198
Need a business rationale to invest in class actions ( years of time and millions of dollars are often
spent)
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These prospective fees drive lawyers to assume the role of "private attorney generals"
Class counsel fees are often negotiated at the
 Outset with rep plaintiff
 Rep plaintiff often ill equipped to assess reasonable of bargain
*Courts must ultimately approve these fees*
 Results in adversarial vacuum, don’t know what is fair to the class
Class Counsel Fees: enhanced access to justice, provision of contingent fees where a multiplier is
applied to the base fee is an important drivers to achieve this, necessary economic incentive to take
the case
Retainer agreement details fee arrangement
Most common approach:
Percentage: provides that class counsel will receive fees calculated based on a certain percentage of
the total recovery
 Can be fixed or varied (early resolution typical lower amount of recovery)
Multiplier: "lodestar approach", computing total value of investment, reasonable estimate of (hours x
hourly rate) x multiplier
 Can be fixed or varied (early resolution typical lower amount of recovery)
Other arrangements: flat fee, hourly, success premium, partial contigency retainer
Pg 199
Cannon v Funds for Canadian Foundation
Judge Belobaba: Initially approved class counsels legal fees at the 25 percent level rather than the full
one third that had been agreed to in the retainer agreement ( "frankly that’s what other judges were
doing")
One imaginative hour vs one thousand plodding hours, why should we care about time? Promotes
docket-padding and over lawyering
Judge cannot measure risk reasonably
Pg 200
Contingency Agreements should be accepted- that are fully understood and accepted by rep plaintiff
Cases where validity could be questioned:
Lack of full understanding or true acceptance on the part of the rep plaintiff to understand the recovery
of class counsel- in Cannons case did they understand 1/3 would be recovered, details should be inc. in
retainer agreement
Where the agreed to amount is excessive- 1/3 in this case isn't excessive
40-50 requires detailed justification
Where the application of the contingency fee would lead to fees so unseemly or otherwise
unreasonable- still up to debate according to this judge if 150 mil is awarded, is 50 mil to counsel
excessive? She cant think of a principled reason for not approving these amounts
Contingency fee helps by:
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More easily understood
Inject a much needed measure of predictability
Would result in certification cost motion awards being used less as a method for financing the
class action going forward
Criticism:
1/3 May be excessive in the view of the risk
Encourage less risky cases, difficult to justify higher fee
Pg 201
Not often there is multiple retainer agreements, maybe if class is relatively small
Pg 202
Retainer Agreement governed by following rules for many common law provinces:
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Agreement in writing
Should state the terms regarding payment of fees and disbursements
Agreement should provide an estimate of the expected fee
Should state the method of payment
Add. Requirements may exist for provinces
 Ex. AB CPA requires that contingency agreements be witnessed and formally served
 Ex. ON CPA notice of certification requires disclosure of fees
Fee Approval Process:
BEFORE OCT 2020:
 ON CPA: fees must be approved by court but no specific considerations that must be taken in to
account
However a large number of non exhaustive factors have been developed directing the court
Pg 203/204
Smith v National Money
Fairness and reasonableness: light of risk undertaken by lawyer, premium for this risk
A real economic incentive to lawyers to take on class proceeding and do well
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Factors
Factual and legal complexities
Risk undertaken inc risk that might not be certified
The degree of responsibility assumed by class counsel
Monetary value of the matters in issue
Important of the matter to the class
The degree of skill and competence demonstrated by Class counsel
Results achieved
Ability of the class to pay
Expectations of the class as to amount of fees
The opportunity cost to class counsel in pursuit of this litigation
POST OCT 2020:
Court
Fees must be fair and reasonable
(2.1) The court shall not approve an agreement unless it determines that the fees and disbursements
required to be paid under the agreement are fair and reasonable, taking into account,
(a) the results achieved for the class members, including the number of class or subclass members
expected to make a claim for monetary relief or settlement funds and, of them, the number of class or
subclass members who are and who are not expected to receive monetary relief or settlement funds;
(b) the degree of risk assumed by the solicitor in providing representation;
(c) the proportionality of the fees and disbursements in relation to the amount of any monetary award
or settlement funds;
(d) any prescribed matter; and
(e) any other matter the court considers relevant. 2020, c. 11, Sched. 4, s. 29 (1).
