Lawyer/Client Privilege in the Bahamas

by Larry Smith

Although you might not know it, a constitutional battle has been raging here for the past five years.

The government is in the metaphorical dock, fighting a war of attrition in the hope that Maurice Glinton and Leandra Esfakis, the two maverick lawyers leading the fray, will give up and go away.

The battle is over the confidentiality of lawyer-client relations – something which experts say is a cornerstone of our justice system.

Glinton and Esfakis sued the government soon after the Ingraham administration rammed a package of 11 financial laws through parliament in December 2000 under heavy pressure from Western countries and the Financial Action Task Force those countries had set up to regulate international banking.

At the time, the Bahamas was ranked among the world's worst-regulated offshore centres, and was blacklisted for being "uncooperative" in fighting money laundering. Rich countries had reached the point where they would no longer tolerate tax havens, so we faced unprecedented sanctions that would have ended our banking relations with the rest of the world.

Almost overnight (by Bahamian standards), costly new layers of regulation were added to the financial sector to control criminal activities - that’s why we had to fill out all those ridiculous identity forms. The laws were written and passed in record time, with the involvement of only a few top ministers.

According to critics, this kitchen cabinet hijacked the authority of parliament to appease international regulators, and Bahamian legislators were never able to debate the matter. But others say there was good reason for Ingraham’s “madness”.

“Perhaps he learned from Pindling’s experience,” one authoritative source told Tough Call. The reference was to the spectacular disclosures of official corruption in the Bahamas by American news media in the early 1980s, which led to a damaging commission of inquiry into drug trafficking.

“If you want to play the game, you have to play by the rules. Offshore financial centres had let the lack of oversight get out of hand and the G7 countries decided that certain things had to be done. Obviously, the more you have at stake in these matters, the quicker you are to react.”

Of course, Ingraham’s rapid reaction drew howls of protest from all quarters - including the then opposition Progressive Liberal party, which vowed to revisit the legislation when it came to power. But Prime Minister Perry Christie has significantly avoided that over four years.

As lawyer Brian Moree said at the time: the government delivered “a massive response to the financial crisis. Only time will tell if this was a stroke of genius or a harbinger of the demise of our financial services industry."

Moree said it was right to make “reasonable concessions to eliminate criminal activity,” but contended that the process was “offensive, unorthodox and dangerously disrespectful of public international law and the rules regulating relations between sovereign countries."

The Financial Transactions Reporting Act affects lawyer/client privilege by requiring the inspection of client files by government agents. According to Glinton and Esfakis, this “abrogates the individual’s constitutional right of confidentiality as we have understood it in common law tradition.”

So these two independent lawyers challenged the government in 2001 and were later joined by the Bar Council, which theoretically wants to resolve the issue. In the meantime, the government has suspended inspections while the lawsuit winds its way labouriously through the system.

But despite dozens of court appearances over the past five years, the substantive issue of lawyer/client privilege has yet to be heard. That’s because - since 2002 - the argument has been over whether our financial laws are unconstitutional because they were enacted under pressure from other jurisdictions.

In that year Chief Justice Sir Burton Hall struck out arguments in the lawsuit’s statement of claim that he said were “not justiciable” - in other words, they could not be settled by a court.

The part of the claim that he deleted argues that the laws are unconstitutional because they were “not made for the peace, order and good government of The Bahamas”, and that enforcement will cause “serious harm to the legal profession, clients, and the public interest.”

What Glinton and Esfakis are saying is that the government ceded its authority: “I don’t believe that the overseas pressure is such that we have to behave like fools and give up all of our sovereignty to other countries and non-state actors like the Financial Action Task Force,” Glinton told Tough Call.

“At end of the day the law is supposed to be for our protection as citizens, and we need to demand rational behaviour and accountability from our government. These are matters of principle that are fundamental to our practice of law”

The constitutional arguments were later restored by the Court of Appeal. But the government waited until last year to appeal that decision – well after the time allowed for an appeal had expired. The Privy Council will now hear the matter on June 26.

Costs for the London hearing will be almost $100,000. And up to last October – when Glinton and Esfakis officially asked the Bar Council for funds – they had spent many unbilled hours of their own time preparing documents and attending hearings, often involving travel to and from Freeport, where Glinton is based. They insist that no clients are funding their action.

And it is a huge risk financially. If they lose the appeal (or the action as a whole), costs will be awarded against Glinton and Esfakis alone. And if those costs are not paid, they can be declared bankrupt and disbarred.

According to Glinton, if the government’s appeal is successful “it would affirm a judge’s right to strike out a constitutional claim at a preliminary stage and thus frustrate further constitutional challenges to the executive.

“The attorney-general will say that these are not issues to be tried, which could give the first instance judge a final say without hearing the merits of the case,” he said. “And since we don’t have judges here who specialise in constitutional law, that could be dangerous .“

If the Privy Council rules against the government’s appeal next month, then things will stay on course and the substantive issue of legal privilege will eventually come to trial.

“They are trying to dismember our case,” Glinton said. “They don’t want to argue judicial review of government actions. So it’s a war of attrition, and we can’t get the main issue before a judge.”

Since lawyers maintain accounts, form companies and handle transactions on behalf of their clients, they come under regulatory scrutiny just like banks and trust companies.

The financial regulations require lawyers to collect information on their clients and provide it to government inspectors. The actual job of inspecting has been delegated to a list of chartered accountants, who must be paid for their services.

The Financial Transactions Reporting Act governs escrow accounts - including those denominated in Bahamian dollars (and we know that money launderers don't use Bahamian dollars becuase they are not tradeable).

