Business Law in Canada
Twelfth Edition
Chapter 1
Managing Your Legal Affairs
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Learning Objectives (1 of 2)
When you complete Chapter 1, you should be able
to:
1. Explain the meaning of “sophisticated client”
2. Examine the role of the lawyer
3. Identify when to hire a lawyer and when to
represent yourself
4. Explain how to find an appropriate lawyer
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Learning Objectives (2 of 2)
5. Review how lawyers bill their clients
6. Describe legal aid
7. Outline the procedure to follow to complain about
your lawyer
8. Discuss the ethics of lawyers and of clients
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Becoming Sophisticated Clients (1 of 3)
• Confident
– Not in awe of lawyers
• Knowledgeable
– Identify, not necessarily solve legal issues
• Up-to-date
– Internet
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Becoming Sophisticated Clients (2 of 3)
• Understands the respective roles of the lawyer
and the client
• Knows when to represent themselves
• Knows when and how to locate and hire a suitable
lawyer
• Understands the various costs to be paid to a
lawyer
• Knows how to deal with dissatisfaction with a
lawyer
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Becoming Sophisticated Clients (3 of 3)
• Clients make many business decisions without
consulting a lawyer (time, cost)
• Business decisions have serious consequences
– Consider appropriate laws
• Sometimes a lawyer is necessary for certain
information or situations
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The Role of the Lawyer (1 of 2)
• Lawyer is an expert who provides relevant legal
advice
– Advises and recommends
• Client is the decision maker
– Not the lawyer
• Lawyer bound to follow client’s instructions
– If lawful
• Information provided to a lawyer must be kept
confidential
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The Role of the Lawyer (2 of 2)
• Solicitor-Client privilege: the duty of the lawyer to
keep the information provided by the client
confidential
• Client must provide all relevant information
needed by lawyer in order to get the best result
• Access to justice would be significantly reduced
without this fundamental part of our legal system
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Question for Discussion (1 of 3)
• What experience have you had with the legal
system? How did you feel about it?
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When to Hire a Lawyer (1 of 2)
• Small businesses face many issues on which a
lawyer can advise
• Form of business organization
– Partnerships, franchises, income tax, liability, estate
planning
• New business, buying existing business
– Minimize risks and liabilities
• Compliance issues
– Ignorance of the law is no excuse
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When to Hire a Lawyer (2 of 2)
• Physical location
– Long term lease terms
• Bank and loan documents
• Contracts
– Employment, supply, customers
• Intellectual property
– Patents, trademarks, and copyright
• Selling the business
– Assets, shares, tax implications
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When to Represent Yourself (1 of 2)
• Lawyer can help client make better business
decisions
• Sophisticated clients can find relevant legal
information
• Online sources available
• Understanding and assessing the accuracy of
information is crucial
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When to Represent Yourself (2 of 2)
• Sophisticated client knows when to retain a lawyer
• Consider the time, cost and type of issue at stake:
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Criminal charges necessitate a lawyer
Civil litigation
Non-complex Small Claims Court action
Account collections
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How to Find an Appropriate Lawyer
• Make a list:
– Referrals
– Provincial Law Society: Legal referral services
– Yellow pages / internet advertising
• Meet with each lawyer on your list to find the most
appropriate
• Establish mutual trust
• Consider an ongoing relationship
– Customized legal advice and efficiency
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How Lawyers Bill Their Clients
1. Fixed fee: used for specific tasks
2. Hourly rate: time spent
3. Contingency fee: the lawyer receives a
percentage of what the client collects
• Disbursements: costs incurred by lawyer on
behalf of client, reimbursed by client
• Retainer: a deposit held in a trust account
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Question for Discussion (2 of 3)
• Is there a limit on contingency fees in your
jurisdiction?
• Do you agree with the concepts of limits?
• Is the limit in your jurisdiction too high or too low?
• Should it change based on the risk of success
with the case?