(2.2) In considering the degree of risk assumed by the solicitor, the court shall
consider,
(a) the likelihood that the court would refuse to certify the proceeding as a class
proceeding;
(b) the likelihood that the class proceeding would not be successful;
(c) the existence of any other factor, including any report, investigation,
litigation, initiative or funding arrangement, that affected the degree of risk
assumed by the solicitor in providing representation; and
(d) any other prescribed matter. 2020, c. 11, Sched. 4, s. 29 (1).
Same
(2.3) In determining whether the fees and disbursements are fair and reasonable,
the court may, by way of comparison, consider different methods by which the
fees and disbursements could have been structured or determined.
Priority of amounts owed under approved agreement
(3) Amounts owing under an enforceable agreement are a first charge on any
settlement funds or monetary award.
Determination of fees where agreement not approved
(4) If an agreement is not approved by the court, the court may,
(a) determine the amount owing to the solicitor in respect of fees and
disbursements;
(b) direct a reference under the rules of court to determine the amount owing;
or
(c) direct that the amount owing be determined in any other manner.
Considerations
(5) In making an order under clause (4) (a), the court shall take into account the
factors set out in subsection (2.1), in accordance with subsections (2.2) and
(2.3).
Holdback
(6) The court may determine and specify an amount or portion of the fees and
disbursements owing to the solicitor under this section that shall be held back from
payment until,
(a) the report required under subsection 26 (12) or 27.1 (16), as the case may be,
has been filed with the court and the court is satisfied that it meets the
requirements of that subsection; and
(b) the court is satisfied with the distribution of the monetary award or settlement
funds in the circumstances, including the number of class or subclass members
who made a claim for monetary relief or settlement funds and, of them, the
number of class or subclass members who did and who did not receive monetary
relief or settlement funds.
Section 33 governs fees when a contingency fee agreement is present (“a
written agreement providing for payment of fees and disbursements only in the
event of success in a class proceeding”)
Specifies multiplier approach
• Base fee and multiplier must be approved by court (s. 33(7))
• Fee must be “reasonable” (s. 33(8)) having regard to the factors in s. 32(2.1)
• Those factors largely codify case law (see factors, p. 203)
Smith v Money Mart, 2010 ONSC 1334: fee must be fair and reasonable in light
of risk taken and success achieved
• Multipliers range from <1 to over 7 but Alarie & Flynn study revealed average
fee was 22% of settlement or 1.95 multiplier
• Need to create economic incentive to do the work (p. 203)
• Paying premium to compensate for risk
• Time
• Out of pockets
• Risk of no certification
• Risk of losing on the merits
• Inability to collect on judgment
• Ever increasing adverse costs orders
Fee agreement is with rep plaintiff only (see sample on p. 212)
Most lawyers/judges prefer % of fund approach - but see caution in Brown (p
204)
Clear sailing provision in most settlement agreements
Quantum Fee Awards
Percentage fee approach dominates class actions today
Some courts have set limit to multiplier to three or four in the most "deserving case"
Often used in mega fund cases where percentage would yield too much money (billion dollar cases) class counsel will often avoid this by asking for a small fee
Pg 205
Brown V Canada-indigenous children places with non indigenous families for adoption
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75 mill was to be given to counsel, Justice Belobaba found that this was unwarranted despite
amazing results by defendant
Percentage fee wasn’t used, multiplier was used
Unseemly and unreasonable, even may be in cases of 50 million
Examine the actual risk incurred
25-30% okay in a few million dollars, but not in case of hundreds of millions of dollars Manuge v
Canada
Class action judge should examine if evidence that fees are excessive
Must produce evidence of time and money invested- court should make appropriate
adjustments for over-docketing
Smith v Money Mart (p. 209) discusses ethical challenges in unopposed fee
Motion
So who is contesting fee at approval hearing?
• Court of Appeal confirms duty of counsel to make ‘full and frank disclosure’
and suggests judges appoint amicus or independent counsel
• Can a judge both scrutinize and test evidence and be impartial adjudicator?
Class member lacks standing to appeal an order approving class counsel fees
Judge can resort to rule 132 to appoint an amicus- present an opposing point of view on motions
How do we preserve fairness?
Amicus: no judicial discussion of appointment process
Monitors: Can help court by analyzing info that may be filed on approval motions
Independent Counsel: