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AI in business: how to manage the risks?
What effect chat technology (ChatGPT, Bard and others) will have on businesses and workplaces.
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The forgotten aspects of AI: reflections on the laws governing information technology
While lawmakers in Canada1 and elsewhere2 are endeavouring to regulate the development and use of technologies based on artificial intelligence (AI), it is important to bear in mind that these technologies are also classified within the broader family of information technology (IT). In 2001, Quebec adopted a legal framework aimed at regulating IT. All too often forgotten, this legislation applies directly to the use of certain AI-based technologies. The very broad notion of “technology-based documents” The technology-based documents referred to in this legislation include any type of information that is “delimited, structured and intelligible”.3 The Act lists a few examples of technology-based documents contemplated by applicable laws, including online forms, reports, photos and diagrams—even electrocardiograms! It is therefore understandable that this notion easily applies to user interface forms used on various technological platforms.4 Moreover, technology-based documents are not limited to personal information. They may also pertain to company or organization-related information stored on technological platforms. For instance, Quebec’s Superior Court recently cited the Act in recognizing the probative value of medical imaging practice guidelines and technical standards accessible on a website.5 A less recent decision also recognized that the contents of electronic agendas were admissible as evidence.6 Due to their bulky algorithms, various AI technologies are available as software as a service (SaaS) or as platform as a service (PaaS). In most cases, the information entered by user companies is transmitted on supplier-controlled servers, where it is processed by AI algorithms. This is often the case for advanced client relationship management (CRM) systems and electronic file analysis. It is also the case for a whole host of applications involving voice recognition, document translation and decision-making assistance for users’ employees. In the context of AI, technology-based documents in all likelihood encompass all documents that are transmitted, hosted and processed on remote servers. Reciprocal obligations The Act sets out specific obligations when information is placed in the custody of service providers, in particular IT platform providers. Section 26 of the Act reads as follows: 26. Anyone who places a technology-based document in the custody of a service provider is required to inform the service provider beforehand as to the privacy protection required by the document according to the confidentiality of the information it contains, and as to the persons who are authorized to access the document. During the period the document is in the custody of the service provider, the service provider is required to see to it that the agreed technological means are in place to ensure its security and maintain its integrity and, if applicable, protect its confidentiality and prevent accessing by unauthorized persons. Similarly, the service provider must ensure compliance with any other obligation provided for by law as regards the retention of the document. (Our emphasis) This section of the Act, therefore, requires the company wishing to use a technological platform and the supplier of the platform to enter into a dialogue. On the one hand, the company using the technological platform must inform the supplier of the required privacy protection for the information stored on the platform. On the other hand, the supplier is required to put in place “technological means” with a view to ensuring security, integrity and confidentiality, in line with the required privacy protection requested by the user. The Act does not specify what technological means must be put in place. However, they must be reasonable, in line with the sensitivity of the technology-based documents involved, as seen from the perspective of someone with expertise in the field. Would a supplier offering a technological platform with outmoded modules or known security flaws be in compliance with its obligations under the Act? This question must be addressed by considering the information transmitted by the user of the platform concerning the required privacy protection for technology-based documents. The supplier, however, must not conceal the security risks of its IT platform from the user since this would violate the parties’ disclosure and good faith requirements. Are any individuals involved? These obligations must also be viewed in light of Quebec’s Charter of Human Rights and Freedoms, which also applies to private companies. Companies that process information on behalf of third parties must do so in accordance with the principles set out in the Charter whenever individuals are involved. For example, if a CRM platform supplier offers features that can be used to classify clients or to help companies respond to requests, the information processing must be free from bias based on race, colour, sex, gender identity or expression, pregnancy, sexual orientation, civil status, age except as provided by law, religion, political convictions, language, ethnic or national origin, social condition, a handicap or the use of any means to palliate a handicap.7 Under no circumstances should an AI algorithm suggest that a merchant should not enter into a contract with any individual on any such discriminatory basis.8 In addition, anyone who gathers personal information by technological means making it possible to profile certain individuals must notify them beforehand.9 To recap, although the emerging world of AI is a far cry from the Wild West decried by some observers, AI must be used in accordance with existing legal frameworks. No doubt additional laws specifically pertaining to AI will be enacted in the future. If you have any questions on how these laws apply to your AI systems, please feel free to contact our professionals. Bill C-27, Digital Charter Implementation Act, 2022. In particular, the U.S. Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, October 30, 2023. Act to establish a legal framework for information technology, CQLR c C-1.1, sec. 3. Ibid, sec. 71. Tessier v. Charland, 2023 QCCS 3355. Lefebvre Frères ltée v. Giraldeau, 2009 QCCS 404. Charter of Human Rights and Freedoms, sec. 10. Ibid, sec. 12. Act respecting the protection of personal information in the private sector, CQLR c P-39.1, sec. 8.1.
