This is the second of two articles highlighting ethical considerations arising from interesting conflicts of interest questions that have come through our ethics inquiry process. The first article in this short series appeared in the April newsletter.
Scenario
Who is the ‘client’ for purposes of an agent’s ethical duties when a firm accepts incoming trademark work from a foreign agent acting on behalf of a foreign client? Is the client the foreign client or the foreign agent? Agency work in Canada very often involves retainers of this nature where a foreign agent (FA) acting on behalf of a foreign client (FC) seeks assistance from a Canadian agent (CA) to apply for and/or prosecute an application in Canada. Conflicts of different natures can arise in some circumstances.
The Code of Conduct
As always, we start our conflicts analysis by looking at the guidance in the Code of Conduct. For this hypothetical scenario, we start with the definition of ‘client’ in the Definitions Schedule:
‘client’ means a person who consults an agent and on whose behalf the agent provides or agrees to provide representation under section 27 or section 30 of the [CPATA] Act or who, having consulted an agent, reasonably concludes that the agent has agreed to provide representation on their behalf. It includes a client of a firm of which the agent is a partner or associate, whether or not the agent handles the client’s work.
It is also helpful to look to Part 3 Conflicts, and the Principle which provides that, “In each matter, an agent’s judgment and loyalty to the client’s interest must be free from compromising influences.”
Analysis
Based on the Code definition of ‘client’, a CA owes duties to both the FA and the FC.
Both the FA and the CA are expected to act in the best interests of the FC. For the FA, they have a direct or bright line duty of loyalty and other ethical duties to the FC. The CA has a direct line of duty to the FA and, in some cases, a ‘dotted line’ of duty to the FC, which line may become direct or solid depending on the specific circumstances of the matter.
Let’s consider a few scenarios to help understand how specific circumstances can impact the analysis:
- A CA accepts a retainer from a FA to provide prosecution services for a FC. The FA then ceases to acknowledge communications from the CA. While it would normally not be appropriate for the CA to communicate directly with the FC because the direct line relationship is between the CA and the FA, direct communication between the CA and the FC becomes necessary in order to protect the FC’s interests. The CA’s duty to protect the FC’s interests becomes a priority in this scenario.
- A CA accepts a retainer from a FA in which the FA agrees to pay the CA’s fees and to then charge these fees back to the client as a disbursement. The FC refuses to pay their FA. If the CA is not paid, their recourse may depend on their contractual agreement with the FA. In some cases, the contractual recourse may be against the FA, with no recourse to the FC. The FA then has to pursue payment from their FC.
- A FC’s trademark application in Canada is unsuccessful and they allege this was due to a lack of competence on the part of both the FA and the CA. This client has the right to expect competent and ethical service from both agents and can therefore file conduct complaints in both Canada and the jurisdiction of their FA. Both agents owed an ethical duty of care to the FC.
- A CA is retained and reaches the conclusion that a trademark application is unlikely to be successful in Canada. The CA has a duty to communicate that opinion to the FA and is entitled to reasonably assume that the FA will accurately communicate this opinion to the FC. In this case, the CA is acting in the best interests of the FC through the FA.
- A FA seeks to retain a CA on behalf of their FC. If the CA is aware of a conflict of interest with respect to either the FA or the FC, the CA will need to consider whether they will be able to accept the retainer.
Conclusion
What the scenarios above illustrate is that the answer to ‘who is my client’ is very contextual, based on the definition of ‘client’ in the Code, and in most respects will include ethical duties to both the FA and the FC. The answer may vary if considered through the lens of agency or contract law, but for purposes of this analysis the focus is on applying an ethical lens and understanding the nature of the duties owed to both parties, which will also depend on the circumstances of each matter and the nature of the retainer.
As always, agents are expected to exercise their own professional judgment in every circumstance based on all relevant facts and considerations and should not rely solely on this guidance from CPATA. We welcome all inquiries from agents about your ethical and professional responsibilities.