Law Times

lAw Times • April 6/13, 2009 FOCUS PAGE 9 actions was held last week and included in the busy sched- ule was a session on "class ac- tion ethics: answers to the 10 hardest ethical questions." Panellists Kirk Baert, a part- ner at Koskie Minsky LLP, Linda Rothstein, managing partner of Paliare Roland Rosenberg Roth- stein LLP of Toronto, and Van- couver's Ward Branch, a partner at Branch MacMaster, tackled the tough questions for those in attendance. Th e session was moderated by Superior Court Justice Paul Perell. But meanwhile, Baert and Rothstein have also provided written answers to those same questions for Law Times readers: Q: Can you contact a potential plaintiff to ask if they are Harder to settle? Continued from page 8 harder and harder to settle." Farrer says he thinks what will happen is the groups of plaintiff s' lawyers doing class action work will shrink, there will be more consortiums of lawyers getting together to get some joint economic clout to take on some of the defendants and some of the less meritorious claims will fall by the wayside "because the economic weight of it will just rock the representative plaintiff s and rock the law fi rms that are pursuing it." Farrer adds, "I think it's a recognition that some of these claims that have high publicity value and a little less value on the merits are more likely now to be de- fended. Th e ones that have merit to them and have real risk where the defen- dants know that the repre- sentative plaintiff and the law fi rm representing that plaintiff are prepared to see it through, I think defen- dants still have to make rea- sonable choices and have to act reasonably and if it is in the interests of the company and its shareholders that it be settled, they should still try and do that obviously." Merkur notes that this development in the law is "a change . . . certifi cation's be- coming less signifi cant for settlement purposes than it has in the past and it's just changing the dynamic. It's sig- nifi cantly increasing the risk for plaintiff s' lawyers is what it's really doing." Says Merkur: "It may have raised the bar on plaintiff s' counsel to make sure your class action does have signifi cant merit from a legal and public relations perspective before getting involved." LT Branch_class actions (LT 1-3x4).indd 1 Answers to 10 hardest ethical questions O BY GRETCHEN DRUMMIE Law Times sgoode Hall Law School's sixth national symposium on class proposed individual repre- sentative plaintiff prior to certifi cation? KB: By explaining that the plaintiff is not simply liti- gating his own case, but that of the class as well. Th e representative plaintiff owes duties to the class. Q: Can class counsel make a promise that the class repre- sentative will receive a cer- tain amount at the close of the litigation? Linda Rothstein interested in acting as a class representative? LR: If someone is seeking ad- vice, and it appears that their circumstances give rise to a potential class action, I believe you have a positive obligation to advise them of that fact. If a fi rm becomes aware of a potential class ac- tion without having been contacted by an aff ected person, is it ethical to seek out a potential class rep- resentative? Th e answer is "yes." A lawyer may not cre- ate a cause of action but, in my view, there are no other ethical limits on advising aff ected individuals that the cause of action exists. Indeed many important and noble claims are not recognizable to the average layperson. Diff erent fi rms, however, approach this is- sue diff erently, in practice. Q: How should class counsel manage an off er made to the LR: No. Very careful advice must be given about this issue be- cause potential class repre- sentatives often ask whether they will receive some form of guaranteed payment in light of the signifi cant re- sponsibility they undertake. All that one can say is that if the action is successful, it remains in the court's discre- tion to order some form of compensation for extraor- dinary eff orts spent by the class representative in pros- ecuting the action. Other- wise, the class representative is limited to his/her share of the damage award or settle- ment fund. Q: If the defendant makes an off er that class counsel believes is in the best interests of the class, and the class representa- tive will not accept it, what should you do? KB: Seek a ruling from the court. Q: Can or must class counsel of- fer to give the representative plaintiff an indemnity for costs? LR: Class counsel may off er an Kirk Baert indemnity but they need not do so. I disagree with the reasoning on this issue in the Poulin v. Ford Motor Co. case, which suggests that an indemnity from counsel is an important consideration with respect to the suit- ability of a representative plaintiff . However, I be- lieve class counsel do have a positive obligation to advise a potential class representa- tive about the existence of the Class Proceedings Fund and the indemnifi cation that it off ers. Q: Can defence counsel insist that class counsel not act in any further litigation against the defendant as a term of a settlement? KB: I don't normally agree to such clauses but they are fairly common especially where discovery has oc- curred. Q: Can class counsel simultane- Q: Should class counsel ever accept an off er to have the fees directly paid defendant? by the KB: In certain circumstances, yes. See Baxter v. Canada per Winkler J. Q: Should defence counsel ever make such an off er? LR: Yes, provided the fi nal quantum to be paid is sub- ject to court approval. Q: Can class counsel ever request/ insist that the court approve a settlement and class counsel's fees as a package? KB: In certain circumstances, yes. See Baxter v. Can- ada per Winkler J. and Northwest v. Canada per LT ously negotiate the settlement amount and class counsel fees? LR: Th e important principle is that a global class settle- ment amount should not result in an unreasonably low recovery to the class because of class counsel's fee demands. Th e manner in which that principle is executed will depend to some degree on the way the negotiations proceed. Most experienced defence coun- sel are also aware of the is- sue and will not consent to a settlement which infl ates counsel's fees at the expense of the class. Similarly, the court is very aware of the competing interests in re- viewing settlements and legal fees to ensure that the overall result is fair to the class, and good counsel will have this in mind through- out the negotiations. Class Actions in Canada Everything you need to successfully initiate, defend or manage a class action lawsuit Cited with approval by the Supreme Court of Canada in the leading class action decision (4th) 19, [2001] 3 S.C.R. 158 (2001), 205 D.L.R. Class Actions in Canada is the leading text and a comprehensive guide to bringing and defending class actions in Canada. 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Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com 4/1/09 10:10:38 AM LT0406 H ollick v. Toronto (City) W ard Branch

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