Legal Feeds Blog
It’s being viewed as a win for the banks but a loss for insolvent oil companies and the environment.
|The court ruled a trustee in bankruptcy could disclaim its interest in certain licensed properties and was not bound by oil and gas well abandonment orders issued by the AER. (Photo: Todd Korol/Reuters)|
In the May 17 decision, Wittmann decided in favour of Grant Thornton Ltd., the bankruptcy trustee in the Redwater Energy Corp.’s receivership and bankruptcy proceedings, upholding its right to “disclaim” Redwater’s non-producing oil wells and sell its producing wells.
Redwater was a junior oil and gas producer that went into insolvency in the spring of 2015. It owed its bank, ATP Financial, about $5 million.
Upon appointment, the receiver conducted an assessment of Redwater’s assets and advised the Alberta Energy Regulator that of the 91 wells to which Redwater held licences, it would only be taking possession of 20 wells, facilities, and associated pipelines.
It was a case being watched closely by those in the oil sector — especially the banks.
At issue was whether the provincial regulatory regime under the Oil and Gas Conservation Act and the Pipeline Act conflicted operationally with the federal Bankruptcy and Insolvency Act.
Wittman looked to the Supreme Court of Canada’s 2012 decision Newfoundland and Labrador v. AbitibiBowater to decide if it is something that in fact falls within the jurisdiction of the federal legislation.
The decision dismissed the application of the AER and Orphan Well Association, which argued Grant Thornton should have to carry out the abandonment, reclamation, and remediation obligations of Redwater’s non-producing wells, or perform abandonment orders as issued by the AER, which included paying a security deposit.
The implications of this decision for the Alberta oil and gas industry are far-reaching, says Melanie Gaston, a partner with Osler Hoskin & Harcourt LLP in Calgary.
“Typically a receiver takes the less profitable wells or those that require decommissioning and sells them as packages. Now, with this decision, it’s clear that doesn’t need to happen. They can go in and pick the good, producing wells and leave the non-profitable ones,” says Gaston. “If I’m an oil company and I’m restructuring what I’m left with post-restructuring is not necessarily all that helpful.”
The question now becomes how to fund dealing with the non-producing wells of companies in an insolvency position. The court’s decision may lead to a dramatic increase in the number of wells determined to be “orphaned” by the AER. This will undoubtedly increase pressure on industry to fund the completion of work to abandon and remediate such wells, and on the boards of directors who serve companies in the industry.
“With these decisions the regulator is in a tough position because it will now be burdened with, potentially, exponentially more wells to manage with the Orphan Well Fund,” says Gaston.
If the legislation remains the same, the regulator will be left to find other sources of funding to manage it — possibly an increased levy on the oil companies already hurt by low prices and the fires in Fort McMurray, or approaching the government for an injection of funds from the taxpayers — just another hit for Albertans.
“The oil companies are now going to be challenged by what happens to them because it does give them some uncertainty. Is the AER, through the Orphan Well Fund, now going to increase levies so they have to pay more and therefore essentially support other players in the industry without having the necessary liquidity to do that right now?”
The court’s decision (which is not yet been posted publically) does however provide certainty to secured lenders that the priority is maintained over their interests.
“This certainty should result in continued access by the oil and gas industry to readily available credit,” Gaston wrote in a post last week about the decision.
Gowling WLG and Cassels Brock LLP served as co-counsel to Grant Thornton throughout the proceedings. They were not available for comment at time of posting.
It is expected an appeal will be launched.
As the federal government looks to expand protections for transgender people with bill C-16, an Ontario initiative is examining what barriers the transgender community still faces in accessing justice.
|The HALCO study wants to assess if and when rights exist that people are actually able to enforce those rights.|
“People have had issues with police, employment, family custody, and family access issues just because of who they are,” says Nicole Nussbaum, the lead lawyer on the project.
