So, You Have A Case In Canada, Eh?

Litigation in Canada is different.  Some politicians tout its “Loser Pays” philosophy.  But, Canada’s theoretical advantages as a litigation forum are undermined by practical realities.  In the end, there are advantages and disadvantages but, without a doubt, it is “different.”

Loser Pays – Sort Of

Canada has long had a system of “Loser Pays,” much touted by tort reform activists.  Indeed, this system has been successfully used by Risk Retention Services in two cases, one in which a gymnastics supply company recovered $50,000 from the plaintiff, and the other time successfully convincing the plaintiff to dismiss his case rather than face the possibility of paying the defendant’s  attorney fees.  These experiences are, however, far from the norm.

First off, the amounts of attorney fees that are ordered to be paid are up to the discretion of the trial court.  It is not unusual for the trial court to order that the defendant pay virtually all of the plaintiff’s attorney fees, but only a modest portion of defense fees when a defendant prevails.  There are mechanisms for maximizing the potential recovery, but since the Canadian system, in practice, is far less adversarial than in the United States (addressed below), these methods are rarely employed.

Even where the court does order the plaintiff to pay fees, this is not a real victory, for it is a rare claimant indeed who has any money to pay for such a judgment.  Thus, while you get a court order requiring the plaintiff to pay, it often is a judgment proof order.  These realities are explained to claimants by their attorneys, so unless the claimant has assets (including a home) the threat of pursuing costs is not always taken seriously.

The rarity of such a claim can be seen in our two cases (two different provinces), and was argued at mediation.  The mediators in both cases had never before heard of a defendant actually holding out for attorney fees.

In the gymnastics case, the plaintiff, after much cajoling, agreed with the mediator’s recommendation that she dismiss her claim.  The equipment company we represented refused to allow the case to be dismissed without the payment of most of the attorney fees.  This tactic worked because the claimant, a daughter of a parliamentary MP, had assets.

Normally, however, the “Loser Pays” system merely increases the cost of settlement.  The plaintiff almost never pays and does not take such a threat seriously.  But the plaintiff attorney, from the outset, adds his fees to the top of the settlement demand (so a case that should settle for $100,000, would settle for $100,000 plus attorney fees).

Initial offers are thus unreasonably high, and even in mediation, the mediator will never try to discount the fees.  Thus, the system is really a “defendant pays” attorney fees.  Not surprisingly, this actually promotes litigation, rather than limits it.  The attorney has nothing to lose by taking the case (most cases settle), and the recovery to the plaintiff is maximized, because attorney fees are routinely added to any settlement.

Less Work – More Money

In Canadian lawsuits, there are only pleadings (summons, petition, answers); and production of documents (not the documents others request, documents we want to use in the trial).  There are also “discoveries”, the Canadian word for “depositions”.

Discoveries in Canada are limited to parties, and the party gets to pick who will testify.  It is not unusual for the party to select an officer who knows nothing about the product or litigation.

When a witness does not know an answer, an “undertaking” is demanded.  This means that the party asking the question at the deposition requires that the party “undertake” to answer the question, or provide a document, that was not available at the deposition.

In practice, this means that very little information is provided at the discovery, and everything can be reviewed and answers drafted by the attorneys.  This is similar to interrogatories in the United States.

Meanwhile, absent a court order, there can be no depositions of witnesses including co-workers, family members or treating physicians. Experts, including physicians, provide bare-bones reports, and everything else is left to the imagination of the parties until trial.

Thus, there is truly far less work to be (or can be) done by the attorneys in Canada.  Meanwhile, it takes years for a case to get to trial, and virtually no trials are heard by juries.

In most cases, there is a right to a jury trial, but it is rarely employed unless the client demands it.

Still, litigation in Canada costs far more in Canada than the United States.  Experienced trial lawyers routinely charge $400-$600 per hour, and these attorneys use lowly associates (typically $250-450/hour) to work up the case.  There are letters between counsel, and numerous court status conferences (during which time nothing has been done).

The concept of bringing motions to compel is completely foreign, even when the limited discovery available is permitted.  Normally, the discoveries of the parties have to be completed within 1 year, but the parties almost never get around to completing these discoveries on time. Further, there are delays in obtaining medical examinations due to the Canadian medical system’s shortage of doctors.

Thus, while less work is performed, the litigation often costs more to perform. Perhaps it is the delays and costs of litigation, but in Canada, virtually all civil cases are resolved short of trial, usually at mediation.  This includes product liability cases that would normally be tried in the United States.

Typically, Canadian juries are more conservative and, remember, whether in settlement or verdict, the losing defendant must pay attorney fees.

In short, there are some advantages to the Canadian system.  You will be required to do far less work to prepare for discovery, and experts will never be deposed.  On the other hand, trial by ambush is always a difficult concept to get your hands around, and, even though far less work is performed, the attorney fees are routinely far higher than in most American jurisdictions.

The Canadian system has advantages, and disadvantages, but most of all, it is just – different.