Law Times

lAw Times • April 6/13, 2009 FOCUS Poulin highlights role of U.S. counsel BY GRETCHEN DRUMMIE Law Times A recent Ontario Divi- sional Court decision highlights the impor- tance of setting out what the role is of U.S. counsel looking to be involved in class proceedings with Canadian firms in actions launched in this country, says a lawyer involved with the case. Conversely, Poulin v. Ford Mo- tor Co. of Canada also applies the other way — if an Ontario or Canadian law firm is planning to assist U.S. counsel south of the border, they need a few things "to be clear in their relationship at the outset," says Jason Squire, a part- ner at Lerners LLP. Superior Court Justice A.D.K. MacKenzie dismissed the certifi- cation application on a claim that arose out of allegedly defective springs in door latch mechanisms of motor vehicles manufactured by Ford. MacKenzie said the plaintiff, Maurice Poulin, did not adequately represent the interests of the class. "The plaintiff had retained counsel and counsel had entered into an agreement with a U.S. law firm Motley Rice [LLC], for what was described in an agree- ment reflecting such arrangement as 'litigation support,'" wrote MacKenzie. "Having regard to the plaintiff's lack of understand- ing or awareness of the primary evidence, his unawareness of what constituted a litigation plan, or of what the financial arrangements were between his Canadian coun- sel and Motley Rice, the court had serious reservations as to whether the plaintiff had capacity to prop- erly instruct counsel on behalf of the putative class. "Of particular note, the plaintiff was unaware of the role played by Motley Rice, and did not understand his own law- yers' arrangement with them," he continued. "Motley Rice, a prominent South Carolina- based class action law firm, was behind the Ford actions in the U.S." In October 2008, the Divi- sional Court upheld MacKenzie and said, "The motion judge was of the view that U.S. counsel were 'acting more as underwriters for the litigation,' as opposed to acting as 'consultants.' This be- came an important consideration in the context of the proposed representative's ca- pacity to bear any costs that could be ordered against the plaintiff, representative given that Mr. Poulin's retainer agreement with his counsel did not provide for any indemnity to him with respect to costs." Squire, who tion in the case, and they would with Jim Hodg- son, both for- merly of Hodgson Shields DesBrisay O'Donnell MacK- illop Squire LLP, acted for Ford in the case, tells Law Times that MacKenzie took a "dim view of the nature of the arrangement with the U.S. counsel." He says that Canadian plain- tiffs' counsel had "entered into what they called a co-counsel agreement" under which Motley Rice in the U.S. would provide what they called the liability experts as well as other direc- Jason Squire says Ontario law firms must be 'clear in their rela- tionship at the outset' when working with U.S. counsel. take a 30-per-cent split of fees earned and the Canadian firm would take 70 per cent of any fees earned. Motley Rice was also funding disbursements for the litigation, said MacKenzie. MacK enzie "found that he had serious concerns about Motley Rice and their fee sharing arrangement with the Canadian firm," says Squire. "That was compounded by the fact that Mr. Poulin himself did not have an indemnity as to costs." Squire adds the Divisional Court also mentioned that Motley Rice, although lawyers, are "not subject to the Ontario courts juris- diction [and] they certainly are not licensed to practise in Ontario." He says that, "None of this is to say that U.S. counsel can't meaningfully participate in a Canadian class action." But, he notes, it's important that it be clear in that relationship that the Ontario law firm is the one that remains in "charge of the litiga- tion in Canada and that funda- mental duty to the class has not been handed off or delegated to the U.S." Squire says the bottom line is that "when getting into an ar- rangement like this either to pro- vide services to a U.S. plaintiffs' class action law firm — because Ontario lawyers can't practise in the U.S. — or the U.S. law firm who develops some expertise wants to bring that to Canada . . . there's probably some principles to draw out of the Poulin case about how properly to structure that relationship, in part so that the court doesn't get the impression it's really the Americans running the Canadian class proceeding. "And to make sure that the fees that are agreed to between the On- tario and the U.S. law firm, or even the process for getting to the fees, is one that's fair to the class and prob- LT PAGE 13 With The McKellar Structured Settlement™ The McKellar Structured Settlement is a sure thing. Tax-free. Guaranteed. Billions of dollars invested, not a penny lost. www.mckellar.com 1-800-265-8381 Untitled-4 1 www.lawtimesnews.com 3/31/09 11:32:42 AM

• Cover
• Family Court Warning
• The Dirt
• Focus On Class Actions