The Program on Ethics in Law and Business challenges Bay Street to reach beyond what is legal—for what is right

The Program on Ethics in Law and BusinessBy Randi Chapnik Myers / Illustration by Sébastien Thibault

Let’s face it: Lawyers tend to get a bad rap in today’s society – especially down on Bay Street where ethical issues sometimes arise in business transactions. But now, legal leaders in the corporate world, including a former justice of the Supreme Court of Canada, are hard at work helping to change that fact.

The Hon. Frank Iacobucci, whose career spans lawyer, law professor, dean, judge, and now senior counsel at Torys LLP, is no stranger to the ethical challenges corporate lawyers face every day. That’s why he’s the ideal candidate to chair the advisory board of the University of Toronto Faculty of Law’s new think tank and advocacy group, launched earlier this year by the law school’s Centre for the Legal Profession (CLP).

The first of its kind at any law school in North America, the Program on Ethics in Law and Business (PELB) homes in on a subject that has always intrigued Iacobucci: The controversial field of business law and ethics, and the conflict of interests that arise when the two worlds intersect.

“I have looked at the area of conflict of interest in a number of settings and it’s a subject I find very, very important,” Iacobucci says. “In the everyday world, it raises questions of integrity, principle, trust and confidence in relationships.”

And in business, in particular, there is quite often a lack of attention paid to ethical considerations and best practices, he explains. As a result, lawyers, who advise not only on what’s legal but also on what’s right and fair in corporate transactions, need clearer ethical guidelines.

Enter U of T law professor Anita Anand, the program’s academic director, who researches corporate and securities law, including the value of good governance. She says the need for a program that raises awareness—and the moral consciousness of corporate lawyers—is long overdue.

“The idea is to further discussion among stakeholders in the legal profession about the concept of ethics in law as it relates to business,” Anand says. “In a nutshell, when you’re engaged in business law, what ethical obligations arise and what should you do about them? What principles and tools should lawyers use when confronted with ethical issues?”

When lawyers advise clients, it’s not just a matter of legality, Anand says. Their advice should consider moral components. For instance, at what point should in-house counsel blow the whistle in the corporation when something is wrong? 

“Just like directors, bankers, auditors and accountants, lawyers have a pivotal role to play in securities transactions when providing advice and support, so they have to be part of the conversation about what’s ethical.” – Howard Wetston

Just look around to see examples of what can happen when ethics slip off the corporate radar.

“Capital market scandals such as the fall of Enron and, more recently, the  global financial crisis have given rise to examination into lawyers’ behaviour on behalf of their corporate clients,” Anand explains. “There is a growing conversation in the policymaking sphere, and in the financial markets, about the ethical role of lawyers in corporate transactions.”

There are so many legal-moral conundrums. For example, what happens when a corporate client asks its legal counsel to sit on its board of directors, giving rise to conflict of interest concerns? Or in-house counsel realizes a course of action being adopted by the board is illegal, leading to a possible duty to report? Or in advising a client on a transaction that is technically legal, a lawyer wonders whether to advise that ethically it may be questionable?

The new program exposes these questions, as well as other issues of substantive corporate law, and in doing so, will ultimately help shape policies and practices in business law. These rules are so important because they affect not just the legal profession but also society as a whole, Anand says. “High standards in ethics go to the heart of what we as a society aspire to—learning to stop and consider right and wrong before we make decisions is crucial.”

To spark the ethical discussion, Anand’s first step was getting the stakeholders to the table. Mission accomplished. Thanks to Anand and the support of Dean Mayo Moran, the PELB advisory board (see sidebar) is composed of legal leaders. Anand is delighted “these icons in Canadian law and business” are stepping up and speaking up. “I believe they are here because they are committed to our values,” she says, “and we are grateful.”

Advisory board member and Ontario Securities Commission chair Howard Wetston looks forward to the program making a real difference in business transactions. He says it’s easy to see why ethical values sometimes get lost in the corporate world and lawyers get blamed.

“When we are focusing on economic goals, we can lose sight of the important issues of morality, ethics and trust,” he says. In his view, setting up lawyers as “gatekeepers” in the discharge of their responsibilities would help. “Just like directors, bankers, auditors and accountants, lawyers have a pivotal role to play in securities transactions when providing advice and support, so they have to be part of the conversation about what’s ethical.”

