On July 18, Yves Boisvert wrote a column entitled “The obscene industry of collective action”. The text is as scathing as its title.
Posted at 11:00 a.m.
Mr. Boisvert argues that class actions have become a business which generates indecent fees for files that are often useless. His column conveys a reductive vision that demonstrates a misunderstanding of the business model of firms specializing in class actions, the risks assumed by them and the social utility of this procedural vehicle.
Readers will not be surprised to learn that as lawyers representing class action plaintiffs, we believe that this procedural vehicle is not only useful, but also necessary in the rule of law.
Understanding the class action business model
Who would want to sue an adversary who has resources ten or twenty times greater than his own and who can hire the most expensive lawyers in town with an unlimited budget? As much to ask who would want to show up to a duel armed with a penknife while the opponent brandishes a revolver.
A class action usually involves a large monetary claim. Defendants (usually large corporations or governments) typically respond with a heavy-handed challenge using considerable resources. They are not required to reveal how much it costs them to defend themselves. However, we know that it is not uncommon for this to represent several million dollars in legal fees, sometimes tens or even, in one case, hundreds of millions of dollars.
The only business model that allows you to take on billionaires, big corporations or governments other than with a penknife requires a law firm to have the means and agree to do all the necessary work, including a lawsuit and appeals all the way to the Supreme Court, without customers paying anything upfront.
The fact that we are paid not on an hourly basis, but as a percentage of the compensation actually received by members, makes this possible. It is a transparent, predictable and fair formula: do you agree to pay your lawyers $50 if they get you $200, without any financial risk for you in case of failure?
In this model, we may spend hundreds or even thousands of hours on files for which we will get no compensation, or even less compensation than we would have received if we had billed clients for each hour. worked. For this reason, it is vital that the business model allows winning cases to absorb the shortfalls of other cases and to ensure the salaries of qualified lawyers and staff while financing future cases.
Risky, collective action?
It’s easy to write a record was easy once it’s won. The reality is that about half of the class action files do not yield any fees.
Of course, there is the Fonds d’aide aux actions collectives. It helps fund disbursements and expert fees, but only covers a tiny fraction of fees. In 2020-2021, the Fund distributed $1,254,000 divided among 228 files, for an average per file of $5,500. This amount represents approximately one day of our firm’s fixed costs, or an hour or two of billing by one of the teams of defense lawyers in just one of our cases.
Mr. Boisvert is not moved by the risk that we run by agreeing to be paid only in the event of success. He probably doesn’t know how it feels when you have to liquidate all your investments and RRSPs, mortgage all your assets and have nothing left to pay salaries, a situation we have experienced a few times over the past 22 years.
Useful, collective action?
Mr. Boisvert maintains that it should be left to governments to ensure that the laws are respected and that collective action in terms of consumption or environmental protection is redundant, thus rendering it useless. One would think to hear the large corporations which want to escape the consequences of their faults.
In addition to the fact that governments are often themselves defendants in class actions dedicated to the protection of the environment, the intention of the legislator in creating the class action was in particular to mobilize private prosecutors in the public interest to help to ensure compliance with the law. This mobilization does not cost the taxpayers a penny, does not depend on the limited resources or the priorities of a ministry or an agency. Above all, it supports the rule of law, a cardinal value in democracy.
Don’t throw the baby out with the bathwater
In order to preserve the credibility of the class action, we have in the past denounced certain files which correspond to the situation described by Mr. Boisvert. However, such files are the exception. His column unfairly targets two meritorious cases (in which we are not involved) and paints all lawyers working in the field with the same contemptuous brush.
Such remarks fuel cynicism towards our judicial system, cynicism that collective action is nevertheless intended to combat by reminding everyone that no one is above the law.