Jump to content
pzabbythesecond

shareholder suits - are firms divided by who they represent, as in PI/Insurance defence?

Recommended Posts

Hi all,

in shareholder disputes - let's say derivative actions, etc etc - are firms generally divided based on who they represent? I.e some firms represent the corporations they defend in these suits, and some firms represent shareholders (either individual, or more likely institutional)? 

Sorry if this is a dumb question and/or if I should be able to find this information out on my own. At passing, I've only found firms to speak to doing this kind of work, not any specific side they represent. I'd gather this means they represent either, but I didn't want to assume..

If there are firms representing one side vs another, how can you go about researching this without having an in at the firm or asking someone at the firm to a coffee?

Share this post


Link to post
Share on other sites
2 minutes ago, Rearden said:

My firm reps both.

Is there a way of knowing which firms rep which/both, outside of asking lawyers at the firm or who know about the firm?

Beyond that, is this an area of law that boutiques (not lenszner, etc etc, but smaller firms) practise?

Share this post


Link to post
Share on other sites
2 hours ago, pzabbythesecond said:

Is there a way of knowing which firms rep which/both, outside of asking lawyers at the firm or who know about the firm?

Beyond that, is this an area of law that boutiques (not lenszner, etc etc, but smaller firms) practise?

I was under the impression that derivative actions aren’t common in Canada because of the oppression remedy being somewhat all encompassing.

Share this post


Link to post
Share on other sites
6 minutes ago, FingersCr0ssed said:

I was under the impression that derivative actions aren’t common in Canada because of the oppression remedy being somewhat all encompassing.

Sure, that too. That's why I said shareholder suits :)

Share this post


Link to post
Share on other sites

I don't think there's a divide like the ideological divide in labour/employment work. But there is probably a practical conflicts divide.

  • Like 1
  • Thanks 1

Share this post


Link to post
Share on other sites
19 minutes ago, pzabbythesecond said:

Sure, that too. That's why I said shareholder suits :)

Doesn’t your question base itself off of which ideological side a firm tends to represent if any? If there aren’t sides to represent then there is no question to consider.

edit - I guess there could be issues where a firm generally acts on behalf of a corporation (the board/ executives) so wouldn’t simultaneously represent an oppressed shareholder of the same corporation. Don’t think this would result in a firm representing one faction or the other. I’ll let commercial lawyers chime in on this one though.

Edited by FingersCr0ssed

Share this post


Link to post
Share on other sites
3 minutes ago, FingersCr0ssed said:

Doesn’t your question base itself off of which ideological side a firm tends to represent if any? If there aren’t sides to represent then there is no question to consider.

I'm just trying to see if there is a divide or not, as there are in other areas, and if so - how to go about finding out what firm does what.

Share this post


Link to post
Share on other sites
11 hours ago, pzabbythesecond said:

I'm just trying to see if there is a divide or not, as there are in other areas, and if so - how to go about finding out what firm does what.

It's a fairly small field in Canada as far as I can tell. There are a smattering of securities boutiques (Groia and Co and Crawley Mackewn Bush come to mind) but the nature of the market is such that it's typically bigger firms. 

  • Thanks 1

Share this post


Link to post
Share on other sites
11 hours ago, pzabbythesecond said:

I'm just trying to see if there is a divide or not, as there are in other areas, and if so - how to go about finding out what firm does what.

No divide.

Edit: To be more helpful, consider the fact that companies can be both issuers and shareholders. See: Estee Lauder - Deciem. https://www.forbes.com/sites/pamdanziger/2018/10/12/estee-lauder-files-suit-to-rid-deciem-of-its-founder-brandon-truaxe/#1274fcf85e88

If you're representing a company, you're representing a company.

Edited by testcase
  • Thanks 1

Share this post


Link to post
Share on other sites

In terms of how to know, I would take a look at firm websites. You could also try looking at public filings (on SEDAR or DisclosureNet if you have access to it) but my sense is that a lot of this stuff goes on behind the scenes.

In terms of whether boutiques practise in this area, in my (limited) experience, this type of work seems to be done mostly by the larger, full-service firms. There are a few reasons why.

