Canadians are more litigious than our polite and accommodating reputations would lead people to believe, says the recently released 2008 Litigation Trends in Canada survey.
The report was sponsored by Fasken Martineau DuMoulin LLP and conducted by Pollara Strategic Insights. Geoff Cowper, Faskens’ partner and head of the firm’s litigation and dispute management practice, says the report is intended to emulate those conducted in the U.S., by creating benchmarks for litigation trends in Canada.
“We are a major litigation firm in the country,” says Cowper. “We wanted to obtain, potentially, a survey that would allow us to monitor what our clients are caring about in litigation fields specifically.”
What the survey found was more than 40 per cent of the companies that responded had been involved in litigation in the past year. The report also found, on average, those companies had been involved in 8.3 disputes during that time.
The most litigious region is Ontario with an average of 9.8 disputes per respondent in the past year. Atlantic Canada ranked the lowest with only 4.1 disputes per respondent in the past year.
The survey found labour issues are the most likely to generate litigation, with contracts, personal injury, and cases related to product liability ranking in the top four.
Cowper says the types of disputes he believes have been on the rise are in the areas of class actions and product liability. However, economic-based actions may top the list for the next year.
“There has been significant growth in bankruptcy-related litigation,” he says. “I think we are going to see growth in the projects-related areas, whether that is real estate or joint-venture-related disputes. I think we are going to see growth in commodity-related litigation just because of the collapse in commodity prices.
“So I think that those are all going to be growth areas and I’m seeing that just anecdotally.”
While Cowper expects the economy to have an effect in driving certain types of claims, he says there is a new phenomenon preventing certain financial-based claims.
In past recessions there was litigation growth in the areas of debt recovering. With the latest recession starting at the bank level, especially in the U.S., and liquidity becoming an issue, companies may take the bird-in-the-hand-is-worth-two-in-the-bush approach, and settle for less to show a growth on the bottom line.
“It’s a liquidity issue and essentially institutions are wanting to maintain healthy balance sheets,” says Cowper. “Even if it costs them stuff, they don’t want the banks to get alarmed at changing trends on their balance sheets.
“I’m seeing clients who are saying, ‘while I could recover the full amount of this debt, but I’m being offered this right now and I don’t have to tell my banker I’ve got a potentially bad receivable.’”
For the survey, Pollara Strategic Insights polled 300 in-house counsel from across Canada whose companies had more than 50 employees.
Other highlights of the survey include that 70 per cent of in-house counsel have employed at least one outside law firm for a legal dispute in the last 12 months. Also, public companies are twice as likely as private ones to cite labour and employment as the legal disputes that top their list of concerns.
The survey can be found at www.fasken.com/litigation-trends-2008.