It’s all fair game: the scope of an investigation ordered pursuant to British Columbia Law Society Rule 4-55 encompasses a broad investigation of the member’s entire legal practice and is not limited to the concerns that triggered the investigation

Administrative law – Decisions of administrative tribunals – Law Societies – Investigations – Judicial review – Barristers and solicitors – Professional misconduct or conduct unbecoming

Lawyer v. Law Society of British Columbia, [2021] B.C.J. No. 1050, 2021 BCSC 914, British Columbia Supreme Court, May 13, 2021, A. Majawa J.

In October 2019, the vice-chair of the Law Society of British Columbia’s Discipline Committee issued an order under British Columbia Law Society Rule 4-55, and commenced an investigation into the petitioner’s entire legal practice.  The petitioner took issue with the scope of the investigation, the seizure of the firm’s records, and the Law Society’s rejection of his requests to exclude certain documents from production.

In June 2017, the petitioner was issued a citation which alleged he mishandled trust funds on nine occasions over the course of one day in July 2015.  The petitioner and the Law Society eventually entered into a joint conditional admission of professional misconduct and disciplinary action.  The petitioner was suspended from practice for two months and paid a fine of $1,000.

Between May 14 and May 16, 2019, the Law Society’s Trust Assurance department conducted a compliance audit of the petitioner’s practice pursuant to Law Society Rule 3-85.  The auditor uncovered concerns about the petitioner’s practice during the course of the audit.  The auditor prepared an opinion seeking the issuance of an order for an investigation of all electronic and physical books, records, and accounts of the petitioner and his firm pursuant to Law Society Rule 5-44.  That order was granted by the vice-chair of the Discipline Committee on October 2, 2019.

Law Society Rule 4-55 provides that the chair or vice-chair of the Law Society’s Discipline Committee has authority to conduct an investigation of the books, records and accounts of the lawyer where the chair reasonably believes the lawyer has committed a discipline violation.

On October 2, 2019, the auditor, together with a staff lawyer for investigations, attended the petitioner’s firm to execute the order.  The petitioner was provided with a letter dated October 2, 2019, which stated a Rule 4-55 investigation had been ordered, and which enclosed a copy of the order, an informational document regarding forensic copying and exclusion requests, a list of investigators designated to conduct the investigation, and copies of the applicable sections of the Legal Professions Act, S.B.C. 1998, c. 9, the Law Society Rules, and the Code of Professional Conduct for British Columbia.  The petitioner signed an acknowledgement form confirming service of the order and confirming information he provided concerning the location of the physical and electronic books, records, and accounts of the firm.

After the petitioner executed the acknowledgment form, the investigators began collecting the firm’s records.  Shortly thereafter, the petitioner engaged counsel who began requesting the Law Society provide more details on the basis for and scope of the investigation.

On November 18, 2019, the petitioner made exclusion requests respecting certain records on the basis of three separate grounds, those being records which were personal, privileged, and/or irrelevant.  The Law Society agreed to exclude certain privileged materials and materials found to be both personal and irrelevant.  In response, the petitioner maintained that there were three grounds for exclusion and that he could not produce records without further details on the scope of the investigation.  He requested an independent adjudication of the Law Society’s determinations regarding his exclusion requests and informed the Law Society of his intention to seek judicial review of the order for a Rule 4-55 investigation.

The Rule 4-55 investigation was accordingly placed on holding pending the adjudication and petition for judicial review.  During that time, the Law Society proceeded with a separate, narrower complaint investigation under Law Society Rule 3-5 as to specific conduct concerns referred by the Trust Assurance department following the May 2019 compliance audit.

Beginning at para. 43 of the decision, the court discusses the proper scope of a Rule 4-55 investigation.  Based on the plain reading of the legislation, the court found Rule 4-55 gives the Law Society authority to conduct a broad investigation of the member’s legal practice and is not limited to the concerns that triggered the investigation.  That scope is said to be consistent with the context, scheme, object, and purpose of the Legal Profession Act, S.B.C. 1998, c. 9 and the Law Society Rules, that being to uphold and protect the public interest in the administration of justice.  With respect to trust accounts specifically, the court comments that the Law Society plays a key role in enforcing the practice standards ensuring lawyers are properly playing their gatekeeper role in respect of the proper use of trust accounts.  Rule 4-55 must therefore be interpreted in a manner that provides the Law Society with the authority to broadly investigate a lawyer’s practice to ensure there are no system issues contrary to the public interest.

