It took the U.S. legal system 15 weeks to convict Conrad Black of fraud charges, the majority of which were overturned by the U.S. Supreme Court. It will take the Law Society of Upper Canada almost two years to decide whether or not Black’s lawyers, Beth DeMerchant and Darren Sukonick of Torys LLP, were in a conflict of interest when they advised him and his companies on the non-compete agreements at the centre of his criminal charges.
It’s a sign of stunning ineptitude that the LSUC can’t prosecute lawyers in a timely fashion. It informed them in January 2006 that they were under investigation for actions dating back to 2000. A discipline hearing, which started as an important test of the law society’s conflict rules, has become a prosecutorial folly.
What many thought should have been a slam-dunk for outside prosecutor Paul Stern has turned into a shambles, which should leave benchers shaking their heads and asking hard questions.
Even Black in his book, A Matter of Principle, questions the law society. In a fascinating, inside look at the U.S. justice system through the eyes of an accused, he writes of the now-retired DeMerchant, a former Torys partner, and Sukonick, who was an associate at the time: “I was never overly impressed with their imagination, and some of their advice was incorrect, but I don’t think they were unethical or negligent. The singling out of them, as well as the Law Society’s rather banal allegations, seems to me to be shabby and tokenistic placation of opinion by the Toronto legal establishment, at the expense of two relatively defenceless scapegoats.” (Black’s book provides a candid opinion of lawyers and personalities he dealt with in his career and legal tribulations.)
The Torys lawyers are charged with six counts of failing to adequately disclose their conflicts of interest and obtain consent of their clients in breach of Rule 2.04 of the Rules of Professional Conduct. The discipline hearings started badly for the LSUC in 2009; 168 boxes of materials were unearthed that hadn’t been disclosed by Torys, prompting an adjournment.
It has been downhill since. A major law society witness about conflicts — lawyer Gar Emerson — was kicked off the case because of a conflict. Another witness withdrew after it was determined he was not qualified to provide expert testimony on the matters in question.
There was also an earlier attempt by LSUC counsel to take the hearing in camera, much to the chagrin of the discipline panel and defence lawyers Phil Campbell and Ian Smith. That turned into a needless sideshow over public access to the hearings and if companies involved had waived their privilege, even though much of the material had been publicly disclosed in court documents.
The panel sat for one day in 2009, 31 days in 2010, and 35 days in 2011 (at press time). Despite that, and 16 days of DeMerchant cross-examination, they are only through a couple of the charges. Another seven days of hearings were expected in 2011 and 24 days are set for 2012.
Compounding matters, one of the panelists hearing the complaint, Paul Henderson, was appointed to the bench.
LSUC spokeswoman Susan Tonkin says, “a number of factors can affect the length of a hearing, including the complexity of the proceeding, volume of materials, number of witnesses, number of motions, and, occasionally, unforeseen events.” Law society officials wouldn’t disclose the cost of the prosecution. A six-year case wouldn’t come cheap and if the LSUC loses, the fees will easily reach millions of dollars when defence costs are added in. Then there are the likely appeals.
Yet, if convicted, it’s unlikely the lawyers would be disbarred. They’re not accused of misappropriating funds. Rather, a suspension would likely be in order. Any victory at this stage would be Pyrrhic at best.
Sadly, Sukonick will almost spend more time fighting these charges than he has practising law and his career has been, if not destroyed, then certainly waylaid.
There’s a strong feeling on the street that DeMerchant, who earned as much as $900,000 annually, should have fallen on her sword and saved her junior by pleading guilty, taking her lumps, and moving on. The handling of this case, combined with the persecution of Joe Groia for his comments towards the prosecutor in the Bre-X/Felderhof case, has shaken the confidence of many lawyers when it comes to the law society’s judgment involving prosecutorial decisions affecting members.
The profession desperately needs guidance when it comes to matters of conflict of interest and commercial deals. The LSUC should draft new rules; there’s a good chance they would pass before this prosecution ends. This test case had the potential to clear the air. But it has become a circus — much like the Groia affair.
Jim Middlemiss is an Ontario lawyer and co-owner of WebNews Management Corp. You can reach him by e-mail at [email protected].
