Law Times

PAGE 8 An online resource 1.800.263.3269 Focus On BUSINESS OF LAW Class actions targeting law firms Cases to prompt reviews of risk policies as alleged conflicts arise BY DARYL-LYNN CARLSON For Law Times uals access to justice, several law fi rms have found themselves ensnared as defendants in class action lawsuits as a result. Th e trend is prompting W larger fi rms to revisit their con- fl ict of interest and risk policies to ensure they don't end up in court as defendants. "We're in an age where law- yers or accountants perform work on behalf of an individual client where that work or that service can impact hundreds of thousands of other people be- yond the scope of that direct re- lationship," says David Th omp- son of Scarfone Hawkins LLP in Hamilton, Ont. He's acting for the plaintiff in the $50-million class action lawsuit listed as Rob- inson v. Rochester Financial Ltd. that also names Fraser Milner Casgrain LLP as a defendant. Th e case has been certifi ed by the Ontario Superior Court of Justice. "I think the court recog- nized that the professionals are hile Ontario's Class Proceedings Act has given more individ- in a position to perhaps infl u- ence what type of programs are able to be sold and mar- keted and our allegation is, if not for the tax opinion, the case never would have been launched," Th ompson says. He expects more profes- sionals to face lawsuits in class actions or other types of litigation. "Th e current legal land- scape has moved towards holding professionals generally more accountable for their ac- tions," says Th ompson. "I see that trend not in just the class action context, but generally speaking, the courts seem to be more vigilant of protecting the rights of individuals who rely on professionals whether it's lawyers or accountants or fi nancial advisers." Th e law fi rm was named as a defendant because it alleg- edly provided a tax opinion that prompted Rochester Financial to proceed with a charitable gift program. None of the allegations have been proven in court. According to Th ompson, the tax opinion by a major law fi rm lent credibility to the program, Newly merged law firms will be particularly vulnerable to challenges over conflicts of interest, says Lorne Sossin. an issue he believes all profes- sions should be aware of in the context of the rising number of class actions. "I think the class proceeding aspect is compelling in attracting greater liability for professionals which include law fi rms particularly because of the fact that professionals today are very much relied upon, whether it's accountants or lawyers, for putting together programs that are available to the general pub- lic," he says. "People can band together and aggregate their claims and pursue it against the big law fi rm or accounting fi rm, where- as in the past it would have been prohibitive to sue a big fi rm." Th ompson notes he's not thrilled about naming another law fi rm as a defendant but says that after carefully reviewing the case, there was an alleged extension of liability that he believes had to be addressed. Other law fi rms that have been named in class action lawsuits include WeirFoulds LLP and Cassels Brock & Blackwell LLP. Lorne Sossin, dean at Os- goode Hall Law School, has been keeping an eye on the cases. He expects many law fi rms to revisit their risk assess- ments as a result. "Th e range of scenarios where a law fi rm can be involved as a defendant or as a co-defendant is very broad, so larger law fi rms will probably have to revisit their policies about confl ict of in- terest and liability," he says. As well, he points out that two signifi cant recent law fi rm mergers — one involving McMillan LLP and Lang Mi- chener LLP and the other join- ing Ogilvy Renault LLP with the Norton Rose Group — could entail similar risk issues. "Th e confl ict issues really come to the fore when you get these mergers of fi rms of signifi cant size," Sos- sin says. Outsourcing Transactions A Practical Guide Fasken Martineau DuMoulin LLP Edited by: C. Ian Kyer and John Beardwood Negotiate and draft better outsourcing agreements for all parties involved With a special emphasis on technology, and a variety of useful precedent agreements, this service expertly guides you through each stage of the outsourcing process. From planning to negotiation, to implementation, the authors rely on their years of experience to ensure the book meets the needs of today's outsourcing practitioner. Create win-win relationships with authoritative insight on: • the RFP process • pricing and payment • benchmarking and its alternatives • implementation, governance and administration • privacy issues • exit strategies • issues in Eastern Europe, UK and Quebec • cross-border transactions and offshore outsourcing . . . and more New chapters include: Order your copy today Looseleaf • $189 Subscription updates invoiced as issued (1-2/yr) P/C 0146030000 ISBN 0-88804-456-9 • bankruptcy and insolvency issues • insurance issues • mismanagement of outsourcing transactions • outsourcing in the UK Outsourcing involves many areas of law such as employment, pension, tax, and IT. This looseleaf service includes chapters on each of these subjects written by experts in those fields. "Both of those raise the is- sue about how each fi rm will approach any possible con- fl icts, especially when you have multiple domestic offi ces. So if they want to take advantage of economies of scale, this is going to have to be one of the major issues for them." Sossin notes he wouldn't be surprised if there was a confl ict between client fi les that leads to a lawsuit or a class action as a re- sult of law fi rm mergers. In terms of the Ogilvy Re- nault deal with the Norton Rose Group, Sossin says the fi rms will have to be very careful about any potential confl icts. "It's highly unlikely it will prejudice any cli- ent but it's a matter of percep- tion in terms of the potential" for confl icts between the fi rms, he points out. "Th e best approach to avoid liability is to develop a rigorous system of confl ict checks and management and implement that in all offi ces." On the issue of class actions, canadalawbook.ca For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book, a Thomson Reuters business. Prices subject to change without notice, to applicable taxes and shipping & handling. LT1129 www.lawtimesnews.com Sossin says law fi rms are going to be closely watching each case to see what the courts determine with respect to their liability. "At the end of the day, it will take a few judicial decisions to clarify the scope of a lawyer or law fi rm's exposure. It will be very interesting to see the out- come and what this will mean for law fi rms and their policies in the future." LT November 29, 2010 • Law Times

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