Friendship and conflict in entertainment
The entertainment business is a business of relationships. The community of professionals in the entertainment business is surprisingly small and the line between work relationships and friendships is often blurred. While this collegial atmosphere is one of the benefits of working in the entertainment business, it can present a challenge for lawyers when trying to manage duty of loyalty obligations when a friend of the lawyer is on the other side of a transaction.
Rule 3.4-26.1 of the Code of Professional Conduct for British Columbia (the BC Code) states that, “A lawyer must not perform any legal services if there is a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s… (b) interest in the client or the subject matter of the legal services.” The commentary of this rule states that “Any relationship or interest that affects a lawyer’s professional judgment is to be avoided under this rule, including ones involving a …friend of the lawyer.”
The Supreme Court of Canada addressed a lawyer’s duty of loyalty in Canadian National Railway v. McKercer, 2013 SCC 39 (class action). In applying the test to establish whether a lawyer’s representation of a client would be “materially and adversely affected,” the court states that one has to ask whether the representation of the client is “liable to create conflicting pressures on judgment” or “factors which may be reasonably perceived as affecting judgment.”
The practical question for the lawyer faced with this issue is how to effectively make the decision as to whether his or her judgment or representation of the client would be “materially or adversely affected.” It appears that this decision must be made by each individual lawyer in the circumstances, applying a standard of reasonableness. In making this decision, it is important to bear in mind one of the duties described in Canadian National Railway v. McKercer – the duty of candour. Applying this duty, it seems that a lawyer should always involve the client in the decision as to whether the lawyer’s friendship will affect his or her loyalty or ability to effectively represent the client, even if the lawyer does not believe that his or her judgment would be affected.
At the outset of the retainer, it is advisable for a lawyer in this position to send the client a letter that addresses the lawyer’s friendship with the other party. The letter should: 1) advise the client of the nature of the relationship and describe how the lawyer’s friend may benefit from the completion of the transaction. 2) state that while the lawyer is not of the opinion that his or her judgment or ability to represent the client will be compromised by the friendship, the lawyer recognizes that the relationship in question may create the perception that the lawyer’s judgment or ability to represent could be affected. The client should be given the option of consenting to the lawyer’s representation and effectively waiving any actual or perceived conflict in the matter, or withdrawing the retainer and seeking new counsel. The client should also be advised of his or her right to seek independent legal counsel regarding the matter of the
While an entertainment lawyer’s friendships within the entertainment business are often the lawyer’s most reliable sources of work, it is important to balance those friendships with the lawyer’s duties under the BC Code.
Patrick Aldous is a partner at the entertainment law firm Atkins and Company in West Vancouver. The music business is the primary focus of Patrick’s practice.