Conflict-of-interest rules clarified

    Law firms not in a conflict when prosecuting subsidiaries of parent firms
    which are their clients

    TORONTO, Jan. 8 /CNW/ - Conflict-of-interest rules pertaining to law
firms who act against subsidiaries of organizations they represent were
clarified in a groundbreaking ruling by Madam Justice Joan L. Lax at Ontario's
Superior Court of Justice. In the case of Ed J. McKenna v. Gammon Gold Inc.,
Justice Lax ruled that a law firm should not be disqualified when it
prosecutes an action against a subsidiary of its client for whom it has acted
in unrelated matters. The ruling was released on January 6, 2009.
    "This ruling has significant implications for law firms because almost
every law firm at one time or another represents banks or major corporations
with subsidiaries," said Earl A. Cherniak Q.C., who along with Jasmine T.
Akbarali of Lerners LLP, represented the plaintiff, Ed McKenna on this motion.
    "There are longstanding concerns in the legal community concerning
conflicts." Cherniak said. "This ruling clarifies the issue as to whether
acting for a parent corporation necessarily precludes acting against a
    Defendants in the case included the underwriting syndicate for the public
share offering of the defendant Gammon Gold Inc. Two of the underwriter
defendants, BMO Nesbitt Burns Inc., and TD Securities Inc., said that when the
action was commenced, the plaintiff's counsel, Siskinds LLP, was retained by
the Bank of Montreal and Toronto Dominion Bank in respect of consumer debt
enforcement proceedings and personal bankruptcy matters. They said this put
Siskinds, a leading class action firm in Canada, in a conflict of interest,
but Justice Lax disagreed.
    In her decision, Justice Lax wrote that both Nesbitt and TD Securities
carry on a substantial business with their own employees under the direction
of Boards of Directors that are totally separate from the banks, who are their
parents. The motion was dismissed with costs.

    About Lerners

    Lerners' lawyers represent a wide range of individual and institutional
clients, from victims of accidents to corporations embroiled in complex
disputes. The firm is devoted largely to resolving disputes and appeals. Its
lawyers, many of whom have been involved in landmark cases, practise in the
following areas: Commercial Litigation and Arbitration, Medical Liability,
Professional Defence, Insurance Law, Personal Injury Law, and Public Law.
Lerners, which has over 100 lawyers, and one of Canada's largest litigation
groups, has offices in Toronto and London, Ontario.

For further information:

For further information: or to arrange an interview, please contact:
Mary Ann Freedman, Freedman & Associates for Lerners LLP, Phone: (416)
868-1500, Email:

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