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Legal Ethics

Murray’s Musings About Character

Once upon a time, there was a lawyer whose practice was reliant on one huge client. His junior associate made a mistake on the client’s file. The client demanded that the lawyer fire the associate. The lawyer refused to cast aside a young associate for having made one mistake. The client fired the lawyer. The lawyer lost his practice. The associate lost his job anyway.

That lawyer stuck to his principles and it cost him dearly. But at least he could sleep well knowing that he had acted honourably. At least until he ran out of money for heat and power.

In my experience, this particular lawyer was exceptional. For many lawyers, principles are easier to uphold in the abstract than they are when there is a real consequence attached to maintaining them.

Many years ago, there was a firm which was having an existential crisis caused by the departure of several rainmakers. Soon after the onset of the crisis, the partners each gave a solemn pledge that for a period of time, every partner would stay with the firm, and no partner would look for a position elsewhere. Soon after, one of the partners announced that she would be moving to another firm. She had lied. I guess that she had heard the old expression, “when the going gets tough, the tough get going,” but did not really understand it. She thought that she was tough. And at the first sign of trouble, she got going.

Some older folks tend to speak nostalgically about the days when a person’s word was their bond. I don’t remember that day. Frankly, I am not certain that there ever was such a day. If there was, perhaps it ended around the same time that they invented school buses and boots without holes in them, and magically flattened the roads, so that my father could finally stop walking ten miles uphill to school every day through the snow with boots that leaked, and then back another ten miles home, again uphill.

I once tried to convince a client named Sam that he could reduce the risk attached to his investment in his company by doing a corporate reorganization which would allow him to distribute his company’s retained earnings on a tax-free basis to a holding company, and then lend them back to the operating company subject to a general security agreement. (For those U.S. lawyers now scratching their heads and whispering “that does not work because of the doctrine of equitable subordination,” the rules in Canada are different.)

Sam did not get what I was trying to sell. I finally discovered the disconnect when Sam said, “Why would I do that? If I cannot pay my bills, I expect my children to do that.” It was a cultural thing. Sam came from a land where people cared about their reputation.

Meanwhile, back in the mainstream culture, I would hazard a guess that we have arrived at the point where someone’s word can only really be considered to be their bond if it has been reduced to writing and secured by a mortgage on their house.

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