Duty Of Professionals To Respond Promptly And Cooperatively With Regulators

• Published date: 02 June 2021
• Subject Matter: Litigation, Mediation & Arbitration, Law Department Performance, Trials & Appeals & Compensation, Performance, Management
• Law Firm: Gardiner Roberts LLP
• Author: Mr James R.G. Cook

The Ontario Court of Appeal has confirmed that professionals have a duty to cooperate promptly and fully with their regulator during the course of an investigation.

In 2016, the Law Society of Ontario commenced an investigation into a lawyer's firm, focussing on the firm's structure and referral fee practices. For several months, the Law Society asked the lawyer to produce various documents and information required for the ongoing investigation. While there was a great deal of communication between the lawyer's counsel and the Law Society, the requested documents and information were not fully produced until approximately eight and a half months after the initial request was made.

As a result, the Law Society brought an application before the Law Society Tribunal Hearing Division, alleging that the lawyer engaged in professional misconduct by failing to comply with Rule 7.1-1 of the Rules of Professional Conduct, which provides: "A lawyer shall reply promptly and completely to any communication from the Law Society in which a response is requested." The Hearing Division concluded that the lawyer had breached the rule, and reprimanded him, in addition to ordering that he pay $25,000 in costs to the Law Society: Law Society of Upper Canada v. Diamond, 2017 ONLSTH 191 (CanLII).

The lawyer appealed the Hearing Division's decision to the Law Society Tribunal Appeal Division, which affirmed the decision: Law Society of Ontario v. Diamond, 2018 ONLSTA 11 (CanLII).

The lawyer appealed the Appeal Division's decision to the Divisional Court, which affirmed the decision once again: The Law Society of Ontario v. Diamond, 2019 ONSC 3228 (CanLII).

A further appeal, representing the third appellate review of the original decision of the Tribunal Hearing Division, was heard by the Ontario Court of Appeal in November 2020.

The Court of Appeal's decision, affirming once again the decision of the Tribunal Hearing Division, was released in April 2021: Law Society of Ontario v. Diamond, 2021 ONCA 255 (CanLII).

It is important to note that this decision was only about the lawyer's breach of a duty to cooperate required by Rule 7.1-1 of the Rules of Professional Conduct. The case did not involve any issues with the state or contents of the specific financial records themselves which had been requested during the investigation. In fact, the Law Society withdrew any allegations that the lawyer's firm had not maintained books and records as required by the Law Society's by-laws.

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