Too Much Information!

Discussions of legal ethics and protection of information often don’t distinguish between confidential information and privileged information. The seminal case of Macdonald Estate v. Martin[i] provides a good example. As Justice Sopinka put it:

Typically, these cases require two questions to be answered: (1) Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? (2) Is there a risk that it will be used to the prejudice of the client?

Of course, not all confidential information received by a lawyer in the context of a solicitor and client relationship is privileged. While confidential communications between lawyer and client for the purposes of obtaining and providing legal assistance are protected by solicitor-client privilege, confidential communications with third parties are generally not.

And when Macdonald Estate was decided, the Canadian courts had not yet clearly delineated between solicitor-client privilege and litigation privilege. We now understand that confidential communications with third parties for the dominant purpose of litigation are generally protected by litigation privilege but not by solicitor-client privilege[ii].

The Canadian law of privilege is also clearer with respect to “common interest” which, in certain circumstances, permits privileged information to be shared on a confidential basis without waiver of privilege. Sharing privileged information between parties in litigation with a common interest is the obvious example but sharing privileged information with a view to completing commercial transactions is another[iii].

The Macdonald Estate principles have been applied in new circumstances over the last two decades. Macdonald Estate itself was a transferring lawyer case in which the “virus” of confidential information came with a transferring lawyer who had previously acted on the other side in ongoing litigation.

The Court of Appeal for Ontario applied the Macdonald Estate principles to acting against former clients in Chapters Inc. v. Davies, Ward & Beck LLP [iv]. In Celanese Canada Inc. v. Murray Demolition Corp.[v], a law firm was disqualified to ensure that privileged information of the opposing party improperly acquired through an Anton Pillar order was not accessed. In Stewart v. Humber River Regional Hospital[vi], the Court of Appeal for Ontario disqualified a law firm that had learned privileged information from the opposing party in litigation as a result of retaining an expert witness previously retained by the other side.

These cases demonstrate that what is in issue is the protection of the administration of justice rather than just the duties owed by lawyers to their clients. In Macdonald Estate, Celanese and Humber River, the law firm was disqualified at the instance of the opposing party and not at the instance of their own client. Justice Goudge made this point clearly in Humber River when he said at paras. 23 and 24:

The starting point is that the courts have an inherent supervisory jurisdiction that extends to the removal of solicitors from the record where their conduct of legal proceedings would adversely affect the administration of justice (MacDonald Estate, at p. 1245 S.C.R.).

Where solicitor-client information comes into the possession of the opposing party, this creates a serious risk to the integrity of the administration of justice. …

While the cases have not yet examined whether the Macdonald Estate principles apply with equal vigour to litigation privileged information as to solicitor-client privileged information, one would think that the same result would apply despite the greater protection applied to solicitor-client information as the integrity of the administration of justice requires that the opposing party not have access to either type of privileged information.

While not yet decided so far as I am aware, I would expect that the Macdonald Estate principles would apply to protect privileged information obtained under the “common interest” exception as well. For example, if a lawyer were to receive privileged information about ongoing litigation in the context of a failed asset purchase, it would seem to follow that the lawyer could not turn around and act for the opposite party in that litigation.

But do the Macdonald Estate principles apply to confidential information that is not privileged? Reviewing Macdonald Estate, Justice Sopinka refers throughout to confidential information rather than to privileged information although he does refer to “confidential information attributable to a solicitor and client relationship”. This phrase is somewhat ambiguous. It would seem to apply to lawyer-client communications. Yet a lawyer receiving non-privileged but confidential information from an opposing party in a transactional matter will have received confidential information as a result of a solicitor and client relationship.

Given the policy analysis in Macdonald Estate, it seems to me that Justice Sopinka was intending to refer to solicitor client privileged information. As he said in discussing the Legal Ethics – Policy Considerations:

… Nothing is more important to the preservation of this relationship than the confidentiality of information passing between a solicitor and his or her client. The legal profession has distinguished itself from other professions by the sanctity with which these communications are treated. The law, too, perhaps unduly, has protected solicitor and client exchanges while denying the same protection to others. This tradition assumes particular importance when a client bares his or her soul in civil or criminal litigation. Clients do this in the justifiable belief that nothing they say will be used against them and to the advantage of the adversary. Loss of this confidence would deliver a serious blow to the integrity of the profession and to the public’s confidence in the administration of justice.

From this, the point of MacDonald Estate can be seen as being to ensure that a client’s privileged information be protected by disqualification against being used against them and that non-privileged confidential information was not intended to be protected. It is also reasonable to conclude that it is only the privilege-holder who is protected under the Macdonald Estate principles.

While this may all seem a bit arcane, the questions of the nature of the information properly protected under MacDonald Estate principles and who is entitled to protection are recently raised in two separate contexts.

