January 03, 2005
To echo the hackneyed real estate maxim about location, the top three legal trends for 2005 are likely to be litigation, litigation, litigation—driven by the movement to improve corporate governance.
Ontario in particular is expected early in 2005 to enact long-awaited amendments to its Securities Act that will make it easier for shareholders to launch civil lawsuits against public companies for errors and omissions that affect stock prices. Adding to that will be a more vigorous emphasis on the policing of public markets, says Peter Jewett, citing as an example the SEC in the United States, which has taken a forceful lead in pursuing corporate laggards in the wake of the Enron and WorldCom scandals.
“My perception is that our securities regulators here have enforcement very high on their agenda,” says Peter, adding that the federal government recently created several new RCMP units to combat white-collar crime. “It’s been very active this year and I think that’s likely to increase going forward.” He further adds that at Torys, several senior lawyers are now working “virtually full-time” advising directors and officers of client companies on best practices for corporate governance.
U.S.-style class-action lawsuits aimed at financial mismanagement and at defective or dangerous products will also fuel the litigation trend this year. Says Peter: “Plaintiffs’ lawyers here are kind of learning how to use class action as a weapon.”