Risk Update

Communications Conflicts — Cable/Cell Conflicts Cause Consternation and Complexity in Canada

Posted Dan Bressler

Hat tip to Simon Chester (Head of Client and Matter Acceptance Team at Gowling WLG) for sending word of: “Potential conflicts of interest prompt Rogers to switch law firms” —

  • “The battle for control of Rogers Communications Inc., which is coming to a head in a B.C. court Monday, has involved an ever-increasing number of lawyers as players in the corporate drama cycle their way through law firms because of potential conflicts of interest. The B.C. Supreme Court hearing is expected to decide if Edward Rogers can dictate who is on, and off, the board of Canada’s largest cellphone and cable company, founded by his father. Rogers is on its second law firm in as many weeks.”
  • “Hiring Goodmans triggered another legal challenge last week, as lawyers for Edward Rogers flagged a new potential conflict. In court filings, they pointed out Goodmans is now representing both the company and chief executive Joe Natale, who Mr. Rogers unsuccessfully attempted to fire in late September, setting off an increasingly bitter feud. Goodmans responded by saying both the CEO and the company signed off on the firm as Fasken’s replacement, eliminating the issue.”
  • “Legal experts say the conflicts laid bare at Rogers, which play out against a backdrop of consolidation in corporate Canada, highlight the barriers to mergers among major law firms and strengthen the business case for specialized legal boutiques.”
  • “‘Situations like Rogers create unique conflicts,’ said lawyer Gavin MacKenzie at MacKenzie Barristers, an expert in legal ethics. Mr. MacKenzie is a former head of a regulatory body for lawyers as treasurer of the Law Society of Ontario. ‘You have a public company, where everyone was previously rowing in one direction, suddenly breaking down into constituencies that have very different goals, creating significant challenges for their lawyers,’ he said.”
  • “Last Friday, court filings show three members of the Rogers family – Loretta Rogers, widow of the founder, and two of her daughters, Melinda and Martha – attacked perceived conflicts at Torys LLP. The corporate law firm has overseen the clan’s affairs for decades and works for the Rogers Control Trust, an entity that controls 97.5 per cent of the company’s voting shares. In the 1960s, newly graduated law student Ted Rogers articled at Torys before moving into radio and cable.”
  • “A series of Supreme Court of Canada decisions over the past three decades raised the bar on a law firm’s duty to its clients. In a 2013 decision on a case involving Canadian National Railway Co., the top court said a law firm cannot act for a client whose interests oppose another client, even in unrelated matters, unless both sides consent.”
  • “A number of small firms with central roles in the Rogers leadership struggle, including Lax O’Sullivan Lisus Gottlieb, trace their roots to litigators who left major firms in part to avoid conflicts. Partners at the boutique used to work at Goodmans and McCarthy Tétrault. Mr. MacKenzie said as courts raised the bar on a lawyer’s duty to its clients, they ensured a steady stream of work will go to boutique firms with proven practitioners.”

For more detail on the substance of the matter, see: “Family battle for control of Rogers lands in B.C. court.”