Skip to content

It’s game on in bet-the-company litigation

|Written By Jennifer Brown
It’s game on in bet-the-company litigation
The litigation panel: ( l to r) Colin Campbell, Marguerite Ethier, of Lenczner Slaght (moderator), Gregory MacKenzie, of 407 ETR and Tom Curry of Lenczner Slaght.

When it comes to high-stakes litigation in-house counsel play a critical role in the outcome but experts say they need to know the important steps in the battle plan.

“For better or for worse when dealing with a case of a certain importance, this is your moment whether you like it or not,” said Gregory MacKenzie, general counsel, 407 ETR Concession Co. Ltd., speaking during a session called “A Bird’s-Eye View of High Stakes Litigation” at the Canadian Corporate Counsel Association’s national meeting in Calgary last week.

“You can go out and hire the best external counsel and put together the war cabinet but, at the end of the day, if you win people will congratulate you, but if you lose it will feel like a loss and you’ll have to wear it for the rest of your time in the company. It’s like being a Torontonian these days — whether you voted for Rob Ford or not he’s our mayor.”

Echoing that sentiment was Tom Curry, a partner with Lenczner Slaght Royce Smith Griffin LLP.

“For in-house counsel the key is to own the challenge — everyone on the business side is looking to you for guidance and leadership and you must demonstrate you have the mental toughness and commit to success. These kinds of cases are not for half measures. Everybody will be looking to you and it’s a great relief when you adopt that posture.”

From the in-house perspective, the day the statement of claim arrives is actually phase two of what is about to happen, according to MacKenzie.

“Phase one was ensuring there was an internal awareness and acceptance of risk related to the practice that gave rise to the litigation,” he said.

“When phase two arrives it’s game on for in-house counsel and there are two critical functions: one is to on-board and integrate external counsel into the war effort. The external counsel becomes the quarterback, as it were, for cases of such importance. The second is to become the person who internally marshals resources.”

When it comes to high-stakes litigation, Curry said it needs to be “all-consuming and a must-win situation” and it’s vital in-house counsel plays a lead role.

“By and large the in-house counsel will have intimate and detailed knowledge of the issue at the heart of the litigation and they play an important role in the strategy required to win the case,” he said.

“You can think of this as two separate teams that come together to form one team over the legal problem — the inside and outside team must form a working group that will deliver success.”

Curry said it’s best if the in-house counsel organizes the effort.

“It’s not helpful to have everyone in the business involved — it must be nimble and you must empower those key to the decision-making to make decisions quickly.”

Presenting a solid and unified relationship between outside counsel and inside counsel and those on the business side is an important focus, said former Ontario Superior Court justice Colin Campbell, who also spoke as part of the panel.

“Focusing on finding out what’s necessary in having a good working relationship is necessary because if the other side sees a weakness they will try and take advantage,” said Campbell.

When it comes to predicting outcome, certainty of any kind can only come from good planning, according to Campbell.

“Get a speedy trial,” he said, acknowledging it can be hard to do, or a settlement.

“Get some rapport with the other side to move things along. As a judge one of the things I have wondered about often is you can tell cases that should have settled but they weren’t — so why was that the case? Get the game plan together quickly as opposed to ‘let’s see if we can get it on to trial quickly.’”

You also need a strategic plan for litigation, said Curry.

“You need a plan that will achieve objectives and you must commit to it and to winning, for sure. What you need next is a mission template or path to victory. Once you go through that exercise you have a much better feeling of what you’re going to do and can guide the business along with that and commit to that template. That gives you a real measure of control.”

Despite his new role as an arbitrator/mediator, Campbell said he still recommends trial over arbitration.

“If you have a choice, as a trial judge I still think trials are still the best way to have disputes resolved but you need to be focused and manage it. I think in looking at the two alternatives you have to know which is the best one for the case,” he said.

Another challenge many companies are uncomfortable with in high-profile litigation is dealing with the media.

“This is a difficult area because in David and Goliath litigation plaintiff counsel will often be out there in the media trying to frame up the case and put the black hat on the company even misstating evidence,” said MacKenzie. “It’s very difficult to explain to the business people that we have to focus on winning this litigation and we don’t want to litigate it in the media.”

Internally, it’s advised to develop a game plan for communication.

“Who doesn’t hate this issue?” asked Curry. “It is a difficult issue to on the one hand be trying a case in court and then walk out and have a media person ask questions and want a comment they can publish while you know the trial judge has the matter on reserve and will probably not appreciate you speaking to the media.

“One has to be very careful. There are lots of examples of media statements issued by public relations people that get taken off track by questions in a media scrum. It’s important to align the message between your courtroom position and the media spokesman.”

Campbell weighed in saying it’s a difficult job for in-house counsel to manage the message and media relations have to be handled carefully.

“I don’t want to read about the evidence in the paper before it is dealt with in the court. Don’t tell a judge what the evidence is or what they have to decide,” said Campbell, recalling a long-running CCAA case in which a prominent person wrote a book about it as the trial was going on. The book said Campbell wasn’t qualified to sit on the matter.

“I took it that it was an attempt to bait me into a situation in which I would maybe recuse myself. When the issue came up I said to the lawyer who made a quiet suggestion that I recuse myself I said no, bring the motion. I will hear everything and never heard another word.”

Campbell said most judges have a thick enough skin to recognize some of the work they do will be criticized.

“I understand the need to get the message out but it has to be done in a way not offensive to the court. By the way, I think most of us regard in-house counsel as being officers of the court and held to the same standard as outside counsel would be in that regard.”

Should in-house counsel be in court during key moments? Yes, but be prepared to be the face of the company.

“You need to practise a certain stoicism,” said Curry. “You can’t look too excited when it goes well or too devastated when it goes badly.”

Campbell agreed.

“I think the worse thing that happens to a corporation is when their lawyer is presenting to the court and in-house counsel has their hands over their face. When corporate witnesses in the courtroom make sure they are not giving visible demonstration of their view of the evidence. It’s not helpful to the case at all,” he said.

Apart from the in-house counsel, business leaders should largely stay away from proceedings, they suggested.

“From an in-house perspective I get nervous when the business people want to come down to court and I don’t encourage it,” said MacKenzie. “I have to tell them not to react or sigh.

“We live in the era of legal TMZ. If you have individuals tracking this case such as self-appointed activists suddenly your executives can be exposed to an interview right out of the blue. Some are only media savvy in a conventional sense. If someone sticks a cellphone camera in their face the next thing you know it can be on YouTube and you’ve lost control of it.”

  • Member of Class Action

    Kuldip Singh
    407 ETR did in fact "bet the company" and lost $8 million in the recent class action settlement. This article was very revealing of the company's legal strategy of publicly fighting while privately being willing to settle. For many of those involved in the Bankruptcy Class Action, this kind of article encouraged all of us to keep fighting for consumer rights. In another major Court battle, 407 was also told the highway could not indefinately hold the threat of court action over a driver's head - the Limitations Act applies in Ontario, unless a consumer signs it away. This company should be concerned about the reputation damage caused by unnecessarily prolonging court action while being willing to settle, pay large settlements and costs. Thank you to the lawyers and the Courts for not allowing a "focus on winning" at all costs to overcome basic fairness.

SPECIAL REPORTS



Save