Law firm owes $35M to car dealers because it also represented government in GM talks
A well-known Bay Street law firm has been ordered to pay 45 million in Canadian dollars to 181 former car dealers it represented in restructuring negotiations with General Motors of Canada Ltd.
Toronto-based Cassels Brock & Blackwell was ordered by an Ontario judge to pay the judgment—which amounts to about $35 million in U.S. dollars at the current exchange rate—because the firm also represented the federal government during 2009 talks with then-struggling GM, which was seeking a government bailout, according to the Canadian Press and the Financial Post. The dealers said they were ambushed by a take-it-or-leave-it GM buyout offer that they were given very little time to ponder.
Judge Thomas McEwen of the Ontario Superior Court of Justice said the dual representation was a conflict of interest that breached the firm’s contract with and fiduciary duty to the Canadian Automobile Dealers Association, the Globe and Mail reports.
“Cassels acted irresponsibly and unprofessionally by failing to have an effective conflicts checking system in place—that is one which actually leads to lawyers discussing and resolving potential conflicts,” the judge said in his written opinion. “Cassels is liable for its failure to heed the alarm bells that were audible, despite the deficiencies of its conflicts checking system.”
However, the damages awarded were little more than one-tenth of what the former dealers had sought, and their class action against GM itself was dismissed, the newspaper notes.
Earlier Globe and Mail and Legal Feeds articles give more details about the trial.
The firm said no conflict existed, arguing that its role in advising an automobile dealers steering committee was peripheral to the dealers’ representation by their own legal counsel. It also said the dealers had not been harmed by the firm’s work.
Related coverage:
Globe and Mail: “Law firm Cassels Brock sues 150 lawyers”
Law Times: “Cassels Brock’s counterclaim raises eyebrows”