The court further held that the investigatory powers of a regulator should not be interpreted too narrowly, as doing so may preclude it from employing the best means by which to uncover the truth and protect the public.  Those powers should also be interpreted broadly in a context where the member of the self-regulating body has a duty to cooperate with such investigations, as is the case for lawyers pursuant to Law Society Rules 3-5(7) and (8), as well as the Code of Professional Conduct for British Columbia.

The court’s finding that the scope of Rule 4-55 investigations is broad and not limited to the area in which the initial concern arose in turn resolved most of the other issues raised by the petitioner.

The petitioner raised issue with the Law Society’s refusal for exclusion requests on the basis of irrelevance.  The court found that as the scope of the investigation is the petitioner’s entire legal practice, relevance for the purpose of exclusion is not defined by the particular alleged misconduct giving rise to the investigation.

The petitioner alleged it was an abuse of process for the parallel Rule 3-5 conduct investigation to have been commenced while the Rule 4-55 investigation was ongoing.  The court held that as the two investigation types are different, the Rule 4-55 investigation being much broader in scope, they are not duplicative and not an abusive of process.

The petitioner alleged there had been impermissible sub-delegation as the chair cast the scope of the investigation as the entire practice of the petitioner, handing unfettered authority to the Law Society investigators.  Given the court’s findings regarding the proper scope of the investigation, that argument was rejected.

In addition, the court found the Rule 4-55 investigation order was not a “decision” reviewable under the Judicial Review Procedures Act, R.S.B.C. 1996, c. 241.  A decision is only judicially reviewable where the Law Society is exercising a “statutory power of discretion” which is defined in the Judicial Review Procedures Act as:

A power or right conferred by an enactment to make a decision deciding or prescribing

a) the legal rights, powers, privileges, immunities, duties or liabilities of a person, or

b) the eligibility of a person to receive, or to continue to receive, a benefit or license, whether or not the person is legally entitled to it.

The court found the decision to issue the Rule 4-55 investigation order was an administrative decision made in the preliminary stages of the statutory process, rather than the exercise of a statutory power of discretion.  The Law Society would only be in the position to make a reviewable decision once the matter proceeded to a hearing panel.  The court further found it was premature to commence a judicial review on that matter as the petitioner’s internal remedies had not yet been exhausted.

The petitioner raised issue with procedural fairness.  The court found that at the investigation stage there is only a minimal duty of fairness owed.  The petitioner argued that minimal duty included providing details of the misconduct which led to the order being issued.  The court found that given the broad scope of the investigation, the minimal duty of procedural fairness had been met, and that the petitioner was not entitled to the information he sought, nor would he have needed it to participate in the process by challenging production of documents or requesting an independent adjudicator to review exclusion request determinations.

Lastly, the petitioner made Charter challenges regarding the seizure of the firm’s records.  In determining whether the seizure of the firm’s records was reasonable, the court noted that where impugned conduct arises in the realm of a regulatory body rather than a criminal context, a more flexible approach is applied to the standard of reasonableness.  In the administrative context, the court considers the nature and purpose of the legislative scheme, the mechanism employed and degree of potential intrusiveness, and the availability of judicial supervision.

In applying those considerations to the present case, the court found the seizure was reasonable.  The investigation was ordered on a reasonably held belief of misconduct, and was rationally connected to the Law Society’s ability to fulfil its duty to the public.  There were a number of safeguards in place in the investigation process, and the petitioner had voluntarily decided to become a member of the legal profession and submit himself to the regulatory scheme.  The process also allowed the petitioner to have a review mechanism which was found to be appropriate in the circumstances.

The court also found the search was conducted in a reasonable manner.  The court found the petitioner had clearly cooperated with the investigation in terms of the initial production of records, and in those circumstances the investigators had no reason to seek an order for search and seizure under section 37 of the Legal Professions Act in order to facilitate the seizure.  The court held that the petitioner’s diminished expectation of privacy over the firm’s records due to the public nature interest of the Law Society’s investigatory powers adds an aspect of consent into the petitioner’s decision to cooperate with the initial production of records.

The court dismissed the petition with costs to the respondent.

This case was digested by Mollie A. Clark, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter.  If you would like to discuss this case further, please contact Mollie A. Clark at mclark@harpergrey.com.

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