To start, this work is almost always high stakes (usually of the bet-the-company variety) and fast-paced. If you're an officer/director/shareholder involved in such a situation, you're going to -- because you can't afford not to -- turn to the firms that have the most experience in these matters, and those are typically the big, full-service firms.

But beyond that, these situations often (if not always) require expertise from various practice areas, and a full-service firm simply has resources that a boutique doesn't. For example, on a typical "proxy fight" my firm would involve at least two corporate lawyers (a partner and an associate or two) and at least one litigator. We might also have to draw on our research lawyers (if a complex question of law comes up that we can't trust an articling or summer student with, say), employment lawyers (e.g., if the dissident director/shareholder is the CFO, can we fire him/her? What happens if we do that under his/her employment contract?), etc.

The "big firm intimidation factor", if there is such a thing, might also come into play. If you're a dissident shareholder, for instance, you're probably going to be more "intimidated" (and ideally more likely to settle/fuck off) by Morgans than by Boutique ABC. Granted, that's probably a very minor, if not completely negligible factor in the grand scheme of things, but it's something that a client might consider nonetheless.

Share this post


Link to post
Share on other sites

I did a quick google search and found several smaller firms who claim their practise "shareholder disputes".

Is that term broader than what I referred to? Or are those firms doing this work?

Share this post


Link to post
Share on other sites

Shareholder litigation occurs in small businesses too, and when that happens it's often dealt with by smaller firms (my little firm being one such). 

  • Thanks 1

Share this post


Link to post
Share on other sites

I'm not really sure why these questions are generating so much discussion. The answers are simple.

No, there's no such divide in the context of shareholder disputes/derivative actions. No firms specialize in acting for the corporation as opposed to shareholder(s). It is not comparable to the management/labour divide, or the insurance/PI divide.

Yes, boutiques have practices including shareholder disputes and derivative actions. It certainly is not limited to large / full-service firms. The scale of the dispute may vary, but all shapes and sizes of companies have shareholder issues, and all manner of firms act in them.

  • Like 1
  • Thanks 1

Share this post


Link to post
Share on other sites
13 hours ago, FingersCr0ssed said:

I was under the impression that derivative actions aren’t common in Canada because of the oppression remedy being somewhat all encompassing.

No, derivative actions are quite common. They're often brought in conjunction with an oppression claim, but they still happen. Why would you limit your routes to a remedy?

Say I'm a 50% shareholder of a company, and the other 50% shareholder has been stealing company funds. I may bring an oppression claim, seeking damages amounting to half of the stolen funds (i.e. the stolen funds are the company's funds, to which I have a 50% entitlement). The company would also have a claim, e.g. breach of fiduciary duty, which would need to be pursued through a derivative action. If the other 50% shareholder had assistance from someone in stealing the funds, that derivative action might also include a claim for knowing assistance in breach of fiduciary duty, which could be more difficult to accomplish solely through an oppression claim. Aside from offering another route to remedy, I may get some kind of strategic advantage from being able to add additional parties/claims. Derivative actions come up all the time.

  • Thanks 1

Share this post


Link to post
Share on other sites
1 minute ago, barelylegal said:

No, derivative actions are quite common. They're often brought in conjunction with an oppression claim, but they still happen. Why would you limit your routes to a remedy?

Say I'm a 50% shareholder of a company, and the other 50% shareholder has been stealing company funds. I may bring an oppression claim, seeking damages amounting to half of the stolen funds (i.e. the stolen funds are the company's funds, to which I have a 50% entitlement). The company would also have a claim, e.g. breach of fiduciary duty, which would need to be pursued through a derivative action. If the other 50% shareholder had assistance from someone in stealing the funds, that derivative action might also include a claim for knowing assistance in breach of fiduciary duty, which could be more difficult to accomplish solely through an oppression claim. Aside from offering another route to remedy, I may get some kind of strategic advantage from being able to add additional parties/claims. Derivative actions come up all the time.

Interesting! I stand corrected.

Share this post


Link to post
Share on other sites

There used to be the occasional political issue of taking on activist investors in particular as clients (so not just general shareholder disputes that come up as matter of course) where you represent issuers, especially issuers that have been targets. But that has softened a bit over the years as service provider loyalty has shifted a bit. It's not nearly (and never was) as strong a business or political conflict as representing two major competitors within the same industry however.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...