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Legal Aid
• Available for certain types of legal problems
• Eligibility varies from province to province
• Not everyone qualifies: client must meet certain
financial guidelines involving household income
and assets
• Not all types of cases are covered
• Small businesses are not usually able to receive
legal aid
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How to Complain About Your Lawyer
(1 of 2)
• Provincial law societies are self-governing and
include regulations for complaints about conduct
• Law societies do not deal with fee disputes
• Mediation may be available to resolve fee
disputes
• Lawyer’s bill can be reviewed by a court official
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How to Complain About Your Lawyer
(2 of 2)
• Law society complaint resolution process for
lawyer conduct
– Mediation
– Formal investigation (if warranted)
• Penalties range from reprimand to disbarment
• Process does not provide compensation to the
client
– Compensation requires additional civil action and
advise from another lawyer
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Ethics of Lawyers (1 of 2)
• Law is what we “must” do, ethics is what we
“should” do
• Every provincial and territorial law society has
rules of professional conduct that contain
professional and ethical obligations of lawyers
• Lawyers are required to be honest, courteous,
keep client confidences and not act in conflict
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Ethics of Lawyers (2 of 2)
• Ethical behaviour implies integrity, honesty and
professionalism
• If rules broken, lawyer may be penalized:
– fine, suspension, disbarment or criminal charges
• Unethical behavior
– Wirick
– Blott
• Vast majority of lawyers are completely ethical
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Ethics of Clients (1 of 2)
• There is no established Code of Professional
Conduct for businesspeople in Canada
• Sophisticated client will make a commitment to
ethical behaviour
• High profile failures:
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Martha Stewart
Conrad Black
Rob Ford
Canadian Senators
Bernard Madoff
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Ethics of Clients (2 of 2)
• Former EnCana CEO, Gwyn Morgan: “When it
comes to business and government, there is an
especially heavy responsibility that comes with
leadership. … It’s up to Canadian business
leaders to act as role models with strong ethical
values… .”
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Code of Business Conduct (1 of 4)
• A sophisticated client should consider a
commitment to ethical behaviour
• “An organization’s continued good reputation and
respectability depends on building and
maintaining a culture founded on ethical values,
integrity, and trust” (Allison Dempsey)
• Businesses may prepare a code of conduct
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Code of Business Conduct (2 of 4)
• Draft one for your business
– Statement of values and standards of business
practice
– Codifies organizational values
– Establishes procedural norms and behavioural
standards
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Code of Business Conduct (3 of 4)
• A code of ethics should discuss:
– conflicts of interest
– protection and use of corporate assets and
opportunities
– confidentiality of corporate information
– fair dealing with the issuer’s security holders,
customers, suppliers, competitors, and employees
– compliance with laws, rules, and regulations
– the reporting of any illegal or unethical behaviour
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Code of Business Conduct (4 of 4)
Table 1.1 Core Values and Ethical Principles
Core Ethical Values
Supporting Ethical Principle
Trustworthiness
truthfulness, sincerity, candour, integrity, promise
keeping, loyalty, honesty
Respect
respect, autonomy, courtesy, self-determination
Responsibility
responsibility, diligence, continuous improvement,
self-restraint
Fairness
justice, fairness, impartiality, equity
Caring
caring, kindness, compassion
Citizenship
citizenship, philanthropy, voting
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Question for Discussion (3 of 3)
• Does your business / employer have a mission
statement? Does your business / employer have a
code of conduct? Are these referred to and used
in the daily conduct of business?
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Social Responsibility (1 of 2)
• Businesses may adopt a best practice approach
to social responsibility
• The ISO voluntary standard suggests seven core
subjects of social responsibility:
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organizational governance
human rights
labour practices
the environment
fair operating practices
consumer issues
community involvement and development
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Social Responsibility (2 of 2)
• Industry Canada provides resources on social
responsibility
• Government of Canada defines corporate social
responsibility as the “voluntary activities
undertaken by a company to operate in an
economically, socially and environmentally
sustainable manner”
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