Veteran GC disciplined for role in energy regulator scandal
Patricia Johnson, Q.C. reprimanded and fined $5,000 after admitting acting in a conflict or potential of interest
A senior general counsel who spent more than a decade in charge of the legal department at the Alberta Energy Regulator has been reprimanded and fined by the Law Society of Alberta for her bit-part role in the scandal that brought down her boss.
Patricia Johnston, Q.C., admitted acting in a conflict or potential conflict of interest without obtaining her clients’ consent after performing legal services for both the AER and the International Centre for Regulatory Excellence, a now-defunct institution designed to train regulators around the globe.
Reports by Alberta's auditor general, public interest commissioner and ethics commissioner later found that the AER acted beyond its mandate when it established ICORE in 2017 and that public funds used for its activities were spent inappropriately.
AER CEO Jim Ellis – who also acted as the director of ICORE – bore the brunt of the criticism in the reports, which concluded that his actions constituted gross mismanagement and that he showed “reckless and wilful disregard for the proper management of public funds, public assets and the delivery of a public service.”
Still, the watchdogs found no evidence that Ellis benefited personally financially from the episode and concluded that there were no grounds for any criminal charges.
According to an agreed statement of facts filed with the LSA tribunal, Johnston played no role in the foundation of ICORE, but did provide legal services to the corporation between May 2017 and April 2018 while also doing so for AER.
There was only one occasion on which she acted for both entities on the same matter: a training course licence agreement. Although Johnston informed Ellis of her conflict in that case, she conceded that she had not met the requirements of the LSA’s Code of Conduct.
Ethics Commissioner Marguerite Trussler showed some sympathy for Johnston in her report, quoting from a February 2018 email in which Johnston told Ellis that her work on the ICORE project was “the most stressful, difficult and unenjoyable I have encountered in a very long time” after lawyers in her department began to raise objections.
“Patricia Johnston was used by Jim Ellis . . . to do ICORE NFP legal work, thereby putting her in a conflict of interest. When the AER law branch staff balked at doing the work, she was left to do it,” the report reads. “She should have refused to do the work earlier than she ultimately did but she was in a difficult position, faced with a demanding and authoritarian superior. She also had a further obligation to make sure that ICORE was appropriate and that all conduct in respect of it was ethical, given her role on the AER Ethics Committee. In fairness to her, Jim Ellis mislead her by stating that he was not going to ICORE in the future.”
Ellis resigned from AER in early 2019, soon after the regulator ceased its association with ICORE. AER also began litigation to recover funds provided to ICORE, which resulted in a $2.7-million default judgement in the regulator’s favour, according to the LSA decision. Meanwhile, Johnston entered inactive status with the LSA in February 2019 after departing her role as AER’s general counsel and executive vice president of law.
In support of the joint submission for a reprimand and $5,000 fine, Johnston’s counsel pointed to her lengthy record of service to clients and the legal profession over more than 30 years at the bar – most in senior in-house roles. He also argued that Johnston’s breach of her obligations was unintentional, posed no risk to the public, and raised no issue related to her integrity.
Lou Cusano, the single bencher hearing the matter accepted the recommendation and delivered the reprimand at the hearing:
“Although you are no longer on the active roster of the Law Society, you are an experienced lawyer having practiced for over 30 years. You have had a long and principled career with significant contributions to the profession without blemish. In other words, you have no record of discipline with the Law Society and I have no doubt that having to deal with this citation at this point in your career must be a disappointment,” he said. “Your conduct reflects poorly on you and the profession, and we would have expected more from you as a lawyer with such breadth of experience. I note, however, that you have taken full responsibility for your conduct, and I'm satisfied that you understand the reasons why your conduct was unacceptable.”
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