It is not just an academic question as I shall set out in this BLOG. In fact, if I am right in what I am suggesting, it may help solve Windsor's deficit, at least for the short term.
For mathematical ease, let’s assume that there are 200,000 people living in the City of Windsor. Let’s also assume that the total fees charged by David Estrin including legal and consulting fees for all the work that he has done for the City total about $5 million. A quick division would show that I have contributed $25 for those costs. I want my money back!
It looks like this might be litigation week with my BLOGs. I have already Blogged about the concerns that I have with the Heritage lawsuit that may come. Nevermind, the massive lawsuits that may start over DRIC and the Enhancement Project that could last a decade or more if past history is a guide to the future. We should not forget other little spats like the Interim Control and Demolition Bylaws that prevent the tearing down of the homes on Indian Road or possible anticompetitive activities with respect to the Tunnel. By the time this is done, the only limitation will be the imagination of litigation counsel.
Let us come back however to the lawsuit started by the Bridge Company against David Estrin and his law firm with respect to his representation of the City. No matter what, it has to be embarrassing for the firm, one of the largest in Canada, and for its head, Scott Jolliffe, who was the Chair of the Canadian Bar Association Committee on conflicts involving lawyers. The Court decision and the Conflicts Report came out at about the same time.
What is interesting to me is that the firm has effectively admitted that it was negligent. That has to be troubling to clients to be direct. Is their conflicts system so poor that it did not pick up on a 20 year client like the Bridge Company? As I Blogged before:
- Yet, David Estrin had said in a Star article:
“Every firm tries its best, but sometimes the conflict screen breaks down," Estrin said.” - In its decision, the 6th U.S. Circuit Court of Appeals stated:
“Estrin claimed to be even more clueless: “Until a few weeks before Centra filed this lawsuit, I was completely unaware that Centra, DIBC, or CTC had retained Gowlings on any other matter.” - And it was not just Estrin as the Court stated:
“For instance, in June 2005, Stamper sought Gowlings’s assistance in certain tax work. Before accepting the work, a Gowlings attorney searched for any potential conflicts of interest but did not identify any. Then again, most importantly for the case at hand, in November 2005, CenTra sought Gowlings’s assistance in creating a $700- to $800-million bond offering by which to finance the twinning of the Ambassador Bridge. Shortly thereafter, Windsor employed Gowlings to help the city oppose the Bridge Plan.” - The Trial Court stated:
“Defendants do not dispute that they entered into a conflict of interest by representing Windsor and Plaintiffs with regards to various parts of the Bridge Plan and that any conflict check that Defendants undertook did not discover the adverse representations.”
It was also said that
- "The search did not reveal Estrin's representation of Windsor adverse to CTC because, when Estrin's general representation of Windsor on border crossing matters gradually turned adverse to CTC in 2003, he did not amend his initial conflict filing to add CTC as an adverse party."
I find this so hard to believe. You have to wonder how this possibly could have happened. What makes it even more difficult for Gowlings is that Estrin was part of a group within the firm headed by his partner, David McFadden. He was also the Chair of the Board of DCTC who ran the Tunnel. He would have to know just about everything going on in Windsor about the border and the border file, especially since he is so involved with P3s as well. You would think that he would know what the lawyers in his group were doing too. Yet, not one single person in the entire firm twigged to the fact that there could be a problem.
Estrin made a rather cavalier statement in January, 2007 when this matter was first reported:
- “Our position is there is no conflict," Estrin said. "When it was brought to our attention we basically fired them as a client.”
