Monday, 02 July 2012 09:06

The new subclass?

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“We. Are. The 99 per cent,” went the refrain echoing around Wall Street and Bay Street at the height of the Occupy movement in late 2011. But the same cries could soon be coming from within the glass towers that line the streets at the world’s financial centres if big law firms face the backlash some analysts are predicting from marginalized lawyers chasing an increasingly elusive seat at the equity partnership table.
“Somebody needs to start Occupy Big Law,” says Steven J. Harper, a retired partner formerly with U.S.-based international giant Kirkland & Ellis LLP. According to Harper, the increasing ranks of non-equity partners chasing the mirage of full partnership, or recovering from de-equitization, risks creating a “permanent subclass” in law firms. Even within equity partnerships, he says the widening gulf between the lowest- and highest-paid members is a recipe for disaster.
At the recently collapsed Dewey & LeBoeuf LLP, some have estimated that spread at between 20: and 30:1. In more conservative Canada, where ratios are firmly in the single digits, and rarely higher than 5:1, it still hurts to be the “one” getting multiples less than your so-called partner, says Harper. “The gap at some of these firms is staggering, in a way that was not true 10 years ago,” he says. “What it means is you wind up with an even smaller group at the top that really controls things, and they can embed themselves there.”
Edmonton-based law firm strategist Patrick McKenna says law firms have moved to shrink their equity partnership ranks because they’ve exhausted all other options to increase, or simply maintain, partner profitability. He says there are four factors that play a role in its calculation: margin (revenue minus expenses), billable hours, rates, and leverage (associate-to-partner ratio).
In the 1980s and 1990s, McKenna says law firms basically worked lawyers harder, pushing billable hour targets to their limits. From about 1995 to 2008, firms simply raised rates, which worked just fine until the global economic downturn hit. Since then, margins have shrunk because expenses continue to rise, while revenue has flatlined or fallen thanks to reduced demand for legal services. Leverage, traditionally low in Canada anyway, has not been an option elsewhere as corporate clients balked at high rates for inexperienced and allegedly unproductive associates. “Well, there’s only one other mechanism to increase partner profitability, and that’s to have less partners sharing in pie,” says McKenna.
Pulling up the drawbridge
One way firms reduce the number of equity partners is by delaying entry. In the last couple of decades, young lawyers have found the path to partnership follows a longer and more convoluted route than it did for their predecessors. “I had one lawyer tell me the chances of being hit by lightning are higher than being made an equity partner,” says McKenna.
Last year, a Robert Half Legal survey of lawyers at large Canadian law firms found associates will wait an average of seven years to make partner. “Competition for partner positions has intensified,” said John Ohnjec, division director of Robert Half Legal in Canada, at the time. “In fact, some firms have been thinning the ranks of partners by promoting fewer associates.”
An increasingly common stop on the partnership track is non-equity partnership. According to Harper, firms are attracted to two-tier partnership by the ability to generate an extra couple of years of leverage out of associates who would otherwise have been promoted. For lawyers, they get the prestige of the partner title, and a billing rate to match, which also suits firms. “The underlying driver is non-equity partners are extremely lucrative. You don’t have to pay them anything near what they generate,” points out Harper.
According to Adam Pekarsky, who runs the Pekarsky Stein recruitment firm in Calgary, non-equity partner positions have been a useful tool for some local firms that are reluctant to dilute the profit pool but want to retain talented lawyers. “There’s lots of examples of firms who have gone two, three, four, five years with no new equity partners. The problem is those people you are passing over,” he says. “Non-equity partnership is supposed to be temporary, but the cynic would say that’s only because firms can’t get away with extending it.”
The danger, according to Harper, comes when firms have some success evolving the position from a transitory state to a permanent one, something he notes is happening more frequently. “Once it becomes clear that you’re staying there, these lawyers become second-class citizens. They know it, and everyone at the firm knows it. They’re delegated the work nobody else wants to do, and it gets very demoralizing.”
Pekarsky says a generational shift, combined with more exacting requirements from law firms, has made their search for potential equity partners more difficult. If a firm hires 10 articling students, he says they’ll do well for one of them to end up as an equity partner a decade later. “Organic, homegrown partners are a rare breed. It’s no longer the brass ring for the vast majority of young lawyers entering the profession,” he says. “There’s so much more pressure on lawyers to do more, that partnership becomes a less appealing prospect. The personal sacrifice is too much for many in a time when both spouses work.”
One Bay Street non-equity partner finds himself torn in exactly that way. In a position to apply for equity partnership, he’s not so sure it’s the right option. “There’s always that sense that I’m perhaps not getting as much as I might, but I’m comfortable where I am with the certainty of income. It makes sense so long as they continue to pay me well,” he says.
And a six-figure buy-in is not an overly attractive proposition at a time when equity partner draws are limited. “They want you to pony up, and for what exactly? The market is constricting, if anything, and everyone thinks they’re [McCarthy Tétrault],” he says. “There’s a great deal of risk putting up that amount to ensure firm does well.”
Simon Margolis, the managing partner at Bull Housser & Tupper LLP, says there’s a five- to seven-year window for income partnership, the non-equity version at his Vancouver firm. He views it very much as a temporary station for equity partner candidates, who have a few years to move up or move on. “The big step to me is entry to income partnership. Some don’t develop quite as you expected, but if you’re not sure about someone, then they shouldn’t become income partners, because the plan is that within a reasonable amount of time they’re going to make it to equity,” Margolis says. “You don’t want to end up with a bunch of people stuck there.”
At the London, Ont., office of Lerners LLP, managing partner Ian Dantzer seems aware of the potential underclass described by Harper, bristling at the term “two-tier” to describe the firm’s partnership structure. “Two-tier is a tough word because it implies one is better than the other. We have a path to equity partnership,” he says. “Non-equity partnership is a testing ground, an intermediate stage between associate and equity partnership. It gives them greater tools and status to go out and market themselves, generate work, and build a practice.”
Even lawyers who have finally arrived at the promised land of equity partnership must constantly look over their shoulder to make sure they stay there. “You don’t allow partners in unless they have their own book of business, and you kick them out if they can’t keep it. We eat our own if they can’t sustain themselves and pay for some others,” says McKenna.
The most vulnerable to de-equitization are lawyers whose promotions were well timed, gaining admission to the partnership in better economic times, when firms were a little less stringent with entry requirements. “We went through a period in the 1980s and 1990s, where if you put in your six to eight years, it didn’t matter, you were just made a partner. Later on, we assessed those partners, and decided maybe they weren’t the right material for us,” says McKenna. “Some partners have retired on the job, but haven’t informed the firm.”
Ed Wesemann, a consultant at Edge International, says de-equitization is particularly popular in the U.S. and U.K., where law firm finances and partner profitability rates are much more public than in Canada. By shifting an equity partner into the non-equity ranks, law firms are able to give a boost to their profit-per-equity-partner rate, a key indicator of law firm performance. “It’s very hard to fire an equity partner, but it’s a little easier to make them into non-equity partners. The biggest problem with equity partners is when they don’t have their own supply of business. So this is a good place to park them, and you can usually give them a little cut in pay,” he says. “You’ve done something and helped the statistical base. Nobody makes any more money, but the math looks a little better.”
According to an American Lawyer report on the top 200 firms in the country released in December, 39 per cent of managing partners said their firms de-equitized partners in 2011, and 38 per cent planned to de-equitize more in 2012. In the U.K., Magic Circle firm Clifford Chance LLP began consulting partners in April on a new termination policy that will allow them to ship out under-performing partners more quickly. That came on the heels of a partnership restructuring by Clifford Chance’s rivals Linklaters, which resulted in the departure of 25 partners and the demotion of 16 more.
De-equitization also comes into play for partners reaching retirement age. In addition to a training ground for lawyers on their way up, Margolis says non-equity partnership is also a “good spot for people to rest in on their way down.” “We have some senior people who are still valuable for us, but not in the position to, or not wanting to, devote themselves in quite the same way as we expect of an equity partner,” he says. “It’s a way of keeping them in the fold, but just compensating them appropriate to their contribution.”
Colin Cameron, the president of Vancouver-based Profits for Partners Management Consulting Inc., says Canadian firms are pushing mandatory retirement ages earlier, with the phase-down process beginning as soon as the partner’s 60th birthday in some shops. “To maintain their profit levels, the business model requires partners to move out of the equity partnership ranks in the 60- to 65-year range. The move down to non-equity status is the most common first step,” he says. “In large Canadian firms especially, they have to be financially as strong and capable as they can to defend themselves against much other bigger, and international players, like Norton Rose. There’s more parties going for a smaller group of clients, who are also pushing for alternative fees, so firms will be pushing retirement as much as they can legally in order to survive.”
The continuing case of Mitch McCormick, the B.C. lawyer who launched a discrimination suit against Fasken Martineau DuMoulin LLP over its mandatory retirement policy, has cast some doubt over just how far law firms can go. The B.C. Court of Appeal heard arguments in April on whether the B.C. Human Rights Tribunal has jurisdiction to hear the merits of the case. The situation is equally unclear south of the border, where law firms were denied a precedent-setting decision when 1,700-lawyer Sidley Austin LLP settled a discrimination case with 32 de-equitized partners in 2007. However, the $27.5-million cost of the settlement is enough for firms there to proceed with caution.
Whether they arrived there by virtue of age or substandard performance, de-equitized partners have boosted the ranks of non-equity partners even further. Edge’s Wesemann says the short-term focus on profitability that has driven the increase could spell trouble in the long run. “We’ve created this monster. They’re not real partners, but they bill like partners, and they have no natural predator,” he says.
According to Wesemann, the lack of genuine partner-level work at law firms means non-equity partners, particularly long-standing ones, end up doing work that is more appropriate for fourth- or fifth-year associates. “We have a rebellion coming. The recession has given us more empowered clients who are actually reading the bills we send them, and they are saying, ‘why on earth are we paying a partner rate for this?’”
He notes the non-equity trend is more fully developed in the U.S., where firms are now taking an axe to their non-equity partner ranks, as well as the equity partnership. A May 2012 report by Altman Weil Inc., “Law Firms in Transition,” found that with the exception of support staff, non-equity partners were the most likely
position American firms will cut in the next
year. Equity partners followed closely behind in third place.
Star power
As Dewey & LeBoeuf stumbles through bankruptcy, Canadian law firms should see the firm — created less than five years ago — as a beacon to the dangers of partnership inequity, advises Harper. Just before the firm imploded, some partners reportedly earned at least 20 times what the lowest-paid partners were drawing from the firm. The problem was exacerbated by guaranteed incomes promised to some lateral stars as part of the big-money deals that brought them to the firm over the last two years. Existing equity partners found their earnings squeezed in order to subsidize guaranteed incomes the firm could not afford, of which there were about 100 such agreements according to bankruptcy filings in Manhattan. “What does partnership actually mean if you have a ratio of 20:1? It’s incredibly de-stabilizing,” says Harper.
