Law Times

Page 8 September 8, 2015 • Law timeS www.lawtimesnews.com Class counsel's fees a difficult issue for judges, lawyers BY YAMRI TADDESE Law Times t's "unsettling" that judges in some cases have skipped close scrutiny of class coun- sel's dockets before approv- ing their fees, some defence lawyers say. The way Justice Edward Be- lobaba approved counsel's fees in Cannon v. Funds for Canada Foundation is an example of that issue, lawyers say. In that case, Belobaba said docketed time and risks incurred by class counsel, which are part of judges' ordinary considerations when approving fees, are "argu- ably irrelevant or immeasurable metrics." "By using these metrics, judg- es felt comfortable building up a reasonable legal fees award that was capped at the 20 to 25 per cent level, sometimes 30 per cent but rarely, if ever, approved at the one-third level," wrote Belobaba. "I couldn't understand this reasoning. Why should it matter how much actual time was spent by class counsel? What if the settlement was achieved as a re- sult of 'one imaginative, brilliant hour' rather than 'one thousand plodding hours?'" In his comments, Belobaba expressed concern about the way the issue has generally played out. "If the settlement is in the best interests of the class and the retainer agreement provided for, say, a one-third contingency fee, and was fully understood and agreed to by the representative plaintiff, why should the court be concerned about the time that was actually docketed? This only encour- ages docket-padding and over- lawyering, both of which are already pervasive problems in class action litigation." In this case, Belobaba grant- ed plaintiff counsel's the full one-third contingency fee. But some lawyers say they see prob- lems with an assessment that places most of the weight on contingency-fee agreements. Michael Rosenberg, a class action lawyer at McCarthy Té- trault LLP, says that at the out- set, it's class counsel and a pro- posed representative plaintiff who decide on contingency fees. "At the time a representative plaintiff enters into that agree- ment, there's no class and the representative is just a proposed representative plaintiff, some- one who is not yet authorized to act of behalf of the class," says Rosenberg. "There's no real scrutiny at that stage to prevent the exploit- ing of the class at a later stage when class counsel seek to rely on this fee agreement," he adds. "In other words, if the rep- resentative plaintiff is someone chosen by class counsel, there's a danger that the representative plaintiff is chosen because they are in fact someone who will sign a 33-per-cent contingency retainer. And if the court then does not apply meaningful scru- tiny to the fairness of that result — the payment of 33 per cent of the recovery to the class — there's a danger that this arrangement will become exploitive." Rosenberg admits judges are in a difficult position when try- ing to meaningfully assess the level of risk class counsel took by representing the plaintiffs. "I share judges' frustration with the exercise in that it places the court in an uneasy position and saddles it with responsibili- ties that it is not well equipped to discharge," he says. In Smith Estate v. National Money Mart Co., the Ontario Court of Appeal spoke of the challenges judges face when re- viewing counsel's fees. "An uncontested motion for approval of class counsel fees places judges in a difficult posi- tion," the court stated. "It would be advisable for motion judges to consider the appointment of amicus curiae to assist them in approving class counsel fees." According to Rosenberg, few judges have heeded the advice to appoint an amicus curiae on dif- ficult cases. "I think that there is more work to be done to explore these possibilities and through experi- mentation find an approach that assists the courts in the difficult task of fee approval," he says. Joel Rochon, the head of Ro- chon Genova LLP's class action group, says there are advantages to deciding fees on a percentage basis but he urges caution when- ever there's a departure from the conventional route. "Justice Belobaba's decision on class counsel fees recognizes that cost and fee awards can have a significant impact on ac- cess to justice," he says. "While the percentage ap- proach to deciding fees has many benefits, we need to re- main cautious when depart- ing from traditionally accepted principles of determining fees developed over the past decades. There will be many cases where a pure percentage is simply not workable and base time and multipliers will have to be con- sidered. Like many aspects of class action practice, it is impor- tant that the f luidity of the pro- cess is respected." Siskinds LLP class action lawyer Daniel Bach says judges generally take their duties seri- ously when it comes to approv- ing fees. Often, dockets are part of a greater consideration that looks at the risks taken by coun- sel, the results of the case, the jurisprudence, and general fair- ness, he says. In some instances, class counsel have complained about Belobaba's preference for put- ting little or no weight on dock- ets. In Rosen v. BMO Nesbitt Burns Inc., Belobaba awarded $290,000 to counsel for the plaintiffs at Koskie Minsky LLP in the face of the firm's sugges- tion of $575,000. In Dugal v. Manulife Financial, plaintiffs' counsel at Siskinds LLP had asked for almost $1.2 million but received $467,000. In an- other case, Crisante v. DePuy Orthopaedics, plaintiffs' lawyers sought more than $700,000 only to get $175,000. But Rosenberg says some courts may be unwilling to award costs on the basis of plaintiffs' counsel's hourly rates because their reward lies in the contingency fee upon the suc- cessful resolution of the matter. "This may be understand- able because plaintiffs' coun- sel's hourly rates are not tested by the market when they work on a contingency basis. Some difficulty may arise when this approach is applied to the de- fendant's costs . . . because the defendant actually incurs those costs to respond to the mo- tion. In this sense, the costs are real and counsel's rates are mar- ket tested," he says. LT There's a risk that initial contingency- fee agreements arranged between class counsel and a proposed representative plaintiff will become exploitive, says Michael Rosenberg. FOCUS ON Class Actions I REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT 8JUINPSFUIBOQBHFWJFXTBOEVOJRVF WJTJUPSTNPOUIMZDBOBEJBOMBXMJTUDPNDBQUVSFTZPVSNBSLFU FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com www.canadianlawlist.com Get noticed by the lawyers, judges, corporate counsel, finance professionals and other blue chip cilents and prospects who find the contacts they need for Canadian legal expertise at canadianlawlist.com with an annual Gold or Silver Enhanced listing package. ENCHANCE YOUR LISTING TODAY! CLLweb_LT_Sep8_15.indd 1 2015-09-02 2:24 PM

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