Page 26 - CCCA 243725 Magazine_Winter 2015

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“ Whistleblowing is like the Bogeyman. no one wants

to talk about it. People come to lawyers because
they see them as the conscience of the organization.
People are looking to you for help. ”

Jean Nelson, Director, governance and Legal Services, Canadian Medical Association

scenario that people know wrongdoing but have to wait until their duty and reacting to particular facts and situations. It’s
it happens before reporting it. In most circumstances, U.S. law the kind of situation that’s hard to sanction. Who would cite
gives people the discretion to report such wrongdoing, instead in-house counsel for not blowing the whistle? The shareholder?
of requiring them to do so. People have the ability to follow How would they have knowledge of this?”
their conscience and not be forced to facilitate wrongdoing or Financial compensation is another hot topic. Because of the
remain silent.” loss of employment and reputation, fnancial incentives have
Disclosure must be restricted to the misconduct. In Fair Lab- been offered to whistleblowers—but the SEC Whistleblower
oratory Practices Association v. Quest Diagnostics Inc., the U.S. Program and the proposed Ontario Securities Commission
Court of Appeals in the second circuit ruled that former in- (OSC) Whistleblower Program exclude lawyers from receiving
house counsel breached their duty of confdentiality in disclos- fnancial compensation. Whether lawyers should receive com-
ing information about their former employer. The court found pensation is a thorny issue that touches on the lawyer’s duty to
that the lawyers had disclosed more than what was necessary the client, the relationship with the client and real economic
and that they violated Rule 1.9(c) of New York Rules of Profes- loss for whistleblowers. These programs do not require whis-
sional Conduct, which prevents lawyers from disclosing infor- tleblowers to use internal reporting mechanisms before going
mation about past clients. forward and reports can be made anonymously. Supporters of
So far Canada has not followed the U.S. model. The Federa- the proposed OSC program claim these policies are needed to
tion of Law Societies of Canada (FLSC) reviewed the new ABA protect people from retaliation. Critics argue the anonymous
rules but decided not to move forward in amending the Model reporting and no requirement for internal reporting gives peo-
Code of Professional Conduct. In 2010, the Advisory Commit- ple the incentive to create false reports for compensation.
tee on the Future Harm Exception recommended the rules be “The threat of retaliation is real, but because of the ability
amended to include disclosure based on imminent risk of “sub- to report anonymously, more people are coming forward,” says
stantial fnancial injury.” Thomas. “There will always be a tension between reporting
“Following consultation with the law societies, it was agreed wrongdoing and protecting privilege communications. When
that more discussion of the proposed future fnancial harm rule external reporting is necessary, it often refects a signifcant
was needed,” says Tom G. Conway, President of the FLSC. “In breakdown in the appropriate handling of the reported wrong-
March 2011, the matter was referred to the Federation’s Stand- doing by the company.”
ing Committee on the Model Code of Professional Conduct.
The issue is on the committee’s ‘issues list’ and will be consid-
ered in due course.” ✖ BloWing tHe WHistle
Law societies have also looked at the issue. In the Law Society
of Upper Canada (LSUC) Rules of Professional Conduct, the You’ve gone through the process of analyzing the information
commentary under Rule 3.3, Justifed or Permitted Disclosure, and decide it’s time to blow the whistle. How do you do it? Law-
makes it clear that even with imminent fnancial harm, lawyers yers must go through the process of up-the-ladder reporting.
are not permitted to disclose to third parties. In the commen- When in-house counsel discovers or is informed of any wrong-
tary, the rules state that while lawyers should not knowingly en- doing, they may disclose the wrongdoing to senior manage-
courage or participate in any wrongdoing, “it does not follow ment, working up the ladder to the board of directors if nec-
that the lawyer should disclose to the appropriate authorities an essary. The most common concern for lawyers is determining
employer’s or client’s proposed misconduct.” whether there’s an issue that needs to be disclosed to others and
“The law societies have the duty to the public to regulate the the type of privilege that may be applicable. If the wrongdoing
profession,” says Nelson. “The lawyers in-house are discharging continues, in-house counsel may have to resign.

26 CCCA MAgAzInE | WIntEr 2015 HIVEr