He says the firm bought into a star culture that overvalued rainmaking lawyers, and that compensation packages spiralled out of control. “The notion a top lawyer is worth 10 times more than another partner makes no sense at all. You get into a vicious circle, where you panic about losing somebody and get into a truly irrational bidding war.”
While Dewey may be an extreme example, McKenna says partner compensation is increasingly skewed at large American firms towards partners at the top end. Ratios routinely hit 10:1 for partner income at opposite ends of the scale, he says. “You’ve got partners with a smaller book of business who, if you look at the economics very carefully, are actually supporting the stars. When you get a spread that gets too great, you end up with a partnership within a partnership,” says McKenna. “And if people come for money, they leave for money. There’s no loyalty.”
Guaranteed incomes or joining bonuses are not unusual in Canada where rainmakers are concerned, according to Cameron, who says that most “would be quite hesitant to pass on clients without some sort of guarantees.” But in conservative Canada, where partner income ratios rarely top 5:1, the impact is reduced. But Christopher Sweeney, CEO of ZSA Legal Recruitment, says rainmakers have increasing influence at a time when corporate clients are placing their faith in a smaller group of trusted advisers. “Firms like to think clients come to them because of the brand and overall service. That is true, but increasingly, sophisticated corporate clients have specific relationships because of individual lawyers,” he says. “That makes it critical that firms adequately reward their top lawyers.”
At Bull Housser, Margolis says the spread of equity partner earnings from top to bottom is 3:1, but that he’s open to widening the gap. “Three-to-one is where we’re currently at, but it doesn’t mean it always has to be. We would have the capacity to get bigger than that, and if it’s done correctly, I don’t think it’s a problem. If someone’s doing all the right stuff, we all do better by that,” he says.
Margolis says the firm tries to avoid fine distinctions between individual partners by creating clear bands of partner pay with distinct entry qualifications, and that the firm’s size makes it easier. “We don’t have hundreds of partners, so you can get a good feel for what people are doing,” he says. “There aren’t too many raised eyebrows.”
Shekhar Parmar, director of the Calgary office at legal recruiter The Counsel Network, says Canadian firms may be particularly wary of overpaid rainmaking because of this country’s own cautionary tale in the 2007 dissolution of Goodman and Carr LLP. “That was a scenario in which some partners were cut pretty large cheques compared to their book size,” he says. The firm abandoned its lockstep partner compensation scheme, which rewarded lawyers based on their seniority, in the 1990s, and recruited a clutch of star performers, including some with high-paid special deals outside the equity partnership. “That kind of thinking can work out well, but you’re taking a gamble. Sometimes things don’t work out and you have to pay the house,” says Parmar.
A string of missed budgets and a failed merger sparked an exodus of equity partners at Goodman and Carr, and the firm’s management decided closure was the only option.
Parmar says he helps Canadian firms evaluate the risk of bringing on new partners laterally, and he finds that most are thinking longer term since the demise of Goodman and Carr. “We help them work out whether they’re bringing real value or if it’s more smoke and mirrors,” he says.
At Lerners, Dantzer says his firm won’t break the bank to land a star performer. “We’re very cautious about lateral hires. We won’t do it just for the sake of bringing someone on. Any merger is very difficult. I think it’s very divisive if you give special treatment to someone new. Unless a significant group recognizes the long-term importance of that practice or person, you’re just creating problems for yourself, resentment, and maybe desertions, so you sort of work against yourself.”
Dantzer says Lerners will resist the temptation to go after star-free agents, and focus instead on its own prospects. “I think more and more we are becoming convinced we have to build from within and develop a sense of loyalty. It takes much longer to do, but it’s much more stable and profitable long term,” he says. “The idea of going out like the Toronto Maple Leafs and buying a few stars sounds good in theory, but it doesn’t deal with chemistry, long-term cost, and the chance that they could move on again.”
But Sweeney says that approach may not work for all Canadian firms if the market sees further incursions from abroad. Norton Rose Group landed in Canada with the wholesale takeover of Ogilvy Renault LLP, before adding Macleod Dixon LLP. Another global giant, Allen & Overy, which has been linked in the past with Canadian law firms, elected for a more organic growth strategy when it entered the Australian market, by poaching leading partners from top firm Clayton Utz to establish a presence in the country. A similar move in Canada could force large Canadian firms to shell out extra cash for their star performers in order to hold on to them and the clients they bring with them. “If a big international firm came in and started building up with just the cream of the crop, that could mean 60- or 70-per-cent increases, which would be a game-changer,” says Sweeney. “It’s not going to happen with the existing major players.”
The last time something similar happened in Canada, says Sweeney, was when Osler Hoskin & Harcourt LLP opened its Montreal office in 2001, recruiting partners by offering them considerably more money. To cover the increased cost of holding on to their stars, firms city-wide bumped rates by around $100 per hour. “There was some flexibility because Montreal was underpriced at the time, so it was able to absorb that shock,” he says.
Increased rates are not an option this time around, with corporate clients looking to save, and that means Canadian law firms will have to absorb the shock themselves. “There’s always a marketplace for stars, and I foresee their value to law firms climbing. We’re almost bordering on free market agency for the top talent in law. These lawyers will spend three to five years at a firm, and if the firm isn’t able to increase what they’re earning, they’ll see what kind of bids are coming in from another team,” he says. “Using the one-per-cent analogy from Occupy Wall Street, even in law firms, there will be those rewarded on a different scale from everyone else. That’s going to cause internal problems from people, and firms have to deal with that. It’s just part of running a law firm in the modern era.”
Cover: Carl Wiens
Cover: Carl Wiens
“We. Are. The 99 per cent,” went the refrain echoing around Wall Street and Bay Street at the height of the Occupy movement in late 2011. But the same cries could soon be coming from within the glass towers that line the streets at the world’s financial centres if big law firms face the backlash some analysts are predicting from marginalized lawyers chasing an increasingly elusive seat at the equity partnership table.
The difficult economic environment of the last few years is being reflected in the salaries of Canadian lawyers, both in-house and in private practice. According to the results of Canadian Lawyer’s 2012 Compensation Survey, the median salaries of newly called lawyers are lower than last year. For example, the median salary of a first-year associate is $72,500, down by approximately $3,500 from last year. It’s the same case for newly called in-house counsel, who are showing a median salary of $77,500, a steep decline of $7,500 from last year.
Indicative, too, of the somewhat mercurial state of the profession, the survey shows only 45 per cent of law firm respondents plan to increase their associates’ salaries in 2013, whereas 77 per cent of corporate legal departments say they will bump up their lawyers’ earnings.
Making decisions on how to compensate various members of the team is no easy feat in the current environment either. In setting compensation rates for lawyers, respondents reported that determining the market value, trying to compete with other firms’ rates, crediting non-billable work, and meeting lawyers’ expectations were the areas of greatest dispute.
The response to the Compensation Survey from law firms this year was substantially up from the last few with 161 managing partners and sole practitioners from across Canada sharing their compensation information with Canadian Lawyer. As well, 74 chief legal officers and corporate legal department heads offered insight on the in-house side. The survey, which looked at earnings, salaries, bonuses, perks, and other compensation for lawyers working at law firms and in-house legal departments across Canada, provides law firm and law department leaders with insight into current trends as they look to manage their teams.
It may provide some relief to newly called lawyers to hear that 45 per cent of firms that responded to the Compensation Survey plan to hire more lawyers in the coming year, 53 per cent plan to keep the same number of lawyers, and just two per cent plan to downsize. This year’s hireback numbers for articling students are also better than last year’s, another indication that while salaries are not growing rapidly, there is work out there.
The survey shows merit is still the most common compensation method for equity partners, at 44 per cent; 17 per cent said they use equal partnership; four per cent said lockstep; and 35 per cent use a different method altogether. Fifteen per cent of law firm respondents recorded having partners who get paid more than $450,000, whereas last year it was 10 per cent.
In terms of targets for lawyers, only 30 per cent of respondents set an annual billable hour target for partners; 10 per cent pay a bonus to partners who reach it, and four per cent enforce a penalty for failing to reach it. It’s a bit of a different story for associates with 44 per cent of law firms setting an annual billable hour target for them; 33 per cent pay a bonus to associates who achieve it, and five per cent enforce a penalty to those who come up short.
Thirty-eight per cent of firms have an annual monetary billing target for associates with the greatest number, 45 per cent, falling in the range of $200,000 to $300,000. “We do not live by the almighty billable hour, we try to value bill as many of our services as possible,” one law firm managing partner commented.
In terms of bonuses, 49 per cent of law firms handed them out to associates in 2011, which is down from 67 per cent in 2010. Of those who handed out bonuses, 55 per cent reported they were discretionary.
While at many firms partnership agreements, forms of compensation, as well as the bottom line are not necessarily common knowledge, one survey respondent said the firm shares its financial information with associates so they can gain a better understanding of their compensation rates. “It’s a very different market at smaller firms and junior lawyers need to understand the business aspect of it and get an accurate picture of what they will get paid at smaller firms,” the managing partner said.
And it appears compensation systems are working well for most organizations with only nine per cent of law firms completing the survey saying they plan to alter their compensation methods next year. See charts on opposite page for more on salaries and earnings for associates and partners in law firms.
Responses to this year’s survey indicate that corporate legal departments are also functioning under restricted budgets. For average legal spend budgets in 2012, 30 per cent were under $500,000 with the same percentage falling in the range of $500,000 to $1 million. The remaining 40 per cent were upwards of $1 million.
When it comes to in-house counsel’s salaries, there seems to be a bit more wiggle room with the majority of respondents reporting that salaries will increase in 2013. Corporate legal departments also generally offer greater benefits and perks than law firm respondents, although that may be a reflection more of the size of an organization than of anything else as smaller law firms don’t tend to offer many perks or extensive benefits. More than 95 per cent of law department respondents reported their company provides benefits and 65 per cent offer perks such as professional development and health club memberships. A fair number, 70 per cent, also have a pension plan for lawyers.
You’re also more likely to receive a bonus working in-house than at a smaller law firm: 62 per cent paid bonuses to lawyers in 2011, with 53 per cent basing it on a percentage of salary.
See the accompanying charts for compensation data for in-house lawyers.
Photo: Shutterstock
Photo: Shutterstock
The difficult economic environment of the last few years is being reflected in the salaries of Canadian lawyers, both in-house and in private practice. According to the results of Canadian Lawyer’s 2012 Compensation Survey, the median salaries of newly called lawyers are lower than last year. For example, the median salary of a first-year associate is $72,500, down by approximately $3,500 from last year. It’s the same case for newly called in-house counsel, who are showing a median salary of $77,500, a steep decline of $7,500 from last year.
Monday, 04 June 2012 10:34

