terms of holding corporations accountable. However when looked at broadly the settlement will be seen as a coup for Shells PR team: instead of having weeks, months or even years of a contested trial where Shells actions or lack of thereof would be once again stirred up in everyone’s mind globally, a quick settlement offers a quick escape route.
All in all $15.5Million may well be considered a bargain when factoring in legal costs, reputation risks and lost revenue. There could well have been some champagne popped at Shell HQs but am sure downstairs in the legal department the wait is on with baited breath to see whether the floodgates have been open.
Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part III
First posted on Commercial Law International on May 19, 2009.
Injunction, injunction, what´s your function?
Sorry I just could not resist. Despite my lame attempts at a joke, it is a very valid question.
What is the function of an injunction?
It is a power whereby the court may order positive action be taken or an order to refrain from acts being currently done. It may be granted at the interlocutory (that is to say at any stage before the end of a trial) or it could form part of a judge´s final judgment. In either case it is a very powerful tool of the courts and one that is not exercised lightly. Special attention, however, should be paid to the interlocutory injunction as it is a pre-trial determination, it is also a subject on which the Privy Council had a few choice words for both the Jamaican judiciary and Jamaican Bar in National Commercial Bank Jamaica Limited vs. Olint Corporation Limited.
The interlocutory injunction is best thought of as a pause button. It is designed to freeze in place the item that is in dispute by ideally preserving the status quo. However, we do not live in a static world and there are going to be winners and there are going to be losers with such an order – you could go as far as saying such an order creates only losers and worse losers. This is why judges are or ought to be extremely cautious in the exercise of this discretion. It should not be that the making of such an order – one that is done without the full rigors of a trial – be determinative of the (main) issue or issues in dispute. This is why judges look to what is called balance of convenience (American Cyanamid Co v. Ethicon Ltd) or more accurately the balance of inconvenience. As Lord Hoffman explains in the NCB case, ¨the basic principle is that the court should take whichever course seems likely to cause the least prejudice to one party or the other.¨
Having decided that Mr. Justice Jones was correct in the first instance to dismiss the case, holding that there was no triable issue, their Lordships had no need to go any further. However (a favorite word of a lawyer), their Lordships went on to deliver a dicta that wrapped the knuckles of the Jamaican judiciary and Bar – as would a school master a disobedient pupil in days of old. As many a current and former law student come to learn, while the ratio of a case deals with the issues at hand, it is often the dicta though said by the way, that is the most significant aspect of a judgment. And this I believe is the case here.
Their Lordships wanted to point out, provide some guidance and in a display of judicial politics, gave the Jamaican legal establishment scolding – that was at times not so well veiled.
There were two features of this case that troubled the Privy Council. The first was that, ¨there appears to have been no reason why the application for an injunction should have been made ex parte, or at any rate, without some notice to the bank.¨ An injunction applied for and given without presence or notice to the other party ought to be a very rare thing, ¨although the matter is in the end one for the discretion of the judge, audi alterem partem is a salutary and important principle.¨ Audi alterem partem – sorry for the Latin but it had to be done - is a fundamental tenet and a cornerstone of justice and cannot be trotted on lightly. It is the right for the other side in a dispute to be heard – like I said a cornerstone of our justice system.
Given the facts of the case, especially the nature of what was in dispute, there should have been no reason why the application for the injunction should not have been inter partes but at a minimum with there should have been some notice to the bank. As their Lordships pointed out, ¨any notice is better than none.¨ The guidance provided to judges considering such applications was made by Lord Hoffmann in no uncertain terms. He lays down the law (literally), ¨that a judge should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction…or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act.¨ The italics are Lord Hoffmann´s. Lord Hoffmann further went on to point out these two conditions are enshrined in the Section 17.4 (4) of the Jamaican Civil Procedure Rules 2002.
What characterizes both these alternatives is a sense of urgency. Olint it would seem feared that the immediate closure of its accounts would prejudice it in its main action against the bank. However such fears are not substantiated by the facts of the case. Not only was Olint given ample notice, they were given an extension. Moreover, the closure of a bank account, with or without extensive notice, is not sufficient grounds on which to say that there was no time to give notice. Their Lordships wondered why, ¨no explanation has been given for why it was not possible for the bank to be given notice of the application.¨
However, it was later explained to their Lordships that such last minute ex parte applications had become common practice in Jamaica. The recent cases of World Wise Partners Ltd v RBTT (2008) and Smith v NCB (2008) were cited as examples.
The Privy Council, expectedly, took exception to such blatant disregard for the law and the Civil Procedure Rules by both the judiciary for granting such injunctions and the Bar for applying for them. They went on to say, ¨these cases appear to show a disregard of rule 17.4 (4) for which no justification is offered. If the rule is not generally enforced, plaintiffs will be encouraged to make a tactical use of the legal process which should not be allowed.¨
Like I said a wrap on the knuckles – actually in legal terms a wrap is highly understating things.
The second feature that troubled the Privy Council was the way in which both Smith J and the Court of Appeal applied the balance of convenience test in the refusal, in the case of the former, and the granting, in the case of the latter of the interlocutory injunction. The basic principle that both had to be mindful of, ¨is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other.¨ Moreover, ¨what is required in each case is to examine what on the particular facts of the case the consequences of granting or withholding of the injunction is likely to be¨
It appears that what the Jamaican courts did was first to characterize the injunction as either mandatory (requiring positive action) or prohibitory while applying the balance of convenience test. Each requires different factors to be taken into account. A mandatory interlocutory injunction would require a ¨high degree of assurance¨ that the applicant would be prejudiced by its refusal, while a prohibitory interlocutory injunction required a ¨serious issue to be tried.¨ At first instance Mr. Justice Jones characterized it has mandatory and refused to grant it while the Court of Appeal characterized it as prohibitory and granted it.
As it turns out the judge at fist instance was correct in result but not in his reasoning. Because what matters is what the practical consequences of the injunction are, ¨arguments over whether the injunction should be classified as prohibitive or mandatory are barren (Films Rover International Ltd v Cannon Films Sales Ltd). Their Lordships made it clear that they ¨consider that this type of box-ticking approach does not do justice to the complexity of a decision as to whether or not to grant an interlocutory injunction.¨
Yet another wrap on the knuckles….Ouch.
It will be very interesting to see what that reaction of the judiciary and Bar will be in Jamaica. This may be a bitter pill to swallow; however, to my mind their Lordships are wholly correct in fact and in law.
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