Dirty Laundry

Can the state enlist lawyers to help it crack down on money laundering in which their clients might be involved? This was the question addressed by the B.C. Court of Appeal in Federation of Law Societies of Canada v. Canada (Attorney General), 2013 BCCA 147, an important judgment delivered last week. Elevating the independence of the bar to a constitutionally enshrined principle of fundamental justice, the Court held that only law societies, not the government, could force lawyers to keep and eventually to hand over records of financial transactions.

The legislation at issue required lawyers and law firms, as well as other professionals, when acting as financial intermediaries for their clients, to keep records of transactions, and made it possible for the federal agency responsible for preventing and combating money laundering to access the lawyers’ offices and computers without a warrant in order to review the documents kept there, subject to the lawyers’ ability to challenge request for the documents covered by the solicitor-client privilege. The information obtained from the lawyers could then be transmitted, on certain conditions, to law enforcement.

The Federation of Law Societies of Canada (FLSC), which consists of the 13 provincial and territorial bars and Québec’s Chambre des Notaires, challenged its constitutionality as applied to legal professionals. They succeeded at first instance on the basis that the legislation authorized violations of the solicitor-client privilege, which Canadian courts had already recognized as a constitutionally protected principle of fundamental justice. The Court of Appeal, however, rested its judgment on a broader foundation: the independence of the bar, which it held was also a principle of fundamental justice protected by s. 7 of the Charter.

One preliminary issue that the court had to address was the factual foundation of the Charter challenge. No lawyer had actually been accused under the impugned legislation; the attack on it was entirely preventive. The Court held that this did not matter, pointing to the voluminous record of social science evidence about the purpose of the legislation at issue that was before the judge of first instance. Another concerned the interpretation of the legislation―the government argued that it did not go so far as the FLSC contended, but the Court rejected that submission. Yet another preliminary issue was whether the liberty interests of clients, as well as lawyers, were engaged. The Court split on this point, the majority holding that they were because information collected by or seized from lawyers could serve in the prosecution, and eventual imprisonment, of clients, while the concurrence found the connection too remote to be significant.

On the main question, whether the potential deprivation of liberty of lawyers under the legislation was in accordance with the principles of fundamental justice, as required by the Charter, the Court was unanimous. It held that, although this was not yet at “settled” matter, “the independence of the Bar” is a principle of fundamental justice.  Pointing to a number of judicial decisions recognizing the value of an independent Bar, the Court concluded that it “has long been recognized as a fundamental feature of a free and democratic society” (par. 107) and an element of the Rule of Law (par. 111). It further held that the independence of the Bar was a sufficiently precise standard against which to assess legislation: “the independence of the Bar consists of lawyers who are free from incursions from any source, including from public authorities” (par. 113). Because the anti-money-laundering legislation “will turn at least some lawyers into agents of the state” (par. 124) for the purpose of collecting information about their clients, it infringes the independence of the Bar and thus s. 7 of the Charter.

The final issue for the Court was whether this infringement could be justified under s. 1 of the Charter. In most s. 7 cases, analysis on this point is almost perfunctory; it is difficult to imagine how an infringement of “principles of fundamental justice” could ever be “demonstrably justified in a free and democratic society.” Here, unusually, the s. 1 analysis was actually longer than that on s. 7, but the conclusion was still the expected one. The Court held that there existed an effective alternative to government regulation infringing on the independence of the Bar: regulation by law societies. The fact that the government appeared to accept the idea of outsourcing some control functions to the law societies only supported this conclusion. Since there existed a constitutional alternative to the government’s chosen regulatory approach, it was not minimally impairing of the rights at stake, and thus not justified under s. 1 of the Charter.

Although the Court’s reasoning seems like a logical extension of the cases which it cites, I find the decision disturbing.

First, as for example with the Québec Bar’s challenge to the constitutionality of the federal government’s “tough on crime” legislation (about which I wrote here), I am uneasy at constitutional challenges that divorced from specific factual situations and involve only “legislative,” contextual facts. It seems to me that such cases call into question the specifically judicial nature of judicial review of legislation; they make courts into legislative rather than judicial bodies.

Second, and perhaps more importantly, I am also very uneasy at the idea of constitutionalizing the “independence of the Bar.” It is true that the existence of lawyers willing to take on unpopular cases, including cases opposing citizens to the government, is important to the preservation of freedom and of the Rule of Law. But is it necessary, to grant constitutional protection to the law societies―legally sanctioned cartels which exist for the purpose of propping up the income of their members, whatever their rhetoric about access to justice which the higher prices they impose impede? Could this constitutional status be used to challenge an eventual law (unlikely, alas) liberalizing the market for legal services and reducing or even eliminating the Bar’s monopoly? It would be a sad outcome if debates about such legislation were prevented by the collusion of the Bar and the judiciary. Finally, I would note that the judiciary accepts, as a necessary corollary of its independence, a duty of reserve―the idea that judges must be politically neutral and indeed abstain from commenting on most issues of public concern (except arguably those that have to do with the organization of and access to courts). Is the Bar prepared to pay the same price for its independence? The activism of Québec’s Bar certainly suggests that it is not. And, while I think that the Québec Bar’s transformation into a public interest litigation outfit akin to the Canadian Civil Liberties Association is a bad idea, I don’t think that lawyers ought to be as neutral as judges. But then they should not try to have their cake and eat it too.

The BC Court of Appeal does not think so, it would seem, though I wonder to what extent it actually thought through these questions. For the Court, lawyers are constitutionally entitled to do their own dirty laundry.

Author: Leonid Sirota

Law nerd. I teach public law at the University of Reading, in the United Kingdom. I studied law at McGill, clerked at the Federal Court of Canada, and did graduate work at the NYU School of Law. I then taught in New Zealand before taking up my current position at Reading.

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