Legal Feeds Blog
Innovation within law firms may mean working directly with clients on introducing new practices, or marketing lawyers to clients on capabilities that go beyond their technical expertise.
|Speakers at a Legal Marketing Association Toronto chapter event, focusing on changes in the legal industry, addressed shifts that firms will see in the coming years. PHOTO: Gabrielle Giroday|
Friedrich Blase, Legal X @ MaRS Discovery District executive in residence and the Un-Firm of the Future managing director, recommends stoking innovation by having lawyers find a small number of “meaningful, sizeable” client relationships. He then recommends lawyers work with these clients to design new ways of delivering services.
“Innovation is the first thing you do in the day, and then you serve the clients, because that’s what your future is all about,” he said. “You need to actually do that with some of your best clients.”
Part of the issue is that the legal industry is trailing the rest of society when it comes to innovation, said Chris Bentley, Ryerson University’s Legal Innovation Zone and Law Practice Program executive director.
He says consumers will drive change if lawyers don’t.
“We are leaving the age of the provider, and entering the age of the consumer,” he said.
Peter Carayiannis, partner with Deloitte Conduit Law LLP, said different factors have pushed law firms to innovate. He said one contributing factor was the 2008 global economic crisis which “really put a great deal of focus on legal budgets, on the behaviour of GCs, on the behaviour of in-house communities.”
“[T]he sort-of black box view to a legal budget was no longer an accepted position at the executive table,” he said.
Other factors include clients becoming “more inquisitive and more disciplined” about legal budgets. It also means considering the different approach taken by millennials to their careers.
“The approach of millennials as they join professional services firms, including law firms, is not the same as their parents. And consequently, the decisions they will make, the compromises that they will accept, the goals and ambitions that they will have in their life, will be different,” Carayiannis said.
Bryan Friedman, general manager of Axiom, says the legal services provider attracts lawyers who want the ability to say yes or no to certain files.
“There’s often the case where a lawyer will be made to take a file that they’re really not interested in, or they’re not comfortable with,” said Friedman, who pointed to an example of a lawyer who declined to do work for a company that did strip-mining in Central America. He said Axiom works with in-house counsel to maximize their value.
“What we really try to focus on is how can we transition in-house law departments from call centres to value-added providers of legal services,” he said. “We want to make sure that lawyers in in-house departments are empowered and have the ability to make their companies more competitive, not just to evaluate risk every time it comes up.”
Carayiannis said law firms may want to look at marketing their lawyers, and their value proposition in new ways, beyond their technical expertise.
Instead, lawyers should be held up as problem solvers.
“It’s not about technical expertise. Your technical expertise is assumed,” he said.
Blase said the seeds of the Un-Firm came from conversations he had with law firms.
“In the end, I didn’t find firms that were willing to take this as an offensive play, they would do it as a defensive play when the clients asked for it, but not as an offensive play,” he said.
He added that it’s a “phenomenal” time for hungry lawyers to connect to individual consumers or smaller businesses, or the “business-to-consumer space.”
“If you’re not part of it, you’re going to get run over by it,” said Blase. “And that I promise you, is so certain, over the next 10 to 15 years.”
Canadian National says rival Canadian Pacific paid $25 million to settle lawsuit, Canadian Press
The new B.C. Franchise Act comes into force Feb. 1, 2017 and puts Canada's most westerly province in line with five others with similar legislation. While the act was passed in Nov. 2015, the B.C. government has been drafting regulations which were passed last month.
|Tony Wilson says the new act and regulations 'levels the playing field' and has enhanced franchise legislation.|
Franchise legislation is a response to the burgeoning commercial growth of franchises in Canada, says Rogers.
"Franchises in Canada represent 45 per cent of all retail and that figure is going to hit 50 per cent in the next few years," he says, adding that while the food industry is best known, franchising now permeates nearly every service sector ranging from printing and signage production to graffiti removal companies.
The B.C. Franchise Act and regulations sets out disclosure information the franchisor must provide to purchaser in a Franchise Disclosure Document to enable a buyer to make an informed decision. Such information includes a financial statement, the franchise agreement to be signed, contact information of existing and past franchise holders, pending legal suits, or outstanding debts, pending union certification, and federal and provincial licensing requirements that the franchisee must meet. There is a 14-day cooling off period that benefits the potential buyer after receiving the FDD. The new legislation also provides for redress for the buyer should the franchisor misrepresent information.
Rogers said one distinction seen is that the act does not allow grandfathering and all new franchise agreements and those renewing must comply.
As a member of the Canadian Franchise Association's legal and legislative affairs committee, Rogers said that the legislation still permits larger franchise companies to use their existing disclosure documents. The new act features a "wrap-around" FDD provision which allows them to modify their document to meet B.C. requirements rather than issue a new document. "A lot of companies are American and for them that is a big deal. They don't want to reinvent the wheel," he says.
Other new features include: a definition of earning projections for franchisors wanting to include such information in a FDD and documents can be delivered to a potential buyer via email as well as personally or couriered.