“And the frequency of these issues is also really shocking, so it’s the range of experiences as well as the frequency that has a really negative impact on not only the people who have had those experiences but trans people as a group.”
The HIV & AIDS Legal Clinic Ontario, which is conducting the study with funding from Legal Aid Ontario, hopes the information gathered will help legal service providers meet transgender peoples’ needs. HALCO first started to look into the possibility of launching a study with Nussbaum’s help after it realized very few people who identify as transgender were accessing the organization’s services.
A previous study researching health topics in Ontario’s transgender population, called the Trans Pulse Project, found 21 per cent of respondents had avoided going to the emergency room when they needed treatment for fear of discrimination or harassment.
“If people in the community feel safer outside of an emergency room in a medical emergency, how safe would they feel going to a lawyer’s office or accessing legal services when they have a real legal need?” asks Nussbaum.
The survey canvasses transgender people on their own experiences on legally dealing with or not dealing with problems such as discrimination, harassment and violence. It also asks whether they feel safe in legal spaces and about their interactions with police.
“Do people have positive or negative experiences walking into a court house, walking into a legal service provider’s office, interacting with court house staff?” says Nussbaum.
Nussbaum says part of the assessment will look to quantify negative experiences but also look at them qualitatively through its focus groups.
The study is also focusing on the legal struggles of transgender people affeted by HIV and AIDS, in particular as they often face “a double dose of discrimination,” says Nussbaum.
The study’s workshops and focus groups have also been providing transgender legal rights 101 advice to both legal providers and transgender participants.
The federal government introduced bill C-16 this week, which will assert human rights for transgender people across the country once passed.
Nussbaum says the study’s goal is to build upon the legislative gains such as bill C-16 to ensure the rights and protections they provide are upheld by appropriate legal access.
“When protections exist, the point isn’t for them to exist in the abstract, but for them toe exist in society in peoples’ life experience,” she says.
“So the legal assessment study is trying to identify the practical challenges to having those rights exist on an every day basis and being able to access legal assistance when its necessary to enforce rights.”
- Altman Weil study sheds light on competitive pressures, cultural inertia facing law firm partnerships
As big firms look to shed surplus capacity, highly paid, non-equity partners and senior associates are more vulnerable to staff reductions than those on the bottom rung.
|Are each of the lawyers in your firm sufficiently busy? Source: Altman Weil|
The survey canvassed managing partners and other law firm leaders at 356 firms with 50-plus lawyers across the United States to gauge perceptions around business prospects and competitive pressures facing the industry.
While 62 per cent of all law firm leaders believed that an erosion of demand was a “permanent trend,” law firms have generally not felt “enough economic pain” to warrant significant changes. As it stands, only 44 per cent of firms have made significant strategic changes to enhance efficiency, and only one-third of firms have looked at changing their basic pricing structure.
However, as the number of firms experiencing sharp drops in profit grows (up four points to 10 per cent in 2015), law firm leaders have begun to shift work to lower-paid lawyers. Already, according to the study, three-quarters of big firms are using part-time and contract lawyers.
And when managing partners were asked which tier of lawyers were considered “least busy,” they pointed not to low-level associates, but rather to their non-equity partners. Fully 62 per cent of managing partners felt their non-equity partners weren’t sufficiently busy, suggesting an ominous potential for cost savings.
As Catalyst Consulting’s Richard Stock puts it, the firms are moving away from the “pyramid” structure and toward more of an “hourglass” — top-loaded with senior partners, bottom-loaded with worker drones.
|Aside from your traditional law firm competitors, is your firm losing any business to other providers of legal services? Source: Altman Weil|
The trend has particularly negative implications for young lawyers looking to land at a big firm and eventually get on a partnership track. According to Stock, that career path is quickly vanishing.
“What they do is, they simply don’t retain as many past the third-year call,” he says. “So essentially they’re hiring worker bees . . . who have no expectation of getting on a partnership track at that stage of life. They’re just happy to do large volumes of work and pay down their debt and then make a decision in three or four years.