The first is the recent amendment of the transferring lawyer rule in the Federation of Law Societies’’ Model Code of Professional Conduct. Model Rule 3.4-17 previously defined confidential information to mean “information that is not generally known to the public obtained from a client”. Practically, this meant solicitor-client privileged information as information obtained from third parties was not included in the definition. This definition is no longer used and Model Rule 3.4-18 is now triggered when either (emphasis added):

(a) It is reasonable to believe the transferring lawyer has confidential information relevant to the new law firm’s matter for its client; or

(b) the new law firm represents a client in a matter that is the same as or related to a matter in which the a former law firm represents or represented its client (“former client”); (ii) the interests of those clients in that matter conflict; and (iii) the transferring lawyer actually possesses relevant information respecting that matter.

While perhaps not intended, the transferring lawyer rule is engaged whenever a transferring lawyer has relevant confidential information, whether privileged or not, whether or not obtained from a client and whether or not obtained in the context of a lawyer-client relationship. The transferring lawyer model rule, as amended, may now have a much broader ambit. While it is seems obviously good to protect confidential information, it is important to recognize that the transferring lawyer rule can result in disqualification of the lawyer in an existing matter. It is startling to think that a client could lose his or her lawyer to protect information that is not privileged and not necessarily learned in the course of any lawyer client relationship.

The second is a recent case in which leave to appeal a disqualification order was recently granted by the Ontario Divisional Court in Performance Diversified Fund v. Flatiron et al[vii]. In Flatiron, an employee consulted a lawyer about employment issues and, in that context, apparently disclosed confidential information about the business of the employer. The law firm was disqualified on the motion of the employer. This raises interesting questions.

If viewed as a matter of the law of confidential information, it is understandable that the court could intervene to protect against the misuse of an employer’s confidential information disclosed by an employee to a third party. But if viewed as a matter of the law of privileged information or the protection of the administration of justice, it is difficult to see why the employer would have right to seek to protect the privilege rights of the employee. Relevant confidential information is ordinarily accessible by discovery in litigation while privileged information is not. The employer’s confidential information did not become privileged by communication by the employee to his lawyer.

My view is that the Macdonald Estate principles properly apply, given their policy basis, to the protection of privileged information at the instance of the privilege-holder. Where privileged information is not at issue and where the rights of a privilege-holder are not put at risk, the administration of justice is not imperilled if the lawyer continues to act – and there is no basis to require that another party be deprived of the lawyer of their choice – who may well be expensive to replace.

This discussion may illustrate what may be seen as a lack of clarity in our thinking around protection of information under the law of lawyers and the Model Code. Some protected information under the Model Code need not even be confidential information (e.g. Model Rule 3.3-1). Some protected information may not need to be privileged (e.g. Model Rule 3.4-18(c)). The Model Code does not distinguish between confidential information and privileged information and is thought by some to imply that privileged information may be used where the law of privilege would not permit its use (e.g. Model Rule 3.3-4(b) and (c)).

It seems to me that our ethical rules and the law could benefit from greater precision so that we protect what is properly protected in support of the administration of justice.


[i] Macdonald Estate v. Martin, [1990] 3 SCR 1235

[ii] Blank v. Canada (Minister of Justice), [2006] 2 SCR 319

[iii] General Accident Assurance Company v. Chrusz (1999), 45 OR (3d) 321 (OCA)
Maximum Ventures Inc. v. De Graaf, 2007 BCCA 510

[iv] Chapters Inc. v. Davies, Ward & Beck LLP (2001), 52 OR (3d) 566

[v] Celanese Canada Inc. v. Murray Demolition Corp., [2006] 2 SCR 189

[vi] Stewart v. Humber River Regional Hospital, 2009 ONCA 350

[vii] Performance Diversified Fund v. Flatiron et al, 2014 ONSC 6892


  1. I have heard of similar issues in the UK, so it isn’t a situation specific to Canadian law.

  2. Lee Akazaki, C.S.

    A “bright line” precisely setting out protected secrets from unprotected secrets may be a holy grail for law firm managers, but the examples cited of the sources of the law of confidentiality and privilege show that the law itself is not sufficiently settled in our young country to draw such a line safely.

    At the root of all policy considerations relating to the law of secret-keeping is the normative principle of encouraging the teller to confide. In medicine, the burden of the family doctor in keeping a medical secret of one family member from the rest of the family can be justified in that the teller will not otherwise seek treatment and cure. Law has developed the principle that one who places one’s well-being in issue in a legal proceeding risks having the physician subpoenaed and forced to divulge the secret in open court. That may be a conceit of law, if the harm created by the divulged secret is greater than the issue before the court; or if litigants do not seek justice for fear of having their doctors in the witness box.

    (Perhaps, in a parallel universe, medicine would develop a principle that legal secrets can be divulged if clinically necessary in an operating theatre.)

    Moreover, the line that is too bright will represent a visible barrier against lawyer mobility. Courts imposing that barrier favour the client before the court to the prejudice of the clients of the firm who may benefit from the moving lawyer’s special expertise. Such is the myopia of the judicial law-making process, and for this reason even the Supreme Court is not always best placed to be the surveyor of the boundaries of this area of law.

    There are many miles left on this journey before we are allowed a rest.