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Lawyer-Client Relationships and Fiduciary Obligations

Certain categories of relationships such as the lawyer-client are considered to possibly give rise to fiduciary obligations because of their inherent purpose or their presumed factual or legal incidents.

It is well-established that not all obligations existing between the parties to a well recognized fiduciary relationship, such as lawyer and client, will be fiduciary in nature, and in the context of a solicitor client relationship, not every breach of duty will be a breach of fiduciary duty. Strother v 346-4920 Canada Inc. 2007 SCC 24 at paragraph 34.

Thus a failure on the part of a lawyer to use reasonable care and skill on behalf of a client may result in the lawyer been found to be negligent, but not necessarily in breach of the lawyers fiduciary duties to the client.

Huang v Li 20202 BCSC 1727 examined the lawyer client relationship and when a breach of fiduciary duty may arise.

Acts of professional misconduct and a failure on the part of the lawyer to comply with the professional standards described in the document, such as a professional code of conduct may result in the lawyer being disciplined by the lawyer’s governing body, but not necessarily constitute a breach of the lawyers fiduciary duties to the lawyer’s client.

In the Strother decision, the Supreme Court of Canada stated that” a fundamental duty of a lawyer is to act in the best interest of his or her client to the exclusion of all other adverse interests, except those duly disclosed by the lawyer and willingly accepted by the client.

The solicitor client relationship was described at paragraphs 34-35 as:

“ when a lawyer is retained by a client, the scope of the retainer is governed by contract. It is for the parties to determine how many, or a few, services, the lawyer is to perform, and the contractual terms of the engagement . The solicitor- client relationship thus created is, however, overlaid with certain fiduciary responsibilities, which are imposed as a matter of law.
The source of the fiduciary duty is not the retainer itself, but all the circumstances, including the retainer, creating a relationship of trust and confidence from which flow obligations of loyalty and transparency. Not every breach of the contract of retainer is a breach of a fiduciary duty.

On the other hand, fiduciary duties provide a framework within which the lawyer performs the work and may include obligations that go beyond what the parties expressly bargain for. The foundation of this branch of the law is the need to protect the integrity of the administration of justice. MacDonald Estate v . Martin (1990) 3 SCR 1235 at paragraphs 1243 and 1265.

Fiduciary responsibilities include the duty of loyalty of which an element is the avoidance of conflicts of interest.
Two points must be made with respect to the rule of professional conduct for a lawyer:

Two Points about Professional Conduct:

1.There is an important distinction between the rules of professional conduct and the law of negligence. Breach of one does not necessarily involve breach of the other. Conduct may be negligent, but not breach rules of professional conduct, and breaching the rules of professional conduct is not necessary negligence. Codes of professional conduct while they are important statements of public policy with respect to the conduct of lawyers, are designed to serve as a guide to lawyers and are typically enforced and disciplinary proceedings.

2. The second point relates to the concerns underlying the rules of conduct in relation to borrowing from clients. The rule is a specific application of the general rules about conflict of interest. There is concern the lawyers legal skill and training, coupled with the relationship of trust arises between the solicitor and client, creates the possibility of overreaching by the lawyer. A further concern is that the lawyers in a position during the form of the transaction and may therefore further his or her own interests instead of those of the client.

Certain categories of relationships are considered to give rise to fiduciary obligations because of the inherent purpose of their presumed factual or legal incidents. These categories are sometimes called per se fiduciary relationships.

A claim for breach of fiduciary duty may only be founded on breaches of the specific obligations imposed because the relationship is one characterized as fiduciary.

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