What's hot, hot, hot

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b_150_0_16777215_00___images_stories_01-CANADIANLawyer_2012_June_cl_june_12.jpgMoney isn’t everything when it comes to the law. Much like possession, it’s about nine-tenths of it. For the Money Issue, Michael McKiernan looks at the most potentially lucrative practice areas for individual lawyers, as well as the hottest fields where every law firm is scrambling for a piece of the action.
Monday, 07 May 2012 09:05

Legal lag in medical advances

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decade or two ago you would have been hard-pressed to come up with an area of scientific advance that seemed potentially more legally fraught than medical genetics. Indeed it was so disturbing that three British law professors glumly forecast in the September 1998 issue of The Modern Law Review that “on the face of it the legal community with its tendency toward gentle incrementalism is not particularly well equipped to handle any kind of revolution, let alone a revolution of the proportion indicated by medical genetics” and then went on to quote a newspaper article saying medical genetic advances “will tie the lawyers up in . . . knots.”
The fear was based on the prevalent belief that knowledge of how genes worked was going to radically reconfigure medical practice. John Bell, Nuffield professor of clinical medicine at Oxford University, optimistically opined that same year in the British Medical Journal, that “within the next decade genetic medicine will be used widely for predictive testing in healthy people and for diagnosis and management of patients.” And knowing what the genes said was going to require doctors to daily make unprecedented and instant decisions about what should and shouldn’t be revealed about genetic information and genetic risks not just to patients, but to patients’ families, to insurance companies, to governments, and to employers.
Today it is highly unlikely any lawyer reading this article is feeling particularly knotted up by genetics-based lawsuits. This is because in 2012 the once exhilarating promise of clinical genetics (now frequently called clinical genomics) is being viewed by many people — including some in the legal profession – as a scientific hype existing somewhere between a fairyland and a fraud.
For example, last year Science magazine published an article entitled “Deflating the Genomic Bubble” where the authors, one of whom was Timothy Caulfield, Canada research chair in health law and policy at the University of Alberta, wrote: “If we fail to evaluate the considerable promise of genomics through a realistic lens, exaggerated expectations will undermine its legitimacy, threaten its sustainability, and result in misallocation of resources [and] . . . fuel unrealistic expectations for predictive genetic testing and uncritical translation of discoveries.”
The reason for what might be called a genetic counter-revolution is that genetics has proven to be complication incarnate. Cancers can have one kind of genetic makeup if situated in one place in the body, and quite another if they have metastasized to a different locale. Hundreds of genes have been associated with common diseases, each of which add or decrease by a few percentage points your risk of getting the disease, but are so common — some found in upwards of 50 per cent of people — that they must also be doing something very health positive in the body. The complications are so intrinsic and so knotted that in 2010, Harold Varmus, director of the U.S. National Cancer Institute, dismissively told the New York Times, “Genomics is a way to do science, not medicine.”
All true and all disappointing for those hoping for genetically revolutionized medicine, except — and that is the point of this article — if one is looking at the gene-based diagnosis and personalized treatment of certain rare kinds of heart conditions known as arrhythmias. In that arena not only has medicine experienced a tsunami of change, but as you will see the social/legal/ethical quandaries which doomsayers in the past believed would bedevil lawyers and regulators are beginning to surge into view.
And this potentially legal and ethically fraught rare heart genetics revolution is of particular import in Canada. In this country, for a number of reasons — close kin marriages in some areas, active genetics research, and world-class heart institutes — we have become among the planet’s leaders in both generating arrhythmia genetic advances and in generating the extremely knotted sociology a genetics’ revolution was supposed to bring forth.
I will lead you through this but to give context as to what has been occurring you need some medical background.
Arrhythmias are the electrical misfirings of the heart made famous by athletes trotting off playing fields, keeling over, and suddenly dying — often without any previous signs of illnesses. While physical heart changes are seen in some conditions, often an ECG or other imaging reveals nothing structurally wrong with the heart either before or after an attack. Effectively the heart battery just went dead.
While the condition can be very rare in the world population as a whole, striking one in 2,000 to one in 10,000 people, they can be very much more common in certain areas of this country. A Newfoundland variety of arrhythmogenic right ventricular cardiomyopathy (ARVC) has been diagnosed in about one in 500 people. Among the 5,400 Gitxsan aboriginals of northern British Columbia, the occurrence of people with the tribe’s special mutation of a long QT syndrome gene is one in 90.
Unlike diseases such as Huntington’s where a genetic test told carriers they would come down with a condition that medicine could do nothing to either forestall or cure, quite the reverse situation has occurred in many arrhythmias. For example, a heart attack is triggered in a genetically distinct version of long QT syndrome by exercise; in another the heart-stopping agent is a loud noise; in a third it is the restlessness of early morning sleeping patterns. Their specific genetic fingerprint says that person A should take beta blockers to ward off an attack and person B should have a defibrillator installed.
Preventative measures can be taken in some instances even before the condition manifests itself. Doctors in Newfoundland are so confident they can associate disease appearance with genetics that they now routinely recommend that the boys in their late teens and girls in their late 20s who carry the gene for a local variant of ARVC have heart-restarting defibrillators implanted in their bodies. Even — the rest of the sentence must be written in boldface — if they have no symptoms of the disease whatsoever.
With this as a background let’s look at what I believe is the only actual judgment in the area, a 2006 decision by the Supreme Court of Newfoundland in the case B.D. v. Eastern Regional Health Integrated Authority, a St. John’s Hospital complex.
It pitted a 30-year-old ARVC-gene-carrying man, who had had a defibrillator implanted in him, against his mother. The man wanted the defibrillator removed because, according to the judgment, “it adversely affects his life in other ways which makes its presence unacceptable to him.” His mother panicked at what she saw as her son’s reckless action and sought to have the removal blocked by the courts. She feared that without the defibrillator her son would die young and thus removal violated a primal dictum of medicine: First do no harm.
Here’s some additional background to justify her fears. Aided by family bibles, Newfoundland geneticists have determined that half the men who carried the gene were dead by the age of 40 and 80 per cent by 50. And, at the time that decision went to court, not a single man who had had a defibrillator implanted had died from subsequent heart attacks.
With this in mind, the Eastern Health heart surgeons themselves were completely uncertain how to respond to the man’s request, says Kathy Hodgkinson, an assistant professor of medicine at Memorial University whose doctoral thesis is on the Newfoundland ARVC gene. “If it was a drug he was taking, he could have quite happily made the decision to stop taking it any time he wanted. But in this case the doctors themselves had to act,” she says. “And there were no rules and precedents for them taking things out.”
Nonetheless, the case was decided on what were narrow grounds. While the mother’s feelings were noble — “She is doing what any loving mother might do if she is convinced her son is not thinking rationally and is putting his life at risk,” —  Newfoundland and Labrador Supreme Court Justice James Adams noted the man was not a child and was competent to make his own decisions. With that in mind, the doctrine of informed consent was invoked, and the Canadian Health Care Practice manual was quoted: “a competent can refuse any medical treatment regardless of treatment and regardless of whether it was necessary to preserve life.” Ergo, the mother didn’t have standing to sue and the man had a right to ask doctors to take out the defibrillator.
Narrow and precedented, except a few months later the man’s body made a different judgment. He had the heart attack his genetics said was almost bound to happen. By good fortune, he was near a place where resuscitation equipment was available and he was saved. What did he do then? He decided that the defibrillator was worth it and had it reinstalled.
All of this leads to the knotty question of what will doctors do the next time a person who carries the fatal gene comes forward and asks to have the defibrillator removed? Will any of them refuse to do it because there is now overwhelming evidence of ICD’s effectiveness — death rates in men with defibrillators are today a tenth of those without — and so removal is patently harmful? Nobody is entirely sure because the correct genetic heart arrhythmias balance between the principles of “first do no harm” and “informed consent” is cloudy.
