For much of the first 15 years after we had the CPA, courts and practitioners were struggling with basic issues. What is the test on certification? How much evidence is required at the certification stage? What types of claims are more amenable to certification? What types of fee arrangements are permissible? How much should class counsel get paid when they win? And how much should the loser pay when he loses and who should pay it?
We now have answers to these questions. The motion for certification asks whether the case will work as a class proceeding. Is there a group of people with a substantial common legal claim against a defendant arising out of the same factual circumstances? The amount of evidence required is not substantial, but need only be enough to show that there is a potential claim for a large group of people that could be resolved, or partially resolved on a major issue, in a common way.
Those claims, which focus on the conduct of the defendant, will be more amenable to certification. The more plaintiff-less the case, the better. No one substantive area of law is better than another in terms of getting certified. What matters are the issues that the case raises, how substantial they are, and how easy it is to answer them in common.
In terms of fee arrangements, no one arrangement governs. Percentages, multipliers of docketed time, and lump sums have all been used. The key question is whether the fee awarded is fair and reasonable given how much counsel achieved and how much risk they took. Time spent is not a measure of skill nor is it necessarily a good measure of the risk undertaken. An unskilled lawyer with no other files would likely take a ton of time to take a complex class action to a successful conclusion, if he could do it at all. He hardly deserves a large fee.
The loser, whether it is the plaintiff or the defendant, will likely be on the hook for a huge costs award. Because the plaintiff won’t want to pay a huge costs award personally, he will need to be indemnified by class counsel, by the Class Proceedings Fund, or by a private funder. As a result, the successful plaintiff’s class action bar is now an oligopoly of well-capitalized firms, with a dozen firms controlling more than 90 per cent of the current cases. Less well-capitalized firms can’t compete, or even enter the market, either because they don’t have the resources necessary to take on the big cases and win them, because they start cases that they can’t finish, or because they get nailed for a huge costs award and leave the practice area.
The practice area is now much more sophisticated, much more complex, much more challenging, with greater risks and greater rewards than ever before. It’s not an area for dabblers. It’s not an area for the timid. Trap doors lurk everywhere, and everything is appealed.
Notwithstanding all the risks, all the challenges, all the complexities, and all the nightmares, most class action counsel enjoy what they do, and derive a great deal of satisfaction from their work. Like the proverbial 20-year-old, they are very sure of themselves. Like the proverbial 20-year-old, they have been through a lot. And like the proverbial 20-year-old, they still want to make their mark.
In the next column, I will discuss how far this complex legal tool can be taken and whether it can, and should, be used to take on even bigger legal and societal problems. And when.