Broughton Law Corporation franchise lawyer Tony Wilson, who was a member of the B.C. advisory committee to the provincial government on the new legislation, says the new act and regulations "levels the playing field" amongst the six provinces and has also enhanced franchise legislation. "We provided the government with advice; there was a lot of to-ing and fro-ing in the meetings, but it resulted in what I think is the best strategy in Canada," he says.
One of the features that will benefit franchisees is the act's requirement any legal dispute (court cases or arbitration) should be settled in B.C. For franchisees with a parent franchise company headquartered in the U.S. or Eastern Canada, that can mean a substantial cost saving in travel time and costs, such as hiring a local lawyer. "Especially in the U.S., where cases can be long and protracted," Wilson said. (A provision of the act also does not allow a franchisee to waive rights inferred by the legislation).
Wilson also said B.C.'s act, in s. 9, sets out substantial compliance in disclosure requirements rather than strict compliance as is found in Ontario's statute. Substantial compliance provides greater balance between the franchisor and franchisee, he said, as it provides for a defect in form or technical error that does not affect the substance of the FDD or the statement of material facts.
Strict compliance can lead to a franchisee searching a contract agreement for a technicality simply to because that person made a poor business choice. "It is too handy to get out of a deal," he says.
Wilson sees the legislation as providing a balance, neither favouring franchisees nor franchisors. "I think the provincial government in its deliberations looked across Canada and made some real improvements," he says.
Third man arrested in slaying of U.S. visitor in Toronto, Canadian Press
Big corporations may soon be looking at third-party litigation funding as a means to go after commercial matters they thought would be too costly to fight.
|Lincoln Caylor of Bennett Jones LLP says third-party litigation funding may be attractive to large corporations looking to fund costly matters they may not have considered before.|
The discussion focused on how litigation funding might serve the legal market in Canada and on the legal and ethical questions that arise in funding transactions.
“The funders are certainly in our marketplace looking for cases,” says Lincoln Caylor, commercial litigation and fraud lawyer with Bennett Jones LLP in Toronto who was part of the Bentham roundtable in September. “Firms that . . . don’t realize that if you’re acting for potential defendants and/or if you have potential plaintiffs [with] this in the market and it’s not going away.”
Bentham IMF released a white paper today on the findings of the roundtable.
“Our market research indicates that Canada is likely to embrace litigation funding, just as we have seen in other sophisticated legal markets throughout the world. It’s very exciting to be at the forefront of building this industry in Canada,” says Tania Sulan, chief investment officer with Bentham in Toronto.
While there have already been some third-party-funded cases in Ontario and Quebec, it is still early days for the funding model in Canada.
“I think it will change things for the legal market and law firms mostly in Toronto as the case size has to be a pretty substantial piece of litigation — minimum is $10 million to $15 million before you would get many funders interested,” says Caylor.
As Legal Feeds reported in October, third-party litigation funding is well established in Australia, the U.S. and elsewhere. It makes large-scale commercial litigation more appealing for litigants.
Caylor says substantial cases “with merit” that “weren’t going anywhere before” will now have the potential to get funded.
“Most will be plaintiff cases against deep-pocketed corporate Canada,” he says.
“It’s all about realizing that litigation is an asset or a liability depending on whether you’re making a claim or defending it, and once you realize it’s an asset I think you’ll eventually see more larger corporations as potential plaintiffs managing their litigation by using funders to take the risk and get it off their balance sheets, which you see in the U.S., Australia and U.K,” he says.
The roundtable agreed litigation funding could benefit the Canadian legal market in several ways:
• provide access to justice for those who cannot properly resource their litigation;
• enable corporate clients to more effectively manage cost and risk;
• permit lawyers to take on cases they might not otherwise be able to accept; and
• generate more efficient and reliable revenue sources for law firms.
The roundtable also looked at professional and ethics questions including whether:
• litigation funding is contrary to the doctrines of maintenance and champerty;
• the litigation funder can play a role in the conduct of the litigation;
• a client waives privilege by disclosing documents to a funder;
• funding arrangements should be disclosed to the defendant and/or the court; and
• the litigation funder’s terms are fair.
The roundtable concluded the ethical concerns are either manageable under current rules and regulations or “more apparent than real.”
“When you’re acting for someone who is getting funding I think the way to make sure you’re proceeding in a proper way is to disclose the fact there is litigation funding either to the case management judge or the court,” says Caylor.
Roundtable participant Jacqueline Horvat of Spark LLP and a lecturer at Windsor Law School, commented that there is a perception by some lawyers that litigation funding could be a threat to their firm’s revenue. However, by working with a litigation funder, law firms can "generate additional work now, increase profitability and smooth cash flow."
In a litigation funding transaction, the funder (not party to the litigation), pays all or part of a party’s litigation costs in return for a fee. The costs typically include a lawyers’ fees, expert reports and other disbursements.
The funder may also provide working capital to the client.
In its report, Bentham says Canada is a hybrid of what is on offer in the U.S. and Australia. In Australia, contingency fees are prohibited and there is a tough adverse costs regime. As a result, it can be hard to pursue cases without external funding. In Australia, funders often pay the lawyers’ full hourly fees and will meet any court-ordered costs.
