Class counsel fees in Québec: No more open bar

While class actions continue to play a significant role in Québec’s judicial landscape, courts are increasingly scrutinizing fee agreements submitted by plaintiffs’ lawyers, placing greater importance on fairness and proportionality. This blog explores the Quebec courts’ increasingly interventionist approach to class counsel fees, as well as the key drivers that appear to underpin this recent trend and the implications for class action defendants.

Background

Since 2017, the Superior Court of Québec has consistently noted a “certain inflation in fee agreements” proposed by plaintiffs’ lawyers involved in class actions. This observation marked the beginning of a series of judicial decisions ordering the reduction of such fees, a trend that has persisted and intensified, particularly over the past two years. Indeed, since 2021, an increasing number of judges have asserted their role in ensuring the reasonableness of plaintiff’s counsel fees. The key factors taken into account by the courts are detailed below.

Low risk and limited involvement

The “risk premium” is a financial compensation that lawyers can seek for bringing a class action with a high level of risk, considering various factors such as the complexity of the case, the level of expertise required, the resources invested, and the likelihood of success. Judges ensure that this premium – usually a multiplier applied to docketed time – is justified and proportionate to the actual risk of the case. In the recent Clercs de Saint-Viateur^[1] case, the Québec Court of Appeal determined that, in the face of “average difficulty and risk”, the claimed fees included an overly high risk premium, which was subsequently reduced. Similarly, in the Navistar^[2] case, the Superior Court found that the modest volume of work performed justified lower fees, given that the case was a copycat suit of proceedings initiated in the United States.

The limited involvement of class counsel was also cited as a reason for fee reduction. In a recent case, the Superior Court lowered the proposed fees as the lawyers’ efforts had "essentially focused on the authorization stage," not justifying an unusually high 30% rate. In a similar context, the judge in Dallaire c. Kobe Steel Ltd.^[3] reduced the fees claimed, partly because most of the necessary work had been carried out in a parallel action initiated in British Columbia and considering that, in this parallel action, the British Columbia judge had found that the fees had to be reduced in light of the stage at which the litigation was settled and the result obtained.

Take-up rate

In the recent Ticketmaster^[4] case, the Superior Court emphasized plaintiff’s lawyers’ responsibility to ensure that their fees remain proportionate, especially when the class action does not elicit a “significant response” by class members. Furthermore, in the Sunwing^[5] case, the same court adopted an innovative approach by withholding half of the lawyers' extrajudicial fees, tying the remainder to a certain threshold of class member claims^[6].

Fees considered excessive or disproportionate to the benefits achieved by the class action further justify review and reduction.

Conclusion

In summary, recent decisions highlight the growing imperative for class counsel to ensure transparency, justification, and reasonableness in the amounts they claim when setting their fees, and for defendants entering into settlements to ensure such settlements are not conditional upon Court approval of class counsel fees. This recent trend is a further demonstration of Québec Courts’ objective of preserving the integrity of the procedural vehicle of class actions and maintaining a balanced and transparent justice system for the benefit of all stakeholders.