Posts Tagged ‘ foreign counsel

Outsourcing Legal Services In Class Proceedings Not “Inherently Wrong” Rules Ontario Court

As class proceedings in Canada continue to bloom from their relative infancy, the courts will play a key role in guiding the future directions of such proceedings. Now is the time for courts in Canada to lay the foundations for what is sure to become a class action packed future.  As part of this class action expansion into the Twenty First Century, I will focus on the development of the jurisdictional boundaries at play  on the issue of collaborating with foreign counsel when prosecuting a class action proceeding in Ontario.

In the recent Ontario carriage motion of Sharma v. Timminco Ltd., both Kim Orr and Siskinds, two prominent class action plaintiff firms were squaring off over which firm should have carriage of a class action involving similar subject matter,that being the misrepresentation by Timminco Ltd. about  its ability to produce solar grade silicon, causing its share value to plummet as a result. One of the issues under consideration was whether Kim Orr’s desire to collaborate with a foreign law firm if it were granted carriage would be appropriate.

In the words of Justice Perell, “there is nothing inherently wrong with Ontario class counsel who are acting for plaintiffs in obtaining services from foreign law firms so long as there is no interference with or usurpation of the lawyer and client relationship between the Ontario lawyer of record and his or her clients”. It was also held that so long as  foreign firms do not assume the “de facto” role of lawyer of record, obtaining such services are appropriate. However, Justice Perell also stated that the foreign firm cannot have a proprietary interest in the class proceeding.

On the facts of this case, the foreign firm obtained by Kim Orr  was merely hired as an advisor drawing from its own experience. It was not controlling the litigation, and only served an advisory role as well as providing investigative and documentary management services.  This decision is significant, as it may encourage Canadian plaintiff firms to retain the expertise of foreign firms when prosecuting class actions.

Many foreign firms may have useful insight to maters at play in Canadian class proceedings as they may have already litigated a parallel class action of a similar nature in their own jurisdiction. In addition, class actions in the United States for example have been around longer than in Canada so obtaining American law firms may add depth to Canadian plaintiff counsel’s approach.

It is not uncommon for defendant’s counsel in Canadian class actions from obtaining legal advice from foreign firms. However, the controversial distinction that arises when plaintiff’s counsel attempts to follow suit is that unlike in the case with corporate defendants who  can have a pre-existing solicitor client relationship with foreign law firms, plaintiffs’ situations tend to be different. This is because a lawyer representing a  large class of plaintiffs in Ontario who then assigns the lawsuit to foreign counsel with no connection to the case creates dilemmas with unfair fee splitting, and  is viewed with more caution on public policy grounds. However, this decision seems to clarify the balance of what degree of involvement foreign counsel may have going forward.

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