“Unless you’re on a specialist track, you’re going to end up like Prince Charles waiting 70 years to inherit the throne. It’s just not going to happen.”
The study also underscores what law firm leaders perceive to be the greatest competitive threats — and it’s not technological automation of routine work. Rather, in-sourcing is cited as the most immediate competitive concern: 83 per cent of large firms report having business taken in-house by their client; another 15 per cent view it as a potential threat, leaving less than two per cent of large firm leaders who don’t see it as a concern.
Stock says this is no surprise, given the corporate-commercial, transactional, and commoditized business work that has for decades been the bread and butter of national full-service firms. Litigation, however, is another matter entirely, he notes.
“There’s no move to in-source litigation,” he says. “So I think that’s true when you’re talking about transactions and corporate-commercial work. The big-box firms have always had a relatively small percentage of their fee earners in litigation. They have not been set up like a Lenczner Slaght or other litigation shops.”
Generally speaking, however, Stock says Canadian firms are more protected than their American peers, given that the most vulnerable corporate-commercial work is contained in Toronto. Law departments here, meanwhile, are much smaller in than those in the U.S., and so less capable of in-sourcing the really big projects.
“We can't forget that in Canada, compared to the United States, 50 per cent of corporate law departments have fewer than five lawyers. And another 25 per cent have fewer than 10 lawyers. You're not going to do a big transaction with just that.”
Despite intense competitive pressures, Altman Weil’s report finds that law firm partnerships suffer from cultural inertia, if not outright apathy. In one remarkable statistic, nearly one-third of law firm leaders believed that the partners in their firms would rather make less money than lose the ability to manage their own affairs.
“In other words,” as the report puts it, “they would actually pay to be left alone.”
This demand for independence and autonomy is what puts the collective law firm at risk from team-oriented corporations and accountancies. Stock says this kind of “ostrich behaviour” won’t last for long.
“If you’ve got some sense of trying to run a business — and this is a Deloitte quote from 25 years ago — you cannot save your way to prosperity. To reduce your expense structure, redesign your compensation structure — it’s always too little. All that buys you is a few years.”
- Ontario Divisional Court ruling says matters can still be dealt with in Small Claims Court.
Order could be restored at the Ontario Superior Court’s overstretched fee assessment office, thanks to a decision yesterday from the Divisional Court that relieved the court of sole jurisdiction to handle those files.
The Divisional Court’s ruling contradicts another one released by the same court in 2014. Jane Conte PC v. Josephine Smith shocked the system when it said all lawyer fee disputes must be resolved at the Superior Court. Prior to the 2014 ruling, those matters could be dealt with at the Small Claims Court.
A more liberal interpretation of the Solicitors Act, Justice Michael Dambrot’s decision in Cozzi v. Heerdegen, says the Small Claims Court has jurisdiction to deal with claims arising from simple retainers. Dambrot says only contingency fee arrangement accounts need be assessed by the Superior Court’s assessment office.
In Conte, Justice Ian Nordheimer pointed to a little-known section of the Solicitors Act, which states all claims for non-payment must go to the Superior Court.
“Partly because of that decision, a very significant jam was created,” says Toronto lawyer Ben Hanuka of Law Works PC. “Everything had to be diverted through this narrow pipe [at] the assessment office.”
In an endorsement written early this year, Superior Court Justice Sean Dunphy said the delay required to get an assessment hearing is “unacceptably long.” But in the same ruling, Dunphy dismissed requests by Toronto intellectual property law firm Gilbert’s LLP for an order that two clients pay outstanding bills arising from undisputed retainers.
Essentially, the issue at the centre of the chaos is poorly drafted legislation, according to Hanuka. He says, s. 17 of the Solicitors Act might could, technically, be read to suggest that every written agreement for legal services must get a blessing from the Superior Court before a payment can be made.