“Doctors could exercise the conscience clause, which says I can’t in conscience do that,” is how Bartha Knoppers, a McGill University law professor who is also director of the Centre of Genomics and Policy, suggests one scenario might play out. “I am increasingly interested in the clash between what we might call common sense and what the legal system tells doctors to do. I think there is an emphasis, some would say overemphasis, on individual autonomy,” says Trudo Lemmens, Dr. William M. Scholl chair in health law & policy at the University of Toronto. However, he also points out that doctors have to respect the fact that “people make many unwise choices.”
But what if the unwise removal resulted in a person having a heart attack while driving and killing others? Should you not be allowed to drive if you carry the gene and haven’t had a defibrillator implanted or had it removed? It is not an idle question but one that may be looming. But because of the prevalence of ARVC in Newfoundland and the sharp decline in the cost of genetic testing, there is a discussion of whether the province should test all babies for the disease at birth. And if they did shouldn’t that information be forwarded on to Newfoundland’s driver examination centres? Or conversely should there be a law in place that says if you carry the “Newfoundland curse” gene you can’t get a driver’s licence if you haven’t been tested and had a defibrillator installed?
Again clouds. Knoppers leans toward yes, pointing to existing laws related to denying licences to people with conditions like epilepsy. “If I am a third generation of epileptic and have decided not to get tested, yes, I think you shouldn’t be able to get a driver’s licence.” Erin Nelson, who teaches tort law and health care ethics and the law at the University of Alberta, is more skeptical. “I think it would be extraordinary if the province had access to health records. You would need rules to do that. I don’t think that there would be very many people in favour of that kind of legislation.”
But at the least should there be genetic tests for the condition before you can get a driving-related job? The Newfoundland cardiologists and geneticists have already had to deal with a case related not to driving but flying. A man without symptoms — again that must be emphasized — was first told he didn’t carry the ARVC gene and then, while studying to achieve his lifelong ambition of becoming a pilot, he was told he did have it. He was quite angry and didn’t want to change his life’s dreams based on what might be in the future or something not presently wrong with him. After much discussion, the doctors were able to convince him to drop out of flight school.
But what if reasoning hadn’t worked, and even more to the point, what if the connection between a gene defect and a subsequent heart attack was more diffuse? The Gitxsan’s version of long QT is much more predicatively problematic than Newfoundland’s ARVC. In 15 per cent of long QT carriers the first sign of the disease is a heart attack. In 35 per cent of people, carrying the disease has no apparent heart disease effect. In the rest, there are a variety of heart-related symptoms. Can Gitxsan long QT mutation carriers become truck drivers? Can they become pilots?
Lemmens points out what decides these issues today is a proportionality test. “You compare the magnitude of the risk and the likelihood of occurrence of risk happening — something can have a small likelihood of happening, but a big effect if it does. And because of that the court may say it is appropriate to impose restrictions.” But what isn’t clear, he admits, is exactly where that line is when it applies to arrhythmias’ variety of risks and consequences.
Then there is the question of a parents’ right to know about their child’s genetic predisposition. In Newfoundland, parents are beginning to demand that ARVC screening tests be conducted on infants or very young children. The problem is that there are no clinical manifestations of the disease before the age of 17 or 18 and as such no need to do anything either in terms of lifestyle changes or defibrillator implants. “The question is that if there is no manifestation of the disease, shouldn’t you wait until the child is old enough to decide for him or herself when and whether to be tested?” asks Christina Templeton, a paediatric cardiologist in St. John’s.
What is the doctor’s legal responsibility?
U of A’s Caulfield believes parents’ rights will win out. “You can’t withhold information about a child from a parent or a legal guardian because they are substitutes for those individuals in a legal sense.” Lemmens disagrees. “There is a tendency in the law to say that when there is no benefit to the child, they should have the right to make a decision for themselves at 18 or so,” he says.
Again the situation seems ripe for both a lawsuit and a subsequent Solomaic judgment.
However Newfoundland’s legal/moral quandaries are nothing in comparison to what has arisen at Partners HealthCare Center for Personalized Genetic Medicine at Harvard University in Boston, a facility designed both to test for heart-disease-causing genes and to translate genetic research results into medical practice.
Consider the sperm donor who at the time of donation was asymptomatic but later learned he both carried a gene for and had symptoms of another arrhythmia known as hypertrophic cardiomyopathy (HCM). Partners contacted all the families involved in the donation offering to test the children for the disease. One was a lesbian couple who had wanted their offspring to be half-biological siblings and so there was a risk both carried the gene. The couple came back and said they didn’t want their children to be tested. When asked why, they said there had been intense sibling rivalry between the two children and that if one tested negative and one positive that rivalry would likely be intensified.
What should the lab do, especially when signs of the disease were being seen in three of nine HCM-positive children born of the donor’s sperm, when symptoms don’t always precede an attack, and when defibrillators have been shown to prevent early deaths in many HCM carriers? More muddiness. “Somebody has to interpret whether this is a significant risk or is this the kind of decision-making we can leave up to parents,” says Lemmens. And because it is so fraught, he adds, “Maybe we will have to create a decision-making body to decide in these instances.”
And even more problematic — if possible — was the young boy with symptoms of heart disease who came to Partners for testing. He, too, tested positive for one of the HCM genes and then his mother was tested. She didn’t carry the gene. Mendel’s laws of dominant genetic inheritance tell us absolutely the father and his side of the family carried the gene. Samantha Baxter, a genetic counsellor at Partners, told the mother to tell the father and his brothers and sisters about the test results so they could test themselves and their children. However, “The mother was going through a rough divorce,” says Baxter, “and as she put it, ‘the dad’s side of the family no longer are her relatives, no longer are somebodies she needed to care about.’” As a consequence she said she wasn’t going to tell them and neither should the lab.
What would the law say was Partners’ “duty to warn” responsibility in the face of an explicit demand by the legal guardian of the child who was their formal patient to say nothing?
Knoppers points out that in France doctors can give letters with test results to patients and the patients in turn are supposed to send the letters to potentially affected family members. “If a person refuses the letter, the doctor sends information to the public health officer and the public health officer is mandated to then contact family members without revealing the identity of the patient,” she says. Such a system does not presently exist in this country.
So what did happen? In the instance of the lesbian mothers, Partners accepted that the women as legal guardians had the right not to test their children, but encouraged them to monitor the children regularly for any signs of heart disease. In the bitter divorce case, Baxter says the mother “somehow had told her sister the testing results and the sister said these results aren’t about us and she relayed them to everybody on the father’s side.”
So the nieces and nephews were tested, but when the mother learned, “I got this ugly phone call from her,” says Baxter, “where she threatened to sue me because how did they find out these variants when she told us not to tell them. And we said we never said anything, but she was still livid.”
And what does all the above portend for the future of rare heart diseases cases and the knots its application threatens to tie the law, lawyers, and regulators in? “This was the story that everyone thought was going to play out, and in this little universe it has,” the hyper-skeptical Caulfield tells me when I describe to him what has been happening with arrhythmias. “All of these old-school concerns are arising.”
Some of the research for this article was funded by a Canadian Institutes of Health Research Journalism grant.
b_150_0_16777215_00___images_stories_01-CANADIANLawyer_2012_May_cl_may_12.jpgA decade or two ago you would have been hard-pressed to come up with an area of scientific advance that seemed potentially more legally fraught than medical genetics. Indeed it was so disturbing that three British law professors glumly forecast in the September 1998 issue of The Modern Law Review that “on the face of it the legal community with its tendency toward gentle incrementalism is not particularly well equipped to handle any kind of revolution, let alone a revolution of the proportion indicated by medical genetics” and then went on to quote a newspaper article saying medical genetic advances “will tie the lawyers up in . . . knots.”
Monday, 02 April 2012 09:04

