Chinese Wall Legal Definition:

A screening barricade established within a law firm to prevent conflicts of interests between associates.

Related Terms: Conflict of Interest , Cone of Silence

An administrative screening process developed within a law firm to segregate lawyers or administrative staff  who may have a conflict of interest in regards to common clients of the law firm or former clients of the lawyer of administrative staff.

For example, a man goes to a law firm and completes a will, giving the solicitor substantial financial and family information. A few years later, his wife seeks a divorce and attends the same law firm but a different lawyer. In ordinary circumstances, the entire firm should disqualify itself and decline to act for the wife given the perception of conflict of interest and a presumption of shared confidences between lawyers of a same firm.

To get round this, but playing with fire as professional disciplinary bodies are inconstent as to the approval of Chinese Walls, law firms create and implement them anyway hoping to thus shield themselves from, or rebut the presumption of having acted in a conflict of interest, and for which they would be exposed to professional discipline.

In a 1991 case before Canada's Supreme Court, MacDonald Estate v Martin 19913 S.C.R. 1235, published at canlii.org/en/ca/scc/doc/1990/1990canlii32/1990canlii32.html, Justice Sopinka described it as:

"A Chinese Wall involves effective screening to prevent communication between the tainted lawyer and other members of the firm."

In 1996, at Ford Motor Company of Canada v Osler, Hoskins & Harcourt, the Ontario Court (citation, 131 DLR 4th 419) stated:

"A Chinese wall is a common colloquial term used to describe a screen established within a firm to segregate lawyers and staff working on one retainer, and the information associated with that retainer, from other personnel within the same firm, for the purpose of protecting client confidences."

As Justice Sopinka mentioned in MacDonald Estate, a Chinese Wall is often coupled with the less-effective technique of a cone of silence.

In Cobb Publishing v. Hearst Corporation (1995), 907 F. Supp. 1038, the US District Court for Eastern Michigan gave favourable consideration to an practice note issued by the Michigan Bar as follows:

"The text of (the Bar's directive "Opinion R-4") set forth the necessity of establishing a timely and truly impenetrable comprehensive Chinese Wall. Given the omnipresent possibility that the former firm will file a motion to disqualify the acquiring firm, and the concomitant need to persuasively demonstrate to a judicial arbiter that a truly inpenatrable Chinese Wall has been erected
"A particularly noteworthy example of a litigation-proof strategy displays itself in American Sigma, Inc. v. QED Environmental Systems. There the acquiring firm had a ... committee, which conducted an ongoing review of its connection with matters to which members, in any former employments, may have had any professional contact. When it prepared to add a new member, it identified files to which a Chinese Wall was needed in a written communication addressed to all firm members, including non-lawyer confidential employees, and circulating the resulting memorandum, requiring each lawyer and confidential employee to sign or initial it prior to the date on which the new employee joined the firm."

Is also in use in criminal law to refer to a form of a gag order defence attorneys put on their client and the evidence while the prosecution is investigating or building their case.

 

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