Trials and Tribulations of the B.C. Law Society
Is the Law Society of B.C. sacrificing public protection on the altar of due process? In the last two decades, the society’s record of disciplining errant lawyers has been marred by watered-down citations, lengthy delays and flaccid results. Two recent high-profile disciplinary matters, involving Vancouver securities lawyers Richard Coglon and Michael Seifert, took 10 years each to investigate and adjudicate. Although these respondents were ultimately found to have committed serious professional misconduct, the society suspended them for only one and two months, respectively.
“The litigious nature of society has come back to haunt lawyers when they discipline other lawyers,” says UBC law professor Wesley Pue, an expert in legal history. “To be disbarred has terrible consequences, which means everybody facing a disciplinary proceeding has every reason to fight it as hard as they can.” As a result, he says, “these cases are being aggressively defended, with appeals brought through the courts and an exponential growth in time required to deal with them. That’s where the difficulty is.”
The B.C. Law Society, like most professional self-regulatory bodies, is a product of the legislature – in this case, the B.C. Legal Professions Act. The act permits B.C.’s 10,000 lawyers to form a club, decide who gets to be members and determine how those members are to be regulated. In return, the 115-year-old society must “uphold and protect the public interest in the administration of justice.” The question is, How diligently is the law society discharging that mandate?
As a business reporter for the Vancouver Sun specializing in white-collar crime and professional regulation, I have been covering law society disciplinary actions for nearly 25 years. And from my vantage point, there seems to have been a decades-long disconnection between the society’s stated mandate to protect the public interest and its discharge of that mandate. During my first five years on the job (from 1985 to 1990), the B.C. Securities Commission (BCSC) suspended four B.C. lawyers from the local stock market for one to five years each for securities-related infractions, but not one missed a day of work on account of the law society.
In other cases, delay has been the problem. Until Seifert came along, the society’s longest-running disciplinary problem was Richmond personal injury lawyer Ted Ewachniuk. In September 1991, a B.C. Supreme Court judge found he used intimidation to deter two prospective U.S. witnesses from coming to Vancouver to testify against his clients. Forced to travel to Missouri to obtain their evidence, the judge took the rare step of assessing costs against Ewachniuk personally. The law society started an investigation, but due to delays it wasn’t until January 2001 – nearly 10 years after the judge’s finding – that a disciplinary panel found him guilty of professional misconduct and disbarred him. By that time, he had racked up 15 citations for professional misconduct and conduct unbecoming a lawyer.
Jim Matkin, who served as the society’s executive director from 1998 to 2004, attributed most of the delay to due process. “Because lawyers are involved, there are a lot of interim motions,” he said during an interview at the time. “They muster all the resources they can to ensure they get a fair hearing. As lawyers, they know how to do that very well.’’ He also noted that cases are adjudicated by volunteer lawyers, which exacerbates delays: “I think it is a factor for sure. People are busy. They have other lives.”
Pue agrees: “Lawyers do want to volunteer and provide service. That’s a wonderful thing about the legal profession that you don’t find in all areas of business. But when the system becomes overburdensome, there may be natural limits to what people are prepared to do.’’
The so-called Hydrogate scandal was one of the biggest tests of those “natural limits.” John Laxton, one of Vancouver’s highest-profile lawyers, was serving as chair of BC Hydro in 1995 when it formed a subsidiary, IPC International Power Corp., to invest in a Pakistani power project. Laxton hired his son-in-law Richard Coglon to prepare IPC’s offering memorandum and promoted the investment to friends and colleagues. When it became apparent the offering would not raise the required capital, Laxton and Coglon personally stepped in and bought shares. Laxton later claimed they did this to “salvage” the deal and rescue the province from embarrassment, which might very well be true.
Problem is, these investments violated Hydro’s conflict-of-interest rules, so they secretly bought their shares through companies domiciled in the British Virgin Islands. As Hydro insiders, they were legally required to disclose their beneficial ownership in IPC’s offering memorandum, but they didn’t.
That sin of omission became an outright lie when I asked them who was behind the island companies. They both said they didn’t know. Skeptical of this response, I wrote a series of stories probing the ownership of the island shares in early 1996, and in March that year Laxton delivered a written statement to the Sun confessing that he and his son-in-law had set up the offshore accounts and had used those accounts to secretly buy IPC stock.
Then-B.C. premier Glen Clark, furious with Laxton’s conduct, forced him to resign as Hydro’s chair. The law society later cited Laxton, not for any of his illicit share dealings or disclosure lapses, but for lying to a reporter. He was suspended for six weeks, in the lazy, hazy days of summer.
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