Rethinking the Approval of Class Counsel's Fees in Ontario Class Actions
Canadian Class Action Review, Vol. 4, No. 1, pp. 15-46, 2007
32 Pages Posted: 29 Aug 2007
Class action legislation is a relatively new phenomenon in several Canadian provinces. The state of the law, particularly in Ontario, is at a pivotal stage. We have a sufficient number of decided cases to draw some conclusions about how well the Class Proceedings Act, 1992 as it is currently being interpreted and applied is meeting its goals, but not so many decided cases that a settled approach has emerged to its application in the courts. In this article, I analyze a sample of twenty-seven reported Ontario class action decisions, focusing in particular on what the courts have done with respect to the approval of class counsel fees. I find that courts have by and large tended to use an enhanced "lodestar method" for compensating class counsel, whereby class counsel's base fee is adjusted with a multiplier to reflect the riskiness of the litigation. In the twenty-seven class actions I analyze, the average fee award per case is approximately $3 million, representing approximately 15 percent of the average settlement. The average multiplier is about 2.5. Under the current provisions of the CPA I argue that, given the incentives facing class counsel, a percentage contingency fee would be superior to the lodestar method, could more easily be monitored for abuses by judges, and would increase access to justice for potential claimants with independently non-viable claims.
Keywords: class proceedings, class actions, legal profession
JEL Classification: K40, K41, K49, K10, K00
Suggested Citation: Suggested Citation