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Clarifications regarding the application of mandatory disclosure rules to severance agreements
On November 2, 2023, in response to certain controversy, the Canada Revenue Agency (“CRA”) sought to clarify the application of the new disclosure rules, in force since June 22, 2023. The CRA’s comments relate, in particular, to the impact of reporting obligations on severance agreements, a topic we initially covered a few weeks ago1. We believe it is appropriate to go over these clarifications. As a reminder, the disclosure rules generally apply to so-called avoidance transactions carried out to obtain a tax benefit and presenting one of the following three generic hallmarks: contingent fee arrangements, confidential protection or contractual protection. At first glance, the interpretation of these hallmarks suggests that severance agreements involving an employee’s undertaking to indemnify their employer are subject to reporting obligations. However, in response to questions from a number of legal experts, the CRA commented on the disclosure rules, specifying, in particular, that a tax indemnity granted under a severance agreement is not subject to the reporting obligation where it occurs in a business or financial context between persons dealing at arm’s length, and acting freely and prudently. In this regard, the CRA pointed out that the contractual protection included in such an agreement would not be considered a generic hallmark insofar as it does not cover a tax treatment giving rise to an unwarranted benefit. The CRA gave as an example a settlement reached between an employer and employee further to dismissal, harassment complaints or other employment-related recourses, providing for severance pay or warranted damages. Even if the employee were to undertake to reimburse the employer in the event of unexpected tax treatment, this type of agreement would not give rise to reporting obligations. Although the CRA’s clarifications were meant to clear things up, they did not definitively establish how the mandatory disclosure rules apply to severance agreements. A certain level of uncertainty remains with regard to severance agreements with no real legal basis awarding tax-free damages to an employee. In such a case, it would be difficult to argue that the business context warranted a favourable tax treatment for the employee. In the case of an agreement providing for the payment of unwarranted damages, and where contractual protection extends to the tax treatment of the amount paid, the avoidance transaction may, despite the CRA’s comments, require disclosure to the tax authorities. One thing is certain: tax indemnity clauses may well disappear from severance agreements. Ultimately, the new rules reinforce the principle that the granting of tax-free damages should be limited to circumstances that warrant it. Quebec case law has long established that the mere fact of losing one’s job does not give rise to damages, barring exceptional circumstances. In short, the CRA’s guidelines do not have the force of law, and may be amended or revoked at any time. Consequently, maintaining a cautious and conservative approach will be crucial when determining whether the new mandatory disclosure rules apply to severance agreements. Our team of employment law and tax professionals is available to answer your questions about these major changes and help you make informed decisions when negotiating severance agreements. Termination agreements: New reporting requirements apply!
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Lavery welcomes two lawyers, bolstering its expertise in commercial litigation
Lavery is delighted to welcome Marc-André Landry and Joël Larouche to its Litigation and Dispute Resolution team, who will bolster the firm's expertise in commercial litigation. Marc-André Landry is joining the team as a partner. Having solid experience in dispute resolution, he assists his clients in particular with negotiation, mediation or arbitration, or before the various courts of law.He acts for a wide range of clients in sectors as diverse as construction, real estate, renewable energy, conventional energy, new technologies, financial services and pharmaceuticals. Mr. Landry is regularly consulted in cases involving fraud or corporate data theft. Using his knowledge of extraordinary remedies (Anton Piller and Norwich orders, seizures, requests for confidentiality, among others) he is able to protect his clients' interests effectively. He also defends business people accused of violating securities laws by the Autorité des marchés financiers."Lavery's vision and the strength of its team persuaded me to join the firm—and I did the right thing. Clients already benefit from and appreciate Lavery's multiservice platform, which meets the needs of SMEs as well as those of the largest institutions," says Marc-André. Joël Larouche joins the team as Senior Associate. He focuses his practice primarily on commercial litigation issues such as insolvency and restructuring. Over the years, he has gained extensive experience with injunctions of all kinds, including Anton Piller, Norwich and Mareva injunctions, as well as those used in breaches of non-solicitation and non-competition clauses and the theft of personal and confidential information, among others. He frequently acts as an independent supervising lawyer in the context of Anton Piller order enforcement. He is sought out by clients to act in various situations, including shareholder and transactional disputes, as well as in regulatory investigations and in the resolution of corporate governance issues. His practice leads him to represent both large private and institutional corporations, in particular in the financial, technology and construction sectors. "I'm delighted to be joining the Lavery family, which has a passionate and meticulous team with a proven track record. The idea of working for a leading independent firm quickly appealed to me, but above all, I was convinced when I saw how people-centered the firm is," says Joël.The combined expertise of these two professionals consolidates Lavery's commercial litigation offer, affirming the firm's position as a leader in Quebec.
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Myriam Brixi recognized as Canada’s leading litigation expert by Lexpert
On November 23, 2023, Lexpertrecognized Myriam Brixi’s expertise in its 2023 Special Edition: Litigation. This directory ranks the leading litigators involved in Canada’s landmark litigation cases who have distinguished themselves in the legal profession by providing outstanding service to clients. Each year, the Canadian Legal Lexpert Directory team analyzes the most notable cases in the country and conducts in-depth interviews with litigation lawyers to evaluate peer nominations and place the spotlight on outstanding legal professionals. As a partner in Lavery’s Litigation and Dispute Resolution group, Myriam Brixi focuses her practice primarily in the areas of class actions, product liability, consumer law and insurance law. She has participated in complex class actions raising important legal issues, including a wide range of multi-jurisdictional class actions. Myriam adds this recognition to the one she received earlier this year as Quebec Litigator of the Year in the Emerging Talent category and another she received as one of the Top 100 Women in Canadian Litigation by Benchmark Litigation. Congratulations to Myriam for this distinction that is a testament to her talent and expertise. For more information, please go to: https://www.lexpert.ca/rankings/best-lawyer/se-lit About Lavery Lavery is the leading independent law firm in Québec. Its more than 200 professionals, based in Montréal, Québec City, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Québec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm’s expertise is frequently sought after by numerous national and international partners to provide support in cases under Québec jurisdiction.
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Lavery’s Anik Trudel named CEO of the Year by Les Affaires in its medium-sized business category
Lavery is proud to announce that its CEO, Anik Trudel, was named CEO of the Year 2023 by the Journal Les Affaires in its medium-sized business category. The nomination of a woman in this category is a first in the history of Les Affaires. The CEO of the Year award is presented to leaders who innovate, honour stakeholders, foster a strong corporate culture and provide the right conditions for growth. This recognition, awarded by a jury of leaders in the business community, is a testament to Anik Trudel’s leadership in ensuring the firm’s growth and progression since her arrival six years ago. “I would like to share this distinction with all the partners, lawyers, members of the Management Committee and administrative staff, without whom all our achievements would not have been possible. The entire Lavery family and I are truly honoured to receive this recognition from members of the Quebec business community. This goes to show that our shared passion for achieving our objective of partnering with key stakeholders in the Quebec economy is valued,” said Anik Trudel. When she was appointed in 2017, her profile in the legal industry was unique: a female lawyer no longer practicing law, taking the helm of a firm where she had never before been an employee, let alone a partner. Lavery chose her not only for her keen understanding of the legal practice, but also for her innovative approach to management, aiming to becoming a leader in reshaping the legal profession in Quebec. Lavery prides itself on its inclusive, collaborative and performance-driven corporate culture. As a CEO entirely dedicated to managing the firm’s operations effectively, Anik has devoted herself to building a diverse team of professionals, including some from outside the legal profession, to work alongside the partners in order to achieve the firm’s strategic objectives. Lavery is undergoing significant growth, setting itself apart with its innovative approach in the industry.
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Lavery recognized by The Globe and Mail as one of Canada's Best Law Firms 2024
On November 15, 2023, the Globe and Mail released the results of its inaugural edition of Canada's Best Law Firm for 2024 and we are pleased to announce that Lavery is included. The ranking for Canada's Best Law Firms was created based on recommendations from lawyers and clients (corporate legal departments). The final list ranks law firms in 31 specialties. Out of the thousands of law firms analyzed, only 200 are recognized. About Lavery Lavery is the leading independent law firm in Quebec. Its more than 200 professionals, based in Montréal, Quebec, Sherbrooke and Trois-Rivières, work every day to offer a full range of legal services to organizations doing business in Quebec. Recognized by the most prestigious legal directories, Lavery professionals are at the heart of what is happening in the business world and are actively involved in their communities. The firm's expertise is frequently sought after by numerous national and international partners to provide support in cases under Quebec jurisdiction.
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