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| Joseph Chiummiento |
At that meeting, the Law Society of Ontario’s (LSO) board of directors, known as Convocation, decided that requests for information from directors trying to fulfill their statutory obligations and fiduciary duties should be vetted and policed by its treasurer and the CEO.
The new policy gives the treasurer final say in granting or blocking information requests. It requires only “written reasons” if a denial of information is decided, and as any administrative law lawyer will tell you, this means that the treasurer’s decisions will be treated with great judicial deference resulting in very limited avenues for judicial review. In other words, the treasurer’s powers under this policy are immense.
Why are information requests from directors even a problem? What kind of burden are the requests creating for the over 600 employees (approx.) and $200-million-plus annual budget? Do directors really need to be “managed” so as not to trouble management?
Ultimately, this is about transparency and accountability or dare I say ... good governance. This at a public interest regulator, which has not been without its secret meetings, undisclosed agendas and entrenched power cliques. The new move makes professional self-regulation harder to justify and, frankly, puts self-regulation at risk in future.
The LSO has the only board of directors in the country that I am aware of, which now has a gatekeeper and administrative decision-making process fully empowered to deny a director their ability to fulfill their fiduciary duty. Benchers will now have less power to fulfill their role or may have to seek costly court involvement for help, the exact antithesis of good governance.
This policy move is likely a reaction to the lawsuit of bencher Murray Klippenstein, a well-respected and highly successful public interest litigation lawyer, who sued the LSO for the right to information on the Stratcom Report. Remember the Stratcom Report led to far-reaching “equity” policies. It was the justification for setting out the failed Statement of Principles requiring lawyers to create a pledge with the potential for suspension if any refused — and caused a considerable ruckus for the legal regulator in 2019.
Bencher Klippenstein requested information on hidden statistics underlying the Stratcom Report and was denied repeatedly over a four-year period, prompting him to bring a lawsuit, resulting in him finally receiving the information.
What legal justification did they have to withhold the information? None, of course. What did they have to hide from Klippenstein’s duly diligent eyes? After Thursday’s vote, they can try to rely on a policy to deny requests for information from directors — and seemingly sidestep related common law rights. For clarity, I am not suggesting they would, but I raise concerns as to the potential.
The LSO operates like a quasi-parliament, but even parliaments allow freedom of information requests.
The Law Society Act (Ontario) states that the “benchers shall govern the affairs of the society” and the treasurer is an equal amongst peers arguably with no authority to limit the rights of directors. Does Convocation even have the legal authority to derogate the rights of its individual elected officials in this way — a first in history for the regulator, and one step forward, three steps back?
This move conjures up old tales of the historical Upper Canada “family compact,” when a small group of Toronto elites ruled in Ontario, denying access and positions of power to those deemed lesser in status. The kind of organizational structure that limited entry to the club and resulted in a concentration of power.
Some lawyers are concerned that the decision communicates an above-the-law attitude amongst those in power. I don’t subscribe to that cynical perspective and know that this treasurer and others on the board care deeply about the rule of law wanting to respect well established tenets.
What we are witnessing is the beginning of a change in role for benchers and directors at the legal regulator. A dangerous first step on a slippery downslope toward less governance and more bureaucracy. Logically, it communicates the message that directors should simply “trust us and don’t ask questions” — removing or limiting the role of independence, despite benchers retaining the clear responsibilities assigned them as stewards of the public interest.
The election model and the granting of powers to elected officials together with common law rights earned, tested and proven through the help of the courts is a system that simply works — why the extra hurdle?
Many lawyers are shocked at this willingness of benchers to accept a policy that sidesteps and gatekeeps entrenched common law rights.
Is it really that difficult for management to field a handful (or two) of information requests per year from its benchers in furtherance of the public interest work they are doing?
If the LSO benchers can decide that they as elected officials can vote to neutralize some of their legally entrenched rights (to govern) with a simple policy decision that seems to allow them to potentially ignore 100 years of developed common law rights of directors, then why bother with elections at all?
This is a dangerous precedent for a regulator to set, one that other regulators and corporate boards across the country will undoubtedly seize upon. One can only imagine what’s next.
Convocation’s sleepy sessions have suddenly become interesting again.
Joseph Chiummiento is a securities lawyer, coach and mentor to solo and small law firm owners, and a former bencher of the Law Society of Ontario. He can be reached by email at joseph@chiummiento.com.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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