Taking a time out

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After three decades in law, two of them on the bench, justice Louise Charron craved the one thing the Supreme Court couldn’t give her. It could give her fascinating cases. It could give her a collegial work environment. It could give her a salary and perks that are the envy of many. But the one thing the Supreme Court couldn’t give Louise Charron was a rest.
“I was taken by the job and I really loved it but I also wanted to make sure that I would leave before I lost the fire in my belly,” Charron says candidly. “And as much as I enjoyed the work and I found it interesting and I was passionate about many aspects of it, it does take its toll. There is a certain treadmill feel to it. And I just asked myself the question as I turned 60, how long do you want to do that?” And, she points out, “It is perhaps a bit unfortunate that there’s no ability to just reduce the workload as you can do in other aspects of the profession.”
Charron, 60, took many by surprise last May when she suddenly announced her decision to retire from the Supreme Court — 15 years shy of the court’s mandatory retirement age of 75. She is younger than six members of the current court, including Michael Moldaver, one of the judges appointed to fill one of two vacancies when she and fellow justice Ian Binnie stepped down. In doing so, Charron joined a trend of top court justices retiring well before mandatory retirement age and going on to play other legal roles.
In 2004, Louise Arbour left the court at the age of 57 to become United Nations High Commissioner for Human Rights. In 2009, she was named president and CEO of the International Crisis Group headquartered in Brussels. In 2008, Michel Bastarache retired from the court at 61 and moved to Heenan Blaikie LLP in Ottawa as a counsel in its litigation group. In fact, since 1990, only three of 13 judges who left the Supreme Court stayed on until or around their 75th birthdays. Nine retired before that and one, justice John Sopinka, died in office in 1997.
Charron says the reasons judges leave Canada’s top court early are as varied as the judges themselves. In her own case, however, she says she might have been willing to stay on the bench if she could have taken a one-year sabbatical or become a supernumerary judge. “If there had been an option, depending on how it would work, I think I might have opted for the sabbatical.”
For Supreme Court judges, it’s all or nothing, Charron told Canadian Lawyer in an exclusive interview in February. There’s not much opportunity to reduce your workload or take a step back. “Even if I wanted to take one year off to recharge my batteries, on the Supreme Court you’ve got three choices. You have a sick leave, which is not a choice because you are sick and your colleagues are left with more work, you’re not being replaced. Or you have death, but that’s a bit permanent — I wasn’t too interested in that one. Or you have retirement. . . . I opted for retirement.”
Charron became eligible to retire with a full pension at 58. It had been decades since she had taken more than a couple of weeks off in a row. While she and her husband, retired police officer William Blake, are both in good health, she knew that the free time she had long envisaged spending together would not be possible if she continued at the court. “I felt at the top of my game. That’s the time to jump off the plane — with your parachute — and see where it leads,” Charron says with a laugh and a twinkle in her eyes.
While she knows the idea has detractors, Charron would like to see a system of sabbaticals or supernumerary part-time work for top court judges. While some contend the court needs continuity and judges could fall behind if they were away for a year, Charron argues jurisprudence does not “start at point zero” when a judge leaves and the court is bound by its precedents. “I personally would not think that it would affect in a negative way for judges to be away from it for some cases and not always be part of the process. Because they will not be always part of the process in the big picture anyways. If they drop dead from overwork they won’t be.”
If there is one thing that Louise Charron is no stranger to, it’s hard work. The first Franco-Ontarian named to the Supreme Court, Charron started out in a modest family in the northern Ontario town of Sturgeon Falls. Charron says she fought her parents’ decision to send her to the private French-language Pensionnat Notre-Dame de Lourdes because she preferred the local English high school where there were boys. But she credits the Filles de la Sagesse (Daughters of Wisdom) nuns who ran the school with providing her with many of the skills that served her well during her career. “The education I received there was excellent. They did not want any of their students to come out at a disadvantage. It was a French school and in a situation where we are the minority, they made sure that once we got out of there we could compete with anyone at any school. So they drew us to the maximum of our capabilities.”
Those capabilities took Charron through Carleton University (BA), the University of Ottawa for her law degree, private practice in civil and criminal litigation with Lalonde Chartrand Colonnier, 10 years as an assistant Crown attorney in Ottawa, as well as lecturing in the French common law section of the University of Ottawa’s Faculty of Law. By the time Charron was appointed a District Court judge and local judge of the High Court of Ontario in 1988, she was only 37 years old. In 1995, she was appointed to the Ontario Court of Appeal and by 2004, at 53, she was sitting on the Supreme Court of Canada bench.
Among the lessons she learned back in Sturgeon Falls that helped along the way were organization, discipline, and intellectual rigour. “Being good enough was never good enough,” she recalls. “Doing it well. You had to have the drive for excellence and I appreciated that.”
On the Supreme Court, however, Charron had to adapt to the reality of the job. Because judgments are divvied up among judges and can take months to fine tune, there is always unfinished work. “I had to mentally adjust to the fact that I could not clear my desk. Some people might not be bothered by that and I was. I had to think differently and accept it as a fact that it would be like that.”
While the public tends to focus on the hearings where scarlet-robed judges listen to the arguments and pepper counsel for each party with questions, Charron says much of the work takes place well before the panel files into the courtroom. “There really is a huge amount of preparation because when we do get to the hearing and we hear the argument and we walk out and the door closes, we are ready to decide the case.”
Charron says the judges meet as soon as possible after the hearing. When she was first named to the SCC, the court had a practice of hearing from each judge according to their seniority. “Initially, when I got here the court was still following a pretty set procedure where the most junior judge would speak first and then we would go in reverse order of seniority. . . . It put quite a burden on the junior judge but I thought it made a lot of sense as well because you could have your opportunity to give your views on a case.”
Over time, the court adopted a less formal process and now begins its deliberation with an open discussion, says Charron. “With a general discussion you have the benefit of hearing the people’s views . . . then we go back to each in turn [and] we give our views on how we think we would dispose of the case and why.”
Chief Justice Beverley McLachlin then asks for volunteers to write the judgment but the judgments are only assigned to judges at the end of a two-week session. If there is going to be a dissenting opinion, the dissenting judges decide among themselves who will write it, but it is only written after the majority opinion is finalized, Charron points out.
Charron, who has written in the majority more than any other member of the court, says the process of drafting a decision then getting the agreement of up to eight other judges can sometimes take quite a bit of time. However, she has always welcomed other viewpoints. “For example, a colleague of mine would say, ‘I agree with you on the result and I don’t see any problems with how you dealt with that issue. But on the first issue I’m concerned with what you are saying here at paragraphs 12 to 15 because it might close the door on other matters that weren’t truly before us so perhaps you should state it more narrowly.’ That’s very useful when someone detects that it may not be interpreted the way we intend.”
In fact, thinking wide and writing narrowly is often key to writing a judgment, says Charron. “It is important to think wide, but write narrowly because usually the issue that you are called upon to decide is rooted in a particular fact situation and can be viewed narrowly. It’s not that you just look at it that way. You can’t. You have to think about how it fits in the big picture.”
One of her rulings Charron believes made an impact on Canada’s justice system was her 2009 judgment in R. v. McNeil, a case of third-party disclosure in which an accused was trying to obtain disciplinary files concerning misconduct by an arresting officer. “I spent a lot of time trying to figure out how best to set it up. I wanted it to work. I wanted it to be functional. I did find that my experience as a litigator, as a Crown, as a trial judge helped me in knowing a bit how it works,” she says. “I’m sure that one had an impact on practice, how things would happen afterwards.”
Charron says in her experience when it comes to pleading before the Supreme Court — or any court for that matter — the most successful lawyers understand two key things. “I put it very succinctly — it’s called preparation, preparation, preparation. And know your court.”
The retired judge says most of the lawyers she saw plead before the Supreme Court had done their homework and the level of advocacy was “good if not excellent.” However, that wasn’t always the case in the lower courts. “I have seen the error done more at the appellate level when I was at the Ontario Court of Appeal by some experienced lawyers, who are smart and great litigators, but they think they can bypass preparation because they have 20-some years behind them and they are so used to pleading before the Court of Appeal. And it was obvious, from minute number three and a half, in the hearing that the junior knew the file more than the senior who was giving the argument. You cannot bypass preparation.”
Nor will you get very far if you fail to understand the role of the court you are pleading before, Charron adds.
“A common error would be a lawyer not understanding fully that an appellate court is not a fact finder and not dealing with the findings of fact at trial. Some lawyers would go and (deliver) a brilliant piece of advocacy if they were at the trial level. We would have to tell them you can’t retry your case. It’s wonderful but even if I agreed with you, your trial judge has made these findings. Show me the palpable and overriding error.”
At the Supreme Court, the best lawyers understand that the justices ask questions unrelated to their clients’ case because the court has to decide the norm that will govern cases across the country, she explains. “Know what the court, the judges you will be pleading before, what they will be looking for in terms of assistance from your answers and be prepared for it.”
While she is a proud Franco-Ontarian, Charron is diplomatic when it comes to the decision by the Conservative government to appoint unilingual English judge Michael Moldaver to the court after she and Binnie retired, saying the important thing is for the court to have the best jurists it can have. While the Supreme Court is a bilingual institution and it is important for judges to “acquire a certain level of functionality in the other language,” Charron says court staff can also help judges. “I would be cautious about absolutes but it is certainly a very important part of the functioning of the court that we have both languages and if you’re fortunate enough to be fully bilingual when you arrive here then all the better, it is less work for you. If you’re not, well the effort is put in and you learn.”
Pointing out that she had to learn civil law when she was named to the Supreme Court, Charron adds, “You have to teach old dogs new tricks.” If anything, she thinks language skills are more important in lower courts. “I see it as more of an issue in a way as a trial judge. If you cannot understand the witness or the accused in his or her language — because it does happen often because we often do trials through interpretation — you don’t get the same flavour when you get the interpretation of a nuance of a testimony. On questions of credibility, I always found unfortunately that you are at a disadvantage for that kind of nuance and you are the only decision-maker as a trial judge. So that’s a lot more crucial.”
Charron also measures her words when it comes to the topic of judicial activism — a charge that supporters of the ruling Conservatives often levy at the Supreme Court. “Activism is sort of complex. You often have to ask yourself in whose eyes. You can get as many complaints that the courts have not been active enough — or they have been too active. But it is an important issue that the courts have to recognize the limits of their role and in many cases the court is not engaged in drawing the line on the constitutional front. If the issue before you is one of statutory interpretation, it’s not the time to flex constitutional muscles and ask yourself if that line unnecessarily infringes on some right or freedom. But when you are given the task of deciding such issues, you have to decide them according to the principles that are starting to be more and more settled and respect the line where some calls are Parliament’s or the legislators’ and the courts have to give it deference. But it’s not absolute deference.”
As a judge, Charron says her hardest cases were at the trial level where cases hinged on questions of credibility. “I was often very grateful to have a jury because if 12 members of the jury came together and reached a conclusion, I thought that was stronger and I would accept their verdict.”
At the Supreme Court level, Charter cases imbued with policy issues were the most challenging. “Where do you draw the line on an issue of freedom of religion?” she said, citing one example. “There’s no one correct answer. Rarely is there just one correct way to go. And those decisions do have a huge impact on people and the way that we will live in our Canadian society.”
Meanwhile, new technologies are presenting new challenges for the Supreme Court, says Charron. “We have a lot of emerging issues coming out of greater use of technology and the fact that we are a global world and there are explosive issues on every front — particularly in communications and privacy and so on. Of course the jurisprudence will evolve to find solutions to these problems.”
What constitutes publication? When is a document incorporated in a contract? Which court has jurisdiction over contracts signed in cyberspace? What is a reasonable expectation of privacy in the digital era? Charron says these are just some of the legal questions new technology raises. “In any subject matter you could see how the rules of common law may have to be adjusted on several issues — be it contract or tort — to adjust to this new environment.”
For example, Charron asks, what expectations should Canadians have of privacy in an age where someone can take a video of you at a shopping mall and put it up on YouTube or tape a speech you give and post it on a web site? “The whole notion of privacy, our s. 8 jurisprudence — you have the right to be secure against unreasonable search and seizure. Well, the measure is reasonableness. So you have to ask yourself, how reasonable is it to expect any privacy now? That shouldn’t mean that you have no privacy. That cannot mean that you have no privacy. So you have to adjust the meaning of what’s reasonable.”
Part of the answer may lie in how the material is used, says Charron. “It could be that the focus, on what is reasonable expectation of privacy, it could be that our focus might be more on what use will be made of it as opposed to just the expectation that it be captured. Because we live in a world where we can almost always be captured in some sense. What use will be made of it becomes a very important part of the equation.” But those questions will be for her former colleagues to tackle.
At the moment, Charron is on sabbatical from all things legal. She is refusing speaking engagements, practising the Buddhist meditation she took up a few years ago, enjoying a more relaxed pace, and the ordinary things of life. She appears far more rested than she did when she stepped down from the bench last August. “I do want to let some time pass — I don’t have a definite period in mind but I think less than a year would be meaningless in a way and then I will see.”
After that, Charron doesn’t rule out a return to law — but not at the same intense pace as the Supreme Court. Private practice is one option, although she has always been less interested in the “business of law.” She also loves teaching. But her eyes light up when she talks about the prospect of chairing a commission of inquiry — particularly one that calls upon her past in criminal law. “Some judges are asked to do a commission of inquiry. Some I don’t think would interest me. There could be some that I think I could contribute something of value.”
But not before she has had her rest.
Photo: Colin Rowe
Photo: Colin Rowe
After three decades in law, two of them on the bench, justice Louise Charron craved the one thing the Supreme Court couldn’t give her. It could give her fascinating cases. It could give her a collegial work environment. It could give her a salary and perks that are the envy of many. But the one thing the Supreme Court couldn’t give Louise Charron was a rest.
Monday, 05 March 2012 08:05