Based on the Court of Appeals decision, Estrin’s opinion that “there is no conflict” is now subject to doubt. "Firing" may have been the wrong tactic on their part to use. Note how silent the firm and its lawyers have been since the decision. Oh, have you seen it reported in the Star yet? A year ago they could report on the trial level decision:
Gowling’s defence was primarily that the Bridge Company was aware of and consented to the conflict by direct waiver or by implication. However, the Court of Appeals made life difficult for Gowlings by stating that some conflicts could never be waived:
- "There are some conflicts of interest to which a client may not consent. Thus, the district court was only partially correct when it stated “that a client may impliedly waive its consent to an attorney’s conflict of interest,” J.A. at 589 (Order at 6), because it ignored the question of whether Gowlings’s simultaneous and adverse representation of CenTra and Windsor was in fact a conflict to which CenTra could consent. We hold that there is a genuine issue of material fact as to whether Gowlings’s conflict of interest with regards to the Bridge Plan was one to which CenTra could consent...
the district court broadly stated that a client may consent to a conflict of interest; however, it is not true that all conflicts are consentable. Whether a conflict is consentable depends upon the facts of the case. According to the commentary to Michigan’s Rule 1.7, a conflict is nonconsentable “when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances.”
The Court pointed out, and you ought to consider, dear reader, whether this was one of these "nonconsentable" conflicts:
- “Then again, most importantly for the case at hand, in November 2005, CenTra sought Gowlings’s assistance in creating a $700- to $800-million bond offering by which to finance the twinning of the Ambassador Bridge. Shortly thereafter, Windsor employed Gowlings to help the city oppose the Bridge Plan… Thus, by September 2006, Gowlings was simultaneously helping CenTra procure funding for the bridge expansion and assisting Windsor in trying to halt the bridge expansion.”
The Court quoted a Centra expert witness who said
- “CenTra submitted to the district court a declaration from an expert who stated that “I simply do not see how a law firm can offer sound professional service simultaneously to a client it is helping to build a bridge and to a client it is helping to block or delay construction of the bridge. This is not even a close question.”
The Court immediately thereafter held:
- “Thus, CenTra presented a genuine issue of material fact as to whether this conflict was one to which it was capable of giving consent, and the district court’s grant of summary judgment was erroneous.”
This tells me at least what the Court of Appeals thinks about the factual situation. Based on this comment alone, I do not understand how Estrin can continue acting for the City nor how the City can continue to retain his firm.
Based on this comment as well, then Estrin’s cavalier statement is unacceptable because the firm was in no position to “fire” anyone. They had a legal duty not to act. That is especially so because the Court stated:
- “If the vague and general information that CenTra possessed regarding prior, different conflicts was enough, then the client would bear the burden of identifying and understanding the full scope of any conflict of interest. It is not the client, however, to whom the various codes of conduct have given this responsibility; “[t]he affirmative duty here rests not with [the clients] but with [the law firm] and its attorneys.”
Based then on the Court of Appeals decision, one can conclude at this stage of the proceedings that:
- Gowlings was negligent with respect to their conflicts check
- some conflicts of interest cannot be waived and this case maybe one of them
- it is the lawyer's function, not the client's, to identify and understand the scope of the e conflict.
In these circumstances, it is obvious that the law firm cannot "fire" one of the parties and carry on with the other. Rather, the firm cannot act for either party.
The Bridge Company will do their own thing with respect to Estrin but what should the City do now that Estrin and Gowlings probably cannot act for us. In fact, it appears to me that Gowlings should never have acted for the City at all if the Court is correct.
Let's step back a bit and ask the question whether Gowlings should have acted for Windsor from day one, even before Eddie Francis was Mayor.
Did their conflicts search show a conflict because the firm also acted for Borealis? If so, how could the firm have acted for the City back in late 2002, early 2003?
Did their conflicts search show a conflict because the firm also acted for DCTC? If so, how could the firm have acted for the City back in late 2002, early 2003?
If the answer is that Gowling's and Estrin should never have acted for the City in the first place, then frankly I want my money back and so should you, dear reader. It is bad enough that there is a conflict with the Bridge Company but there may also have been conflicts with two other border proponents that should have prevented Gowlings from acting for the City of Windsor at all.
If the Court of Appeals is correct and the conflict is non-consentable, then the City should immediately contact Gowlings head, Mr. Jolliffe and ask for a refund of $5 million. In my opinion, the City has no choice but to do so.
There are many questions that have arisen in my mind about this whole matter and what the Council and Mayor did or did not do. After all, our Mayor IS a lawyer and should be very familiar with the process and procedure as well as the law. But that is for another BLOG if the need arises.
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