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CCCA62_048.qxd:CCCA_V1No2_Col-Litigat-V1.qxd 09/14/2007 04:08 PM Page 48 Litigation Rapid response Your first reaction to a class action filing may be the most important. hen a company is hit with a class lawyers, coincident with or even before carefully documented; the plaintiffs’ W action,the eyes of countless observers issuing their Statement of Claim, may lawyers will critically evaluate both the — industry analysts, media representatives, launch a media campaign to curry public manner and results of the company’s doc- the investing public, suppliers, competitors, attention and support for their case.You ument search and production efforts. customers, and of course, shareholders and need to be ready to respond with an employees — turn to see the corporate reac- effective and consistent message. 4. Retain outside counsel. tion. In-house counsel must demonstrate to Internally, you must also be prepared to It is critical to identify and retain the right all these observers that the company is acting manage the flow of information to employ- outside counsel immediately. Give careful swiftly,decisively and appropriately. ees about the lawsuit, and (of course) to the consideration to the breadth of expertise To launch the necessary factual investi- officers and directors of the company.Finally, and resources that a law firm can bring to gation and legal assessment of the proposed together with external counsel, you will your defence. Outside counsel not only class claim,while simultaneously managing need to address reporting requirements and will provide advice about the substance of public and shareholder interest in the insurance issues arising from the possible the claim and the appropriate defences,but action, corporate counsel must focus on exposure represented by the new litigation. also will be able to help you think strategi- four main tasks. cally in a number of other important areas: 3. Implement your document • analyzing the risks and benefits of early set- 1. Form an in-house team. retention policy. tlement initiatives, or preliminary motions Create an internal class action team, with As with all litigation claims,your company, to immediately attack the plaintiffs’case; tasks delegated to each team member.If the as the defendant, has a general obligation, • managing the tempo of the litigation; case is especially complex or all-consuming, subject to considerations of privilege, to • streamlining efforts and co-coordinating your internal team may need to be supple- produce all documents that have a “sem- responses if the litigation is proceeding in mented with additional internal counsel on blance of relevance” to the allegations multiple jurisdictions (national or inter- contract, or seconded outside counsel. made in the lawsuit. A court can impose national); The key is to have the appropriate peo- severe penalties on a company facing litiga- • advising on handling media and internal ple in place to effectively manage the myr- tion that fails to secure and preserve docu- communications; and iad issues arising from the new lawsuit, ments relevant to the action. • addressing stakeholders such as share- while also minimizing the impact of the Also, conducting an early and detailed holders and the Board of Directors. litigation on the company’s day-to-day document review will bring the strengths In addition, forward-thinking lead business operations. and weaknesses of your company’s position counsel can help internal counsel search into clear relief. The longer it takes the for and identify related issues that could 2. Develop a communications strategy. company to conclude its investigation, and lead to other litigation (including future Immediately consider both your internal and the more limited its ability to do so class actions) and to develop appropriate external audiences. To respond to outside because of missing documents, the more risk containment policies. enquiries (or to proactively communicate difficult it is to develop effective short- and your response), you must identify a commu- long-term litigation strategies. Dana M. Peebles is a partner in theToronto nications point person right away, either in- Accordingly, if a document retention office of McCarthy Tétrault LLP. He carries house or by retaining external advisers. policy is not already in place, immediately on a civil litigation practice with an emphasis A class action tends to receive more direct all employees involved in the matter on corporate-commercial,class action and secu- media attention than an ordinary claim, to identify, segregate, secure and preserve rities litigation. The article is adapted from a and requires sensitive and skilled han- their relevant documents in every media. recent McCarthy Tétrault client newsletter dling. Indeed, the plaintiffs and their Ensure that each step in this process is discussing the defence of class actions. 48 CCCA Canadian Corporate Counsel Association FALL 2007