New tricks

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Last December, when the mandatory retirement policy at Stikeman Elliott LLP finally kicked in for Mortimer Freiheit after 43 years with the firm, the Montreal litigator had a clear flight path ahead. Rather than retire or stay on in another capacity following his obligatory withdrawal from the equity partnership at the firm, Freiheit is throwing energy behind a new legal venture, a boutique firm called Freiheit Legal Inc.
The new firm is growing on the solo practice started by David Freiheit, his youngest son and one of four of five children who are lawyers, and is in full expansion mode. Four new lawyers, including the elder Freiheit, have signed on in the past couple of months and initiated a business plan to target artists and entrepreneurs and those who can’t be served by big firms because of their high legal fees or conflicts of interest. “I didn’t want to be a painting on the wall,” says Freiheit, who helped develop and then headed up the business law, insolvency, and commercial litigation practices over a period that saw Stikeman grow from 16 lawyers when he joined in 1968 to more than 500 today. “We will be able to get good work from different law firms that have conflicts or where the type of work or the client is not really appropriate for them because of the hourly rates,” he says, bubbling with enthusiasm about his new life. “Being a smaller firm with a smaller overhead we are able to provide services to them at a cost significantly less than at a major firm.”
Freiheit is a good example of the kind of successful transition many of the bigger law firms want for the growing number of older lawyers in their ranks in order to make room for a new generation of practitioners. He was one of those responsible for imposing a mandatory retirement policy and agrees with it for the same reasons now. “It allows for the transitioning of clients to younger lawyers, so the firm is able to offer continuity to a client even as the lawyer gets older,” he says. “If lawyers keep hanging onto their clients over time, the clients themselves change — there are new people taking over and they don’t necessarily relate as well to the guy that has been there for all those years.”
But Freiheit and others suspect trickier times are ahead in applying the mandatory partnership retirement policies because many more lawyers now want to continue practising beyond the age of 65 — a frequent cutoff age in many age-based partnership agreements — because of financial or professional reasons. The fact is that bigger law firms with age-based policies have pushed the mandatory retirement age lower than it used to be and have started to provide fewer if any options for those who want to stay on longer. “Lawyers are going to resent and resist retiring at early ages despite the policies that are in place, so I predict that there is going to be a change in behaviour because the lawyers who don’t want to retire are not going to transition their clients as easily as they did in the past,” Freiheit asserts. “When you remove from the partner the assurance of a continuing retirement policy that takes him into his later years (after 65, 67, or 68, depending on the agreement), those partners who want to protect their future are going to retain their influence with clients so as to maintain their bargaining position. So what is going to happen is that there is going to be more individual negotiations on a case-by-case basis and an ad hoc retirement policy with all the risks that flow from that, including claims of discrimination, of favouritism, political favours, and all kinds of stuff once you start negotiating individual agreements. It is a difficult situation.”
Those with extra leverage are older lawyers with high billings and a public profile and there is anecdotal evidence that law firms are continuing to make exceptions for them on a discretionary and perceived strategic basis. Those exceptions come at the very time bigger firms with such policies are redoubling efforts to get other older partners to prepare to retire, with an ideal transition typically beginning three to seven or more years before the prescribed cut-off age through more aggressive client transitioning campaigns.
The case of British Columbia lawyer Mitch McCormick, who launched a discrimination suit against Fasken Martineau DuMoulin LLP over a dictate that he comply with mandatory retirement from the partnership at age 65 and accept no possibility of continuing employment after that, adds more uncertainty to the mix. Law firms with mandatory retirement policies have been analyzing their partnership agreements and combing their wording in the wake of the B.C. Human Rights Tribunal decision that it did indeed have jurisdiction to hear the merits of the McCormick case, a decision upheld by the B.C. Supreme Court that is set for another hearing before the B.C. Court of Appeal in April.
While any favourable decision for McCormick could spawn other age-based discrimination suits against other firms, not everyone believes lawyers will rise up in a tide against the firms where they worked for so many years. And some suggest that law firms will keep, but adapt, any mandatory retirement policy on any judgment ruling that lawyers are employees rather than owners of a law firm through the partnership and continue to focus on the upcoming generation to secure their survival.
In the meantime, the ongoing imperative of client transitioning and the general enforcement of mandatory retirement is a situation that has other consequences both for firms and individual lawyers. Some lawyers — Ottawa litigator and former McMillan LLP partner Eugene Meehan is one of them — are taking a proactive approach by setting up their own firms and taking clients with them long before any discussion of the required time to leave. “Some firms expect you to do a quiet exit at 65 and just as quietly hand over your whole book of business — all the clients you have spent up to four decades assembling and servicing,” says Meehan. “I am 59, I feel very young, I think I act quite young, my children sometimes tell me so, I run marathons faster or slower than them, depending on the day, and I’ve got tons to contribute! So in my case, I am pre-planning the future on the basis that I prefer to make decisions now rather than have decisions made later for me.”
Judges work with full compensation until the age of 75, says Meehan — why can’t lawyers? In January, Meehan, along with two other lawyers and a support staff of seven, launched Supreme Advocacy LLP, an appellate advocacy and agency boutique that will help other lawyers take cases to the Supreme Court of Canada and offer specialty advice in complex legal opinions on any area of law.
Other lawyers are switching to firms that do not have mandatory retirement policies, crossing the street to work for competitors, or are seen as acquisition targets by firms who value the benefit of an experienced lawyer on their team and potential business they bring, says Shekhar Parmar, a director in Calgary for The Counsel Network, a legal recruiting firm. “In lots of ways, the candidates we’ve talked to, it is more than just an economic issue, it is quite personal, tied into their sense of worth and they are basically being asked to transition away from what they have spent their lives defining themselves as,” says Parmar. “There is some real sensitivity when they hit mandatory retirement about the files because the understanding is that when you are ready to retire you are leaving your practice behind as opposed to taking it away.”
Parmar says there are new opportunities like contract lawyering as projects like infrastructure builds and resource exploitation heat up. He points to McLeod & Co. LLP, a Calgary law firm that is benefiting from a talent recruitment plan designed to boost its own fortunes while providing concrete financial incentives to older lawyers in return for transitioning over their clients and business. For almost three years, McLeod has been actively courting older lawyers, typically “55- to 63-year olds on the far side of partnership” as part of its strategic plan to grow and become more of a regional player in the Alberta legal market, says managing partner Robin Lokhorst, noting the firm has grown to 45 lawyers today from 26 in 2005.
Senior practitioners at the big national firms and lawyers from smaller local firms have different concerns, says Lokhorst, “but many of the concerns relate to their exit strategy and in the big firms the exit strategy will often be dictated by whatever policies are in place. And they may certainly intend to have these folks transition their practices to younger lawyers, but then, often, the senior lawyers are faced with the dilemma of compensation and a lot of the large firms haven’t fully explored and dealt with how you compensate someone for giving away work.”
Lokhorst says: “We structure a program where we actually compensate them and it is entirely customized to the individual, what we want from them and what they want from us. We track certain financial measures and we compensate them for transitioning clients and transitioning knowledge to people that we have in-house. They know to the penny how these things are calculated and they catch on very quickly and see the benefits.” Lokhorst says the firm has hired five older lawyers as a complement to the hiring of younger lawyers and is planning to ramp up the program given its success so far.
Toronto intellectual property litigator Don MacOdrum ended up with a competitor firm after he found the clock ticking on his future with McMillan LLP after the firm officially merged with Lang Michener LLP in January 2011. Lang Michener, the firm he articled and spent his whole career with, did not have an age-based retirement policy but McMillan did, obliging lawyers to leave at 65. MacOdrum, who just turned 70, suddenly found himself with a non-equity partnership arrangement for compensation and a one-year deadline to move on. IP litigation specialists Bereskin & Parr LLP quickly moved in to scoop him up after he casually mentioned that he was looking for a spot during lunch with longtime friend Donald Cameron, who was in the process of merging his IP boutique Cameron MacKendrick LLP with Bereskin.
Montreal law firm Robinson Sheppard Shapiro LLP also saw a chance to add bench strength to its team with the addition of two senior lawyers who did not want to retire but had to move on from their firms. Pierre Bourque, a seasoned litigator, moved over to RSS from Quebec regional firm Lavery de Billy LLP, along with Peter S. Martin, most recently an acquisitions and financing lawyer and former chairman of the business law practice group at McCarthy Tétrault LLP. “It is exciting to have a guy like Peter come to us for at least 10 years and bring talents we need, not just in the actual legal work, but talents of developing clients, how to lead large transactions and get teams put together to work in the interests of clients,” says RSS partner Charles Flam, adding that Bourque, in addition to pursuing his passion for litigation, can pass on the benefit of his many years of experience before the courts to nurture younger RSS lawyers.
The 77-lawyer firm, which now has seven lawyers aged 65 years and older, recently changed its own age-based compensation scheme because it found that some of its senior partners — including one 82-year-old litigator — “were basically as productive if not more productive than before” and that did not mesh with its policy.
Paul Boniferro, national leader of practices and people at McCarthy Tétrault and a labour and employment lawyer, says there are no plans to eliminate the firm’s mandatory retirement plan. But McCarthys for a few years now has aggressively stepped up its discussions with all partners, including older lawyers, to make sure that
business objectives of the firm and lawyers are on the same page and track, and that expectations are clear and measured with set compensation incentives in some cases.
In addition to an annual performance review, where lawyers meet with practice leaders to discuss their objectives and business plan, McCarthys is currently in the process of adding a mid-year round of discussions and review, another vehicle to create a culture of “trust and accountability and open and frank dialogue.”
As for client transitioning and lawyers using client relationships as bargaining chips to stay on longer, Boniferro says large mainstay clients have been insisting that the firm work together with them on teams including lawyers of different levels that “mirror their organizations in terms of having peer-to-peer relationships at all levels, so the transition because of retirement of an aging partner is really about the success of the team during the career.”
That being said, “There are unique circumstances where there is a skill set and or a client relationship that is critical to the strategic plan of the firm where we extend people’s relationship with us.”
Daniel Gallivan, the Halifax-based chief operating officer of Cox & Palmer LLP, says the firm also has “clear expectations” for its older lawyers transitioning clients “and that has worked well for us.” The law firm gives lawyers greater latitude than many, with a mandatory retirement at 70, and the possibility of staying on after that as counsel for five years, a situation that means fewer lawyers from the firm are looking for other legal and financial options in their later years.
Retirement policy or not, older lawyers who have forged new careers say the move away from the pressure cooker of a big firm often leads to revitalization and release. “At the end of the day it was an opportunity for me to put my hand on the tiller and say, ‘hey, I can actually go and craft something that is more in line with my style, my values, and culture,’ and where we can release the pressure valve of rates a bit for interesting clients who just couldn’t take the rates of a big firm,” says Jim Titerle, who founded Miller Titerle LLP in Vancouver two years ago after more than 30 years heading up the national environment and climate change group at McCarthys.
Now 60, he had seven years left before mandatory retirement at a “fabulous firm, great people, great work, great support,” but he had wondered about striking out on his own and “if I did not do it now, when? For most of us, it is a very big step to walk away from what we’ve known for many years — the big paycheque, the organization, just fear of falling. To take the step is not easy. It is probably the same as any decision in life. The moment you take the step, you look back and say ‘that was easy’ and there is a whole world out there of people who need legal services.”
Cover: Pierre Charbonneau
Cover: Pierre Charbonneau
Last December, when the mandatory retirement policy at Stikeman Elliott LLP finally kicked in for Mortimer Freiheit after 43 years with the firm, the Montreal litigator had a clear flight path ahead. Rather than retire or stay on in another capacity following his obligatory withdrawal from the equity partnership at the firm, Freiheit is throwing energy behind a new legal venture, a boutique firm called Freiheit Legal Inc.
Monday, 05 March 2012 08:04