Lawyers are required to spy on their clients if they suspect that a suspicious transaction has occurred - without tipping the client off. This puts lawyers in impossible conflicts, and that is why the offending regulations have been declared invalid in other jurisdictions.

As one observer said: "Can you imagine what a great tool this would be in the hands of an unscrupulous executive?"

So what about the 700 plus other Bahamian lawyers who are affected by these regulations and the five-year-old lawsuit? Although the Bar Association supports the action, and once threatened to “discipline" any lawyer who complied with inspections, it has not come up with any money.

Part of the reluctance to join in the action may be a lack of awareness of what it means to be a citizen and a lawyer in a constitutional democracy, knowing that it is an uphill battle all the way.

Statistically there is little chance of citizens succeeding against the state at the first level - the Supreme Court. And to go the whole process is expensive and time-consuming.

And historically, a judicial success at the Privy Council level - as in the D'Arcy Ryan citizenship case - has not always yielded a success in practical terms.

According to one observer, “Leadership is lacking in this country in every aspect of social enterprise. In other countries the Bar has been the main force in bringing these matters to court. Here it is more a matter of form over substance. “

Some law firms are dealing with the prospect of inspections by setting up new companies to hold duplicate sets of files. This means that inspectors won’t be able to examine client files within the law firm, but would be directed to corporate files in a separate company.

A lawyer at one major firm said: “This is just one practical on-the-ground approach that some firms have had to the financial regulations. But we would definitely be concerned if they came to inspect client files in our law offices.

"There is no question that the underlying issue is very serious, and courts around the world have consistently upheld the integrity of lawyer/client privilege.”

And perhaps the true question is, are these really maverick lawyers pursuing a foolish quest?

“This constitutional litigation was filed by the Canadian Bar Association and the various provincial bar associations in Canada, and the law societies in Australia, after ours was filed,” Esfakis told Touch Call. “it has been determined already in favour of their bar associations.”

The dictionary defines maverick as "one who is unorthodox in his ideas and attitudes". Are the law societies of those jurisdictions mavericks?

Perhaps we should describe Glinton and Esfakis as “vertebrate" lawyers instead, inelegant as it may sound. However, that might imply that the rest of the Bar is “invertebrate”.

Comments

[Leandra]

go larry!

[connie]

these backbone Bahamian lawyers are making history!

[Bahamerican]

Excellent write up!

[Ursula Wells]

I think it is a good thing that the government is trying to get involved in the actions of lawyers.
Frankly, there are too many lawyers in Nassau that are willing to do dirty work for their clients.

I was very surprised to read in your article that lawyers are required by law to report escrow accounts to the government. When my mother died six years ago, my sister, acting as trustee, sold my mothers house, closed her bank accounts here, in Miami and Canada, took over her rental properties and has used her lawyer to avoid accounting for any of it, even though I am a beneficiary named in my mothers will.

When I finally got access to the so called "estate account" the bank manager told me there was nothing left. In my opinion the government needs to do something to stop this kind of thing from happening because I know my sister is not the only one abusing the system in this way.

If this means that all escrow accounts are to be audited by a select list of auditors then so be it - some lawyers cannot be trusted, some accountants cannot be trusted. It is good to see the government taking some sort of positive action to protect people like me from the actions of some lawyers in this country.

[leandra esfakis]

Ms. Wells obviously did not understand the nature of your article: the inspections have nothing to do with the government protecting the public against crooked lawyers. But I understand where she is coming from. I suspect there is more than one story like this.

I believe the Law Society in Canada for instance, has its own auditors. I do not how it works, but it would give teeth to an investigation against lawyers if the Bar Association had an auditor who could access lawyer's records.

The question is, when would a disgruntled member of the public be entitled to call for records?

Ms. Wells, could have, and should have, if she had grounds, got her own lawyer to get an injunction against her sister as executrix, could have frozen the administration of the estate, and could have got an order against her sister as trustee for an accounting. The sister would have to account, or be in contempt of court.I have been through this exercise on both sides of the equation.

If the sister's defense is, "da lawyer t'ieff it all," then, make him a defendant to the action, and get an order for accounting against him.

That is where a Bar Association auditor could be useful: if he were ordered to audit the lawyer's account for that estate, the pplaintiff would not have to come up with the money for an auditor (at least initially), nor rely on the defendant attorney's auditor.

A member of the BC medical association, told me that when their disciplinary tribunal sits, a fee is levied against all members of the association to pay for the costs of that tribunal sitting.

This has two benefits:

1. The sitting members are not sacrificing their incomes (totally).

2. The fee levied gets the attention of all members, and makes members more circumspect, as they do not want to be the centre of their colleagues' negative attention.

At present, members who serve on the Bahamas Bar Ethics Committee or Disciplinary Tribunal are not compensated. When I sat on the Disciplinary Tribunal (which disbarred Leon Smith) it took about 2 weeks or so out of my working life -no income, same overhead.It really is hard.

The only independent members of the Bar on that Tribunal were two single practioners (myself and Hope Strachan), not lawyers from the big firms, who have back-up.

Yet, they are the biggest complainers about single practioners. Where are the big firms when the rubber hits the road?

In the Leon Smith case, the whole process, from the initiation of the complaint, to Leon getting disbarred, took three years.

According to Justice Osadeby, lawyers in Jamaica have been disciplined for "just" lying to their client about getting a court date.

[bernadette]

How do i go about getting a divorce with out thw concent of my husband.one_b_one_g@hotmail.com