On March 5, that conversation got started at a packed (and waitlisted) launch of the new program at the U of T’s Munk Centre. For those quick enough to have snagged a seat, PELB hosted a panel discussion using fact-based scenarios centred on Canadian business catastrophes Nortel and YBM Magnex.

The lively panel of judges, lawyers, businesspeople and scholars included Anand, Ontario Superior Court Justice Michael Code, LLB 1976, LLM 1991; Lawrence Ritchie, executive vice president and senior policy adviser at the Canadian Securities Transition Office; Torys LLP counsel Julia Holland; Osler, Hoskin & Harcourt LLP partner Jeremy Fraiberg, LLB 1998; and Alexander Dyck, a professor at the Rotman School of Management.

Participants had many substantive questions to ponder. Among them: legal ethics in the corporate context; ethical challenges for a lawyer joining the board of a corporate client; obligations of an advocacy lawyer required to make full disclosure to a regulator; law reform initiatives to protect whistle-blowers; the concept of withdrawal; and self-regulation in the legal profession.

“We created scenarios modelled after real world business problems and panelists commented on the issues they gave rise to, which led to healthy discussion with audience members,” says panellist Julia Holland, LLB 1990. During the discussion, participants considered not just the ethical choices of individual lawyers but also the power and influence of law firms and CEO suites. 

“At the end of the day, the most important question is this: If the client wants to do something that’s legal but maybe not moral, what is our responsibility as lawyers, and how do we handle that, and does this program give us a framework for addressing the problem?”

But isn’t morality subjective?

“Sure, but there’s always room for interpretation in law, even in statutes,” Holland says. “What people need is a framework to think about the issues and just asking the questions in the first place, that’s really productive.”

“You start with the Rules of Professional Conduct,” she explains. “Look at what has recently gone on in business—whether reporting has changed or there are more lapses in morality like insider trading scandals, for instance. Then, if there’s a concern, you go on to talk about how to educate lawyers and other professionals by asking questions: Why is this happening? Is it that people don’t have tools to analyze the situation or don’t recognize problems? How can we change that?”

The Conflict of Interest Commissioner for the Province of Ontario, Sidney Linden, LLB 1964, found the panel’s questions and resulting discourse fascinating. He notes that while in the public sector ethical rules are coded, that’s not always the case in the private sector. Not all private companies or firms have internal codes of conduct, and if they do, there is often the question of how to apply them.

Still, there is a common denominator across both sectors, he says. “The basic principles of fairness are the same. Those of us responsible for advocating for a deepening of core values have a great deal to share with and learn from each other,” Linden says. “That’s what this program does and I look forward to it playing an important role on this subject going forward.”

As the program gains momentum, there are some exciting PELB events being planned, including a possible fall conference on the theme of the boundaries between ethical and legal obligations in the practice of corporate law. The Centre will also continue its popular bi-monthly lunchtime Speaker Series during the academic year, engaging law students as it focuses on the PELB mission.

The Law Society is also a part of the conversation about ethics. The PELB launch event webcast is accredited for 1.5 professionalism hours. Wetston says that as a self-regulatory organization, the Society has a responsibility to ensure the standards of the profession are met.

“We are at a low ebb in confidence and trust in the financial market, and since 2008, it has been challenging for the industry to rebuild public confidence. When there’s fraud, misrepresentation or inaccurate disclosure, you have to talk about it and that’s what this program does—spur discussion,” he says.

Iacobucci agrees. “It’s incumbent on all of us in business and law and in the thinking world generally to try to do something to hold up the values of trust, confidence and integrity.”

Says Wetston: “It’s not about pointing fingers. It’s about realizing that there is shared responsibility between law and business for the public trust in those entities, and that’s what this program seeks to achieve. We are off to a great start.”

Program on Ethics in Law and Business Advisory Board

The Honourable Frank Iacobucci – ChairTorys LLP
The Honourable Henry JackmanE-L Financial Corporation Limited
Avie BennettFirst Plazas Inc.
Sheila BlockTorys LLP
Norie CampbellTD Bank
The Honourable James FarleyMcCarthy Tetrault LLP
Anthony S. FellRBC Capital Markets
Joseph HeathUniversity of Toronto Centre for Ethics
Brad MartinFairfax Financial Holdings Limited
Roger MartinDean, Rotmas School of Management
Michael NobregaOntario Municipal Employees Retirement System (OMERS)
Len RacioppoCoerente Capital Management
Michael TrebilcockUniversity of Toronto Faculty of Law
Howard WetstonOntario Securities Commission