Eyes to the soul of justice

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When a California jury acquitted O.J. Simpson of two counts of murder in 1995, the verdict delivered a where-were-you-when moment to people around the world. But the trial also gave Canadian advocates for cameras in the courtroom their biggest and longest-lasting headache. The case has become a textbook argument against putting cameras in the courts, with grandstanding lawyers on both sides, an allegedly star-struck judge, and an orgy of commentary stoking a media frenzy around the televised trial.
That same year, the Supreme Court of Canada allowed CBC Newsworld to broadcast live a tax case concerning spousal support payments, Thibaudeau v. Canada, and shortly thereafter began broadcasting its proceedings regularly on the Canadian Public Affairs Channel. But rather than setting a precedent for televising proceedings, progress outside the country’s top court has largely stalled, with the spectre of O.J. raising its head in every province that tackles the issue.
“I think the O.J. Simpson trial and some other sensational cases in the U.S. are responsible for the visceral reaction you find by many people against it,” says Dan Burnett, a media lawyer at Owen Bird Law Corp. in Vancouver. Burnett, who has been a key player in the campaign for cameras in the courtroom in B.C., sees the Simpson case as an anomalous one. “They have been televising trials for a long time in the U.S. and for the most part, it works fine,” he says. “They may have a problem there with celebrity trials, but I don’t see us having that same problem in Canada, and of course if we did, the ongoing discretion of the judge to just turn off the cameras would kick in.”
In 2001, Burnett argued unsuccessfully on behalf of broadcasters seeking to televise the criminal trial of former B.C. premier Glen Clark, who was charged with breach of trust in relation to home renovations performed by a neighbour who had also applied for a casino licence from the province. The broadcasters, vigorously opposed by the province’s attorney general, appealed to the Supreme Court of Canada, but Clark was acquitted before it could be heard, rendering the appeal moot.
In late 2010, then-attorney general Mike de Jong softened the stance of his office, launching a pilot to video record sentencing proceedings at three provincial court locations. Then in early 2011, Burnett convinced B.C. Supreme Court Chief Justice Robert Bauman to allow cameras in to record the closing arguments in a hearing over the constitutional validity of Canada’s anti-polygamy laws. The CBC streamed the arguments online with a 10-minute delay. “Most Canadians haven’t actually sat down and watched our courts in action. It might not be the most sensational thing around, but it is very impressive. You realize that this is a fair process, that these are serious people who are trying to treat witnesses and parties fairly, and it’s a shame that citizens can’t see that more for themselves,” says Burnett.
He says he was surprised last year when the provincial government completed its turnaround, announcing that it, rather than media organizations, would initiate applications to televise trials for alleged Vancouver rioters following the Canucks’ 2011 Stanley Cup loss. “In a way it’s been coming. Obviously, attitudes have changed, and probably for the better in terms of openness of the courts,” says Burnett. “It’s just an opportunity, as I see it, to use technology to expand the courtroom gallery. We start with this principle that the courtrooms are open, but that principle loses a lot of its reality when you take into account that the massive majority of citizens really can’t come and attend court in person. They work during the day, or they live out of town. Even if they could come, there’s very limited seating, so only a tiny fraction of the public can actually see the court firsthand. Having the open door and the gallery seats there is, in many cases, nothing more than symbolic openness.”
The B.C. government’s push for cameras met with an unenthusiastic response from the Crown attorneys who were forced to make the applications to televise. Six prosecutors are working on the riot file, recommending charges against about 80 individuals. “They have concerns around their personal security. Their position is that they’re not going to consent to their own images being televised, which is something the court needs to consider,” says Jamie Chaffe, president of the Canadian Association of Crown Counsel.
And while the attorney general may be able to impose her will on the Crown’s office, the ultimate decision-makers, the judiciary, are another matter altogether. De Jong’s successor in the office, Barry Penner, was forced to shelve his sentencing pilot after running into stiff resistance from provincial court judges, while the Canadian Judicial Council’s official position on televised trials is that it “is not in the best interests of the administration of justice.”
In mid-February, however, B.C. Attorney General Shirley Bond was forced to scale back her plans after Provincial Court Justice Malcolm MacLean denied the first application to televise, in the sentencing of a rioter who had pleaded guilty. MacLean rejected an argument that the application was politically motivated, but said there were too many unanswered questions around the safety of court personnel and the re-broadcast of footage, instead suggesting the appointment of an amicus curiae to study his concerns in greater detail.
That prompted Bond to rescind her direction to Crown counsel, citing the delays MacLean’s approach would cause, but reaffirmed her commitment to cameras in court. “In the meantime, we will carefully consider Judge MacLean’s decision, and we will continue to look for opportunities to make the justice system more transparent to all British Columbians,” Bond said in a statement.
But some had already dismissed the government’s move as a gimmick, and some advocates fear that what may have been seen as a leap forward, may in fact have set back the campaign for televised court proceedings. Robert Holmes, president of the B.C. Civil Liberties Association, has suspicions about the provincial government’s long-term commitment to the idea. “If this is meant to be a test run, as a precursor towards a broader use of cameras in the courtroom, then all power to it,” says Holmes. “On the other hand, if the government is solely doing this to add an extra degree of stigmatization to a particular group, and they plan on never letting cameras in again, then I’m not sure I want them on my side, because their motives are suspect.”
Paul Burstein, the former president of Ontario’s Criminal Lawyers’ Association, concedes that the time may have come for cameras in the courtroom, but is unimpressed by the intial approach of the B.C. government. “It should be for the right reasons, and this is clearly for the wrong reasons. It promotes public shaming and potential vigilantism, which is just wrong,” he said prior to MacLean’s ruling. “I think it’s appalling. Not only is the intention to shame, but the subtext seems to be that the government wants people to know the faces of those responsible, so that if the courts don’t mete out enough punishment, the public can sit in judgment as to what else should appropriately be administered to these individuals by way of public ridicule, spitting on the street, and so on. I’m exaggerating to some extent, but what else is the purpose?”
Donna Turko, a Vancouver criminal lawyer and former television journalist, earned her MA in sociology and anthropology a decade ago with a thesis that examined the deep-seated division between legal and media professionals over cameras in the courts. She says it was never likely judges would grant applications to televise riot trials, especially over the objections of defence counsel. “In general, the legal profession doesn’t trust the media, because there’s an innate sense that for the media, it’s about making money, and not protecting rights,” she says.
According to Burnett, the more judges see cameras in action, the more comfortable they will become with the idea. He says judges who have led commissions of inquiry, which are often televised, rarely come away opposed to the idea. “Generally what they see is that it all works in a pretty civilized way, and it’s not such a big deal. The fear of the bogeyman disappears.”
Chaffe says he’s keen to see courts retain the final say on whether or not to allow cameras, and says that view is backed up by the January 2011 Supreme Court decision Canadian Broadcasting Corp. v. Canada (Attorney General). In that case, the top court upheld the constitutionality of a Quebec Superior Court directive that limited journalists’ use of cameras and recording equipment to certain areas of the courthouse.
But it’s another critical courtroom player that is central to his organization’s opposition to cameras in court — the witness. “One of the real challenges, particularly with serious criminal offences, is whether or not we can actually get witnesses to come forward and testify. It’s a challenge that gets much more difficult when witnesses feel that not only will they be in open court facing the accused, and possibly media in the courtroom, but that their image could be projected on a daily basis across the country contemporaneous with the trial,” says Chaffe. “Television may actually inhibit access to justice and access to the court if witnesses or victims don’t want to speak out.”
But Holmes says judges can easily work around sensitive witnesses by obscuring images or distorting voices where they deem it appropriate. “That’s fair because there are valid excuses and reasons for limiting it in some contexts,” he says. Burnett agrees that the judge should have control over what can be broadcast, and says concerns about witnesses are “overblown.” “It isn’t as if you turn on the camera and there’s no turning back,” he says. “The reality is high-profile cases attract lot of attention, and you’re going to have a packed gallery, sketch artists, camera crews outside doing reports, the judge sitting up at an imposing-looking desk, and people being cross-examined aggressively. The idea that this one little camera sitting on a tripod at the back of the room is going to be the thing that suddenly makes a witness unable to testify properly is a bit of a stretch as far as
I’m concerned.”
Chaffe doesn’t object as strongly to the potential broadcast of appeal court proceedings. Live witnesses there are not an issue, which may help account for the Supreme Court’s pioneering position on this area.
Its decision in the 1981 Patriation Reference case was the first in the country to be televised live. From 1993 to 1995, the court allowed cameras in three times to cover cases involving the tax deductibility of nanny expenses, the right to assisted suicide, and the tax deductibility of spousal support payments, before CPAC began regularly broadcasting from the court. Since 2009, the court has branched out even further, launching live webcasts and archiving video footage of hearings.
Ironically, that puts the Canadian Supreme Court at odds with its American counterpart, which has traditionally eschewed television cameras, despite their widespread use in state-run courts. All 50 states allow cameras in their courtrooms. The U.K.’s experience broadly mirrors Canada’s, where the only court that allows cameras is the Supreme Court.
Appeal courts have also been at the heart of provincial experiments with cameras in court. Nova Scotia invited applications to broadcast hearings from its appeal court for two years from 1996 to 1998. Meanwhile, in Ontario, the province’s 2006 Panel on Justice and the Media, including luminaries from the legal and media spheres, recommended an amendment to the province’s ban on cameras in the Courts of Justice Act, to allow them for proceedings in the Court of Appeal and the Divisional Court, as well as motions and applications in Superior Court that involved no witness examination. “In such cases, televising should be broadly permitted. The court should always have discretion to exclude television, but only after giving due consideration to the value of openness,” the panel wrote. “Some may see this as a small step. We do not think so. . . . The people of this province will have an opportunity to be eyewitnesses to important aspects of the justice system in action. Whether they watch for inspiration, education, or even entertainment, they will be observers of a historic process, which is a critical element of our democratic system.”
A three-month pilot followed in late 2007, when one courtroom at the province’s Court of Appeal was outfitted with cameras and microphones. The $365,000-project saw 21 cases streamed online across 20 court sessions. Only one of the cases, an appeal by a man wrongly convicted of killing his young niece, garnered much media coverage, but the court’s web site logged 18,000 visits, and 95 per cent of those interviewed for an evaluation report said the pilot enhanced openness, while 85 per cent called for an expansion to other courts.
The 2008 report on the pilot was only released in March last year after a freedom-of-information request, and then-attorney general Chris Bentley said he was open to revisiting the issue. Brendan Crawley, a spokesman for the Ministry of the Attorney General, tells Canadian Lawyer that privacy issues remain a concern, but that consultations are underway with chief justices of all three of the province’s courts. “We need to ensure that we approach this in a thoughtful and comprehensive manner. These are informal consultations, and we have not placed any firm timelines for them to be completed,” says Crawley. In the meantime, there are no cameras in Ontario’s courts.
John Honderich, the former editor and publisher of the Toronto Star, was a member of the 2006 panel on justice and the media. He says he was advocating to have cameras present at all levels of court, but has been disappointed at the lack of action even on the panel’s watered-down recommendations. “This was a compromise that everyone was supposed to be able to live with, but I think they just weren’t prepared to take on the legal establishment,” says Honderich. “The establishment in this province has been very strongly imbued, and I guess the government just didn’t see this as a battle they wanted to fight.
For Turko, the problem with the focus on appeal proceedings is that they are the ones of least interest to the public at large. “It’s like watching paint dry,” she says. “From an academic point of view, there are certainly things to be learned, but the exercise doesn’t really go anywhere if nobody watches it. It comes down to the quantum of what you’re going to get for costs that could be put elsewhere in the system.”
In the B.C. context, Chaffe says he would rather see the money and court time being spent on applications to televise instead being used towards dealing with inadequacies in the court system there. “They’ve got 2,500 cases over 18 months waiting for trial, and they’re 20 judges short of full complement at the provincial court level. This is going to hamper the ability of the justice system to react to other cases that the public may very well regard as a higher priority, like sexual assaults and homicides, which we think is harmful,” he says.
Illustration: Carl Wiens
Illustration: Carl Wiens
When a California jury acquitted O.J. Simpson of two counts of murder in 1995, the verdict delivered a where-were-you-when moment to people around the world. But the trial also gave Canadian advocates for cameras in the courtroom their biggest and longest-lasting headache. The case has become a textbook argument against putting cameras in the courts, with grandstanding lawyers on both sides, an allegedly star-struck judge, and an orgy of commentary stoking a media frenzy around the televised trial.
Monday, 06 February 2012 08:07

The offshore banking nightmare

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Cover: Mick Coulas
Cover: Mick Coulas
It was a strategy born of sheer frustration, a chess move that failed. On Nov. 28, 2006, Michael Morris, a Canadian who runs a small offshore bank in the Bahamas, arrived at a bustling Starbucks in downtown Toronto expecting to meet a woman called Ginette Brown. The previous month, a woman by this name had called Morris at his offices in Nassau, where he runs Barrington Bank International Ltd., and told him she had a client seeking financing and would Morris agree to meet with her when he was next in Toronto? Weeks later, they arranged to rendezvous at the Starbucks while he was in town visiting family.
Monday, 06 February 2012 08:05

Judging the judges

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Illustration: Tara Hardy
Illustration: Tara Hardy
In almost two decades of practice, criminal lawyer Paul Slansky had never complained about a judge. But one day in July 2004, he resolved to change that. Ontario Superior Court Justice Robert Thompson had just ordered him confined to the courthouse in Owen Sound, Ont., while jurors deliberated on the fate of his client, Vytautas Baltrusaitis, who was charged with murder. Toronto-based Slansky, who was staying at a hotel just a couple of minutes’ walk from the courthouse, viewed the move as malicious and petty. “However this conduct was merely the straw that broke the camel’s back,” Slansky wrote in an affidavit following the trial he called “the most difficult of my career.”
Tuesday, 03 January 2012 11:40

The death of collective bargaining?