In the U.S. contingency fees are prevalent in commercial litigation and adverse costs are very rare and so funders usually only cover a portion of the law firm’s fees as a case progresses, and the law firm carries the reminder in return for a partial contingency fee. Unlike in Australia, the risk of paying court-ordered costs does not need to be allocated in the U.S.
“This dynamic means there is real opportunity for flexibility in litigation funding arrangements in Canada, depending on the needs and risk appetite of clients and law firms.”
Isfahan Merali is joining the Law Foundation of Ontario as a member of its board of trustees, adding her depth of experience to the organization tasked with improving access to justice.
|Isfahan Merali says she has a lived experience of some of the issues faced by groups funded by the Law Foundation of Ontario.|
As the first female South Asian bencher of the Law Society of Upper Canada, Merali has been a trailblazer as a human rights advocate.
“I’m deeply honoured,” says Merali who is also counsel and deputy registrar at the Ontario Judicial Council. “I’m excited to be able to add another voice on issues of access to justice and barriers that diverse communities face.”
As a legal professional who has practiced mental health law, and as a racialized licensee, she says that she has a lived experience of some of the issues faced by groups funded by the law foundation, which helps her to understand some of the barriers and challenges these groups must overcome when they try to access justice.
“We put out specific calls for marginalized and vulnerable communities, so that includes indigenous peoples, racialized communities, linguistic minorities, and so I hope that myself, coming from the South Asian community, will add to the perspective and the voice and the analysis that the law foundation trustees bring to looking at grant applications,” says Merali.
When it comes to upcoming projects that she’d like to pursue during her time on the board, Merali says she would like to focus on working with indigenous communities, especially since the Truth and Reconciliation Commission report was released, bringing greater interest in looking more carefully and more holistically at the problems this group faces, and on looking at “unique and innovative” projects and solutions coming from youth on access to justice.
“I don’t think there’s only one community that’s grossly underserved,” she says, adding that many groups are underserved and that family law in Ontario is also a sector in crisis.
There’s also the issue of diversity — it’s improving, but there’s still a lot of work to do, she says. Merali believes that the legal community should be as diverse as the people it serves in Ontario, and work needs to be done toward making a “much more inclusive and equitable legal community.”
With intentions of bringing these issues to light, Merali believes that providing tools, education and addressing issues that people face in a holistic and affordable way are keys for improving access to justice within the legal system.
“[Access to justice] is so multi-faceted,” she says. “It means understanding the legal education system and how to access it to get the help people need.”
Former Toronto Maple Leafs player Mike Zigomanis has won a lawsuit against D’Angelo Brands after the company terminated its promotional contract with him over a nude photo scandal.
|Eli Lederman of Lenczner Slaght Royce Smith Griffin LLP says if a company wants to include a morality clause in an agreement it should make sure to structure it as broadly as possible.|
The company also cited Zigomanis’ demotion to a minor league team as a reason it terminated the contract. Zigomanis played the first eight games of the 2010-2011 season for the Maple Leafs before being sent down to the team’s American Hockey League affiliate, the Toronto Marlies.
Zigomanis sued for wrongful termination and demanded $162,000 in unpaid income.
The contract contained a termination clause that gave D’Angelo the right to termination if Zigomanis was convicted of a crime, spoke ill of the company in public, or committed “any act which shocks, insults of offends the community, or which has the effect of ridiculing public morals and decency.”
The contract, however, made no mention of any requirement that Zigomanis play for the Maple Leafs for its duration.
D’Angelo Brands argued that the nude photo incident should fall under the “morals clause.”
Stinson, however, found the incident could not fall under the clause as the nude photos were taken before the contract was signed in May 2011.
“For the defendant to rely on past conduct as justification for termination, is an attempt to insert into the contract an additional clause amounting to a warranty of past good conduct,” Stinson wrote in the decision.
As D’Angelo Brands had not inserted a clause concerning Zigomanis’ past personal conduct, the incident could not be applied retroactively, Stinson said.
Stinson also said that Zigomanis had an expectation of privacy when he sent the photos.
“In recent years, new methods of communication have emerged that enable individuals to exchange information via email, text message and in numerous other ways,” Stinson wrote.
“Many people choose to privately exchange intimate information and photographs in this fashion. This reality has been recognized and the privacy of such communications has been protected by the Parliament of Canada.”
Toronto lawyer Eli Lederman says the takeaway from the decision is that if a company includes a morality clause in an agreement, it should make sure to structure it as broadly as possible so that it covers conduct that predates and postdates the signing of the contract.
“If a contracting party wishes to protect itself in order to terminate a contract based on past conduct, then that would need to be expressly spelled out in the agreement,” says Lederman, a partner at Lenczner Slaght Royce Smith Griffin LLP, who was not involved in the case.
David Whitten, the lawyer who represented Zigomanis, and Gregory Hemsworth, who acted for D’Angelo Brands, did not respond to requests for comment.
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