Law Times

PAGE 10 FOCUS apriL 12, 2010 • Law Times How much should class counsel receive? Academics, courts delving into contentious debate over lawyers' fees BY ROBERT TODD Law Times so do the massive payouts that lawyers receive following a suc- cessful defence or claim. Courts and legislators have highlighted the importance of contingency fees, something University of Windsor Faculty of Law assistant professor Jas- minka Kalajdzic calls "the en- gine that drives class actions." Yet there is tension, she notes, A between the desire to increase ac- cess to justice — the impetus be- hind those fees — and the need to ensure counsel are not over- compensated at the expense of class members. Kalajdzic suggests public sentiment in Canada and the United States is shifting as more people believe class action payouts to lawyers are too high. s Canada's class actions regimes get increasing courtroom exposure, Th at, she says, threatens the legit- imacy of this form of litigation. "Courts have a really diffi cult job in terms of ensuring that lawyers get compensated in an amount that's proportionate to the risks that those lawyers take in order to give them incentives to keep taking hard cases." Courts in Ontario have awarded a wide range of payouts to class counsel through multipli- ers. In some cases, lawyers have received amounts that represent less than a one-time multiplier, leaving them with less than their standard hourly rates for the work conducted. On the other end of the spectrum, some lawyers have received larger payouts, with a multiplier of 5.5-times awarded in 2009's Cassano v. Toronto-Do- minion Bank. In that case, Superi- or Court Justice Maurice Cullity awarded class counsel $11 mil- lion from an overall settlement of $55 million. not only encourage an ineffi - cient use of time and a padding of dockets, it may also fail to reward effi cient time manage- ment and the exercise of supe- rior skill by class counsel." In another notable decision, Courts should consider the fair- ness of lawyers' fees earlier in the process, says Caroline Zayid. Cullity rejected using the "lodestar" approach used in the United States and embraced by some Ontario courts in reason- ing that "the application of a multiplier to a base fee may the Court of Appeal last year awarded class counsel $6.3 mil- lion — about half of what they had requested — in a securities class action settlement involving Atlas Cold Storage Holdings Inc. In that decision, Superior Court Justice Joan Lax said the smaller payout to lawyers cre- ated "a more equitable sharing of net recovery as between class members and class counsel. Th is falls within the range of percent- ages of gross recovery that have been accepted in other cases." Kalajdzic says it's important for the courts to not approach the counsel-fee agreement as any oth- er contract. She notes the even- tual payout will apply to a much wider group of people than the representative plaintiff who has agreed to it. Also, the Class Pro- ceedings Act compels the court to approve a "fair and reasonable fee." Finally, she suggests the rep- resentative plaintiff is in an awk- ward negotiating position. Kalajdzic points out that some people have proposed that Ontario courts consider appoint- ing an amicus to help judges vet proposed counsel fees in major class actions, a system adopted in some U.S. lawsuits. Th e neu- tral third party could be a law- yer, community organization or public interest advocacy group. "In Canada, we haven't seen that," says Kalajdzic. "It would require quite a cultural shift. But there's certainly precedent for it south of the border and examples where it's worked well and, I'm sure, examples as well of where it's been ineffi cient." Caroline Zayid, a partner at Accident Benefits in Ontario James M. Flaherty and Catherine H. 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Inside you'll find: • a review of substantive law of product liability • a discussion of tactical and strategic issues and considerations • useful checklists and precedents … and more! Looseleaf & binder • $169 • Releases invoiced separately (1/yr) • P/C 0487030000 ISBN 0-88804-347-3 Personal Injury titles McCarthy Tétrault LLP who represents defendants in class ac- tions, recommends courts take an earlier look at counsel fees. "Th at question the court is putting to itself is, 'Is the class ac- tually getting something? Have they got something of value here that would justify paying a large fee to the class counsel?' In a way, I think what courts need to do is think about that issue and look at that issue even in the much- earlier stage of certifi cation." As a result, Zayid says it would be wise for judges to con- sider the eventual compensation class members can expect. "If you can do that mental exercise and say, 'You know what, even on a really good day, this is not going to achieve any- thing of any substance for any member of the class,'" then class counsel should be aware of it, she suggests. With that process currently taking place at the end of pro- ceedings, counsel have at times found themselves having spent endless hours and resources on a lawsuit that proved far less lu- crative than they had expected. Meanwhile, Kalajdzic says there is growing interest among academics in the area of class counsel fees and suggests the system could yet undergo a sig- nifi cant overhaul. "We're going to hear even- tually from the Supreme Court of Canada on some of these issues," she says. LT For a 30-day, no-risk evaluation call: 1.800.565.6967 CA102 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. CA102 (LT 1-2x4).indd 1 www.lawtimesnews.com 4/6/10 12:06:47 PM

• Cover
• Clinic Cutbacks
• Building Boom
• Focus On Class Actions