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Air Canada has had two strikes. The one in 1998 involved pilots; it lasted 13 days and was settled through bargaining during what were profitable times. The other, last June, involved front-counter staff; it was settled after three days — mere hours after the federal government tabled back-to-work legislation. The first strike occurred while the Liberals were enjoying a majority in the House of Commons with Jean Chrétien as prime minister. Today, Stephen Harper’s Conservatives run the country, also with a majority. But while Chrétien stayed out of Air Canada’s contract squabble in 1998, Harper has not.
In light of labour disputes in recent months by both Canada Post and Air Canada, academics and labour lawyers across the country are now discussing Harper’s apparent war with the labour movement in Canada. Some unions are preparing to enter the trenches to fight that battle while others already have done so.
Harper has carte blanche because of his majority, but the hockey enthusiast has the equivalent of a breakaway on an empty net. There’s the loss of resistance with the collapse of the Liberal party, and the uncertainty left at the top of the new opposition New Democrats due to the death of leader Jack Layton. “Harper’s government has more respect for the right to bear arms,” says Toronto labour lawyer Paul Cavalluzzo, who represents the Canadian Union of Postal Workers, referring to the Conservatives’ recent move to do away with the long-gun registry. “Obviously they are not very friendly to the labour movement and they don’t pretend to be.”
In 2011, Minister of Labour Lisa Raitt interceded to stop a strike by Canada Post and prevent one by Air Canada’s flight attendants. Meanwhile, the Canadian Union of Public Employees is preparing proposals for new deals for the carrier’s pilots as of November; the two sides there are already fastening their seatbelts in anticipation of severe turbulence. A contract with Air Canada mechanics is also up for renegotiation.
This new policy of stepping into disputes is setting the stage for a new style of labour negotiations, experts say, where companies hold back and wait for government help. If the government’s propensity to involve itself in labour disputes continues, says Cavalluzzo, employers will feel safe under the umbrella of back-to-work legislation and will no longer be serious about negotiating. That’s exactly what happened in Air Canada’s dispute with the flight attendants, says another Toronto employment and labour lawyer, Howard Levitt of Levitt LLP. “I blame it on Air Canada,” he says. “They didn’t fight. You’ve got to be prepared to fight.”
The airline’s communications department did not respond to interview requests for its representatives.
The government’s increased involvement in labour matters is dangerous, says McGill University’s Bob Hebdon, an expert on government intervention in disputes. “[Parties] hold back knowing if the government intervenes they’ll have padding,” he told The Canadian Employer. “So, the union doesn’t really get the last best offer. The behaviour has changed.”
Twice CUPE took an offer from Air Canada back to the flight attendants. On the first attempt in August, 87 per cent of them rejected the proposal; on the second in October, that number was down to 65. Union leaders said they managed to get 80 per cent of what membership was seeking. “The fact that the members twice rejected offers that they were presented by the union is a pretty clear signal that there is conflict within the union,” offers Ken Thornicroft, a law and labour studies professor at the University of Victoria.
The Canada Industrial Relations Board hadn’t been used in more than a year when it was asked by the union representing Canwest employees to establish successor rights when a number of the broadcaster’s television stations were sold. By going to the CIRB, the government took away the union’s only strength — the membership’s willingness to withdraw their labour, says Julie Guard, an associate professor of labour studies at the University of Manitoba. “For the Harper government to take away the only power that the union really had undermines the entire premise of the labour relations system that has governed relations between workers and their employers since the 1940s,” says Guard.
She says that by intervening twice now — with the postal workers and the flight attendants — one might surmise that the goal is to prevent all strikes by intimidating workers into accepting bad agreements, on the grounds prolonged agreements will not improve the employees’ position. Also, the employer can offer as little as it wants, knowing it will not have to face a strike.
She says the Air Canada and Canada Post negotiations suggest the Harper government has a secret policy of undermining collective bargaining and weakening the labour movement. “The Conservatives did not mention collective bargaining or an intention to undermine unions when it campaigned in the last election and has not acknowledged that goal now,” she says. “But it appears that is nonetheless its agenda.”
Levitt believes Air Canada would have been better served training new flight attendants in what he says is an unskilled job — forcing a strike that wouldn’t matter to the public, given that the airline would still be in the air and would still have people on the plane pouring coffee. The unionized flight attendants would then watch as the company proceeded without them and be frightened back to work.
That seems to be the plan of the City of Toronto, which by all accounts is bracing for an extended work stoppage with its two largest unions in January. Toronto is moving ahead with plans to train managers to perform unionized employees’ tasks as it tries to negotiate rollbacks on benefits and the end to the “job-for-life” clause in its previous contract.
Levitt says the danger in having the Ministry of Labour continue to get involved in forcing arbitration is that it “will kill the collective bargaining process.” In an opinion piece for Postmedia News in July, Levitt cited the example of the City of Windsor asking Dalton McGuinty’s Liberal government in Ontario to stay out of its dispute with its union and not order them back to work. “[Asking for intervention] is an admission of failure, because ordering the workers back means an arbitrator will decide their remuneration and the history of arbitrators’ decisions has created the very wage boondoggle the public is decrying,” Levitt wrote.
When dealing with labour disputes that reach a stalemate, Levitt recommends firing the lawyers and advisers who brought negotiations to a standstill. Then, if the union strikes, tell the union the cost of the strike will be taken out of their future salaries and benefits when a settlement is reached. “With one not-for-profit client I negotiated for, we told the Teamsters every time our offer was rejected, the next would be less. On the third offer, they believed us and accepted the reduced offer. The next time they didn’t strike,” wrote Levitt.
The postal workers began rotating strikes on June 14, and on June 15 Raitt informed them she would be tabling back-to-work legislation. She did so on June 20. The postal union filed a constitutional challenge in Ontario Superior Court on Oct. 11, arguing that the Conservatives violated the Charter of Rights and Freedoms by imposing back-to-work legislation.
Raitt sent Air Canada’s flight attendants to the CIRB to arbitrate their dispute. The 6,800 flight attendants cancelled a strike scheduled for Oct. 13 after the CIRB told them to stay on the job while the contract offer was reviewed. On Nov. 7, the CIRB ruled in favour of Air Canada on a new four-year deal that expires March 31, 2015. “The government robbed [the flight attendants] of what was a democratic opportunity,” says Anne Gregory, acting director of CUPE’s legal branch. “This is a company that declared bankruptcy twice and after agreeing to wage rollbacks and concessions to help the company, they didn’t get to bargain.”
The pilots were met by a notice of dispute filed with the government in October, prior to a second round of talks, which appears to be following the same path as that of the flight attendants.
That Harper has begun a war with the labour movement in Canada is clear to the Professional Institute of the Public Service of Canada, which has 60,000 white-collar professionals, including federal government lawyers. Traditionally keeping an arms-length distance from labour matters, PIPSC voted in November to join the Canadian Labour Congress in anticipation of layoffs, rumoured to be extensive in the coming months. In the late 1990s, PIPSC had voted against joining the CLC. But, back in the late 1990s, money wasn’t as tight. Air Canada’s pilots won nine-per-cent salary increases over two years in 1998. The airline made a profit of $427 million in 1997. A few short years later in 2003, the company filed for bankruptcy protection and most recently reported a loss of $46 million for the second quarter of 2011, considerably less than the $318 shortfall for the same quarter a year earlier.
Formed in 1920, PIPSC’s almost 100 years of political neutrality ended when 400 delegates rallied at Parliament Hill on Nov. 4. That same day, a private member’s bill tabled by Conservative MP Russ Hiebert calling for greater financial disclosures from Canadian unions crashed in the House of Commons in large part because of procedural strategies developed by PIPSC, and slipped into the hands of the New Democrats. “In today’s difficult economic times, our members are facing an increasingly complex labour environment, as well as a sustained attack on the part of government and its supporters in the business community,” PIPSC president Gary Corbett said after the Nov. 7 vote.
Finance Minister Jim Flaherty is attempting to balance the budget by 2015, but among the roadblocks he faces is a reported increase in pay for public servants of $1.2 billion for 2012 as established through collective bargaining. Job cuts have already been publicized. Close to 800 positions were eliminated in August at Environment Canada, whose employees belong to PIPSC, along with 52 from the National Research Council. In October, Veterans Affairs Canada confirmed that 500 jobs would disappear in the next few years.
On the flipside, what hasn’t been reported, according to the Canadian Taxpayers Federation, is an increase in public sector jobs of 35,000 since Harper took office in 2006 — to 420,000 from 386,000. “It is simply not correct to say that the Harper government is cutting the size of the federal public sector, or cutting spending. The opposite is true,” says Gregory Thomas, the CTF’s federal and Ontario director. “We welcome the cost-cutting the government has carried out so far. We urge them to cut more aggressively.”
The federal government is using the Air Canada dispute to publicize its desire to make changes to the Canada Labour Code, which is more than 100 years old.
“There’s something wrong in this case and does that mean there’s something wrong in the code?” Raitt said in an interview with the CBC in October. “If we do have a problem and maybe it is a flaw in the system, we should discover it now, and if we need to make changes we can make changes.”
Harper has made some major moves in the first months of his majority, including scrapping the long-gun registry, eliminating the Canadian Wheat Board, and beginning the process of cutting $4 billion from the country’s budget, which is what prompted PIPSC to hold its vote.
The labour movement in Canada faces a challenge not only from the government, but also from the new global economy. As the generation of baby boomers leaves the workforce, it is replaced by a younger workforce that views unions as being less important — having grown up in a country where most labour rights have long been established.
According to a paper written by compensation and industrial relations director Karla Thorpe for the Conference Board of Canada, organized labour has seen a 1.7-per-cent decline in the past few years, to 29.2 in 2011 from 30.9 per cent of the workforce in 1997. Seventy per cent of the public sector is unionized, while 15.9 per cent of the private sector is — an all-time low, down from about 35 per cent just a decade ago. “Labour’s ability to exert pressure on behalf of workers will undoubtedly be impacted by a declining base of members and the resulting loss of union dues,” writes Thorpe. “Even though union density is on the wane, organized labour can continue to have a positive impact on government policy — particularly if they focus on issues that have broader public appeal.”
Thornicroft suggests that unions are here to stay, and will remain especially relevant in the public sector. “In terms of public, unions remain strong and powerful and well funded and I don’t see any change there. They will continue to have considerable bargaining leverage. In the private sector, that’s a different story. In the private sector unions have no significant bargaining leverage these days.”
Most of the concerns, according to Thornicroft — safety, health care, and wages, for example — are no longer issues in Canada, so workers in the private sector are now opting to skip unionizing. “For private sector unions the glory days are gone,” he says. “They may be back but I don’t see it happening any time soon.”
It would appear Air Canada’s flight attendants are dealing with that reality right now.
Cover photo: Liam Sharp
Cover photo: Liam Sharp
Air Canada has had two strikes. The one in 1998 involved pilots; it lasted 13 days and was settled through bargaining during what were profitable times. The other, last June, involved front-counter staff; it was settled after three days — mere hours after the federal government tabled back-to-work legislation. The first strike occurred while the Liberals were enjoying a majority in the House of Commons with Jean Chrétien as prime minister. Today, Stephen Harper’s Conservatives run the country, also with a majority. But while Chrétien stayed out of Air Canada’s contract squabble in 1998, Harper has not.
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