Revisiting Class Counsel Fee Approvals: Towards Presumptive Validity of Contingency Fee Agreements

AuthorPeter W Kryworuk & Jacob Damstra
Revisiting Class Counsel Fee Approvals: Towards
Presumptive Validity of Contingency Fee Agreements
Peter W Kryworuk & Jacob Damstra
: Although Ontario’s Class Proceedings Act, 1992 has now been
in force for twenty-f‌ive years, a number of procedural and substantive
issues in class actions litigation remain unsettled. Among these is the
most appropriate method for rewarding class counsel for their ef‌forts
in successful class proceedings — whether that success is obtained by
settlement or judgment. Notwithstanding the statutory provisions in
the Class Proceedings Act, 1992 setting out a method of compensation for
class counsel using a multiplier, or “lodestar,” approach, courts have been
increasingly critical of that method from early in the development of the
jurisprudence on these issues. A percentage-based approach to fees has
gained traction in the class actions judiciary and is now commonplace
among class action litigators. More recently, following the leadership of
Edward Belobaba J, Ontario courts have moved towards accepting the
presumptive validity of contingency fee agreements between class coun-
sel and representative plaintif‌fs. Under this approach, the courts are gen-
erally deferring to the contractual agreement between the representative
plaintif‌f and class counsel regarding compensation for class counsel in
the event of a settlement or judgment, absent exceptional circumstances.
Recent amendments to the Ontario Class Proceedings Act, 1992 have incor-
porated some of the factors courts frequently consider on class counsel
fee approval motions, but the ef‌fect of these new provisions remains to
be seen. This article provides an overview and history of class counsel
fee approvals before moving on to discuss this movement towards a pre-
sumptive validity approach. The authors also discuss some of the limita-
tions and potential pitfalls of the presumptive validity approach. Finally,
this article looks toward the future of class counsel fee approvals and pro-
vides some comments on what may be necessary on this issue.
Peter W Kryworuk & Jacob Damstra*
How should a court approach class counsel compensation when a class
proceeding settlement is secured after “one imaginative, brilliant hour”
rather than “one thousand plodding hours”? This question has been taken
up by the courts tasked with addressing the problematic nature of trad-
itional class counsel fee approval methodologies.1 In Cannon v Funds for
Canada Foundation, Belobaba J approved class counsel fees in the amount
of 33 percent of the total $28.2 million settlement secured by class counsel
and introduced compelling reasoning for widespread judicial acceptance
of presumptive validity of well-drafted, clearly understood contingency
fee agreements.2 Cannon af‌forded presumptive validity to a one-third
contingency fee, introducing an innovative approach to class counsel fee
approval with full potential to remedy overwhelming concerns associated
with the more “traditional” methods of determining class counsel fees,
* Peter W Kryworuk is a senior litigation partner at Lerners LLP. Jacob RW Damstra is
a litigation associate at Lerners LLP. Both Peter and Jacob are members of Lerners’
Class Actions Practice Group. The authors would like to thank Margarita Dvorkina,
Summer Law Student at Lerners LLP, for her invaluable assistance with research and
early drafts of this article and Stephanie Coppens, Articling Student at Lerners LLP,
for her very capable assistance in updating an earlier version of this article. The
authors would also like to thank Michael G Robb of Siskinds LLP for his insightful
comments and recommendations.
1 Cannon v Funds for Canada Foundation, 2013 ONSC 7686 at para 5 [Cannon].
2 Ibid at paras 5 and 8.

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