“The problem is that it’s almost nonsensical,” Hanuka says, adding Dambrot’s decision in Cozzi is “the only way forward.”
After Nordheimer wrote Conte, paralegals like Frederick Goodman, who went the Small Claims Court to resolve lawyers’ fee dispute matters, could no longer do those jobs as paralegals don’t have standing at the Superior Court. This morning, speaking from the Small Claims Court, Goodman says he’s “back in business.”
“This decision . . . restores our ability to pursue claims for lawyers in the Small Claims Court for unpaid accounts but only in so far as those [accounts] which are not contingency fee arrangements,” says Goodman .
With files from Michael McKiernan
Ann Cavoukian has long touted the benefits of “data privacy by design” and now the European Union has passed an overarching privacy law called the General Data Protection Regulation, which embeds that requirement.
|Ann Cavoukian says people often see privacy as an impediment but in fact she says ‘privacy breeds innovation.’ (Photo: Jennifer Brown)|
Privacy by design was first developed by Cavoukian in the 1990s when she was privacy commissioner of Ontario. It is an approach to protecting privacy by embedding it into the design specifications of technologies, business practices, and physical infrastructures.
“That in itself is huge,” said Cavoukian, now the executive director of the Privacy and Big Data Institute at Ryerson University.
She was speaking on an International Association of Privacy Professionals panel last week in Toronto called “Privacy by design: How I learned to stop worrying and love disruptive technology.”
Even though privacy by design has been embraced globally for many years, the EU law is the first time it’s appearing in a statute.
Cavoukian noted that Canada’s privacy commissioner, Daniel Therrien, is also now asking if privacy by design should be embedded into Canadian law.
“Keep your eyes open for this, and if you lead by privacy by design it will be more likely you will be compliant with the GDPR and you will be more likely to be meeting the requirements of many jurisdictions because privacy by design raises the bar considerably,” she said.
Abigail Dubiniecki, legal counsel for the Canadian Air Transport Security Authority, noted that even if an organization doesn’t have operations in the EU, if it is directing services to EU residents, it can still be captured by the requirements.
With distrust of how organizations are handling personal data at an all time high, how can organizations foster trust with customers in the private and public sector?
“You have to find ways to grow trust,” said Cavoukian. “When I was privacy commissioner I told businesses to treat privacy as a business issue — focus on the tech and how you can increase privacy thereby increasing trust and be compliant with the legislation.”
Cavoukian said with the Internet of Things exploding at such a rapid pace, if companies took time to reflect on the protections that could be embedded from the outset, they would be much further ahead. Companies are still too siloed though to make sure it happens at the design stage
“When I talk to software designers and ask why they aren’t embedding privacy into the design of their technology they say, ‘We’d love to do that but the instructions we receive don’t reflect the need to do that.’ They say if we had the instructions at the front end, it’s easy to do,” she said.
She referred to the “risk intelligence approach” which anticipates risk and identifying them upfront in an effort to mitigate risk by incorporating privacy into design.
Dubiniecki said some view the problem as a generational gap — that some older age groups are more concerned about privacy than others that have “softer” security concerns.
“There is the idea that some will sacrifice privacy for personalization,” she said. “They want something customized to their needs so some innovators see privacy as a barrier to innovation but others see it as an opportunity.”
Cavoukian agreed it is an opportunity. She says people often see privacy as an impediment but in fact she says “privacy breeds innovation.”
“If you can embed privacy from the get go it will assure customers and keep regulators out of your door because you will be building it in in the strongest way possible.”
Protection of data should also be the top concern of any organization, she said.
“In this day and age of cyber attacks, if you don’t have data protection end to end you won’t have privacy. You have to have secure data collection and through the secure destruction of the data,” she said.
“Remember, it’s not your data — just because you have custody and control of it because you collected it doesn’t mean it belongs to you — it belongs to the data subject.”
Mandatory evacuation order issued for Alberta oil sands facilities as fire rages, The Globe and Mail
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