Higher lawsuit settlements are coming to Canada
When Canadian-based Tim Horton’s franchisees launched two class-action lawsuits against their franchisor, Restaurant Brands International (RBI) they knew they were up against a behemoth. As they fought against RBI over misuse of national advertising funds, the legal fees sky-rocketed, and eventually their association of franchisees fund was not able to continue with the $ 500 million lawsuits. How did the franchisees continue to fight the behemoth? They went galactic. That is, they enlisted a third party, Galactic Litigation Partners, to finance the cost of litigation. With their new, third-party financial arrangement approved by Superior Court of Justice Ontario, the franchise owners eventually received a settlement from RBI, looked forward to a more transparent advertising fund, and inadvertently altered the course of litigation in Canada.
Since the 1990s, third-party litigation funding has raised the stakes in the law courts of Australia, the UK, and more recently in the USA. It’s a new trend in Canada, and, providing the terms are fair and reasonable, Canadian courts have become more flexible with their approval of such arrangements. For example, Galactic’s court-approved funding agreement comfortably covered fees, disbursements, security for costs if needed, and a host of other provisions. In return, the franchisees agreed to pay Galactic 22 to 26 percent of the award/settlement, a percentage range deemed to be reasonable compensation for Galactic’s services.
It’s probable that anyone reading this article has purchased a Double-Double from a local Tim Horton’s that was one of the 1500 Tim Horton’s involved in the class action lawsuits. It’s also probable that anyone reading this article is a business owner themselves. Your business may not be the size of RBI or anything like RBI, but your business can be just as vulnerable to a lawsuit that could now become even more costly.
Litigation lawsuits on the rise in Canada
The expense of third-party financed litigation will translate to higher court settlement and award amounts. We could also see an increase in the number of lawsuits in Canada because the third-party litigation funding industry opens the door for more plaintiffs that otherwise wouldn’t have access to justice due to the lack of money. The litigation landscape is evolving and the costs are rising; two realities that may weigh heavily on your organization’s present and future. However, there are ways to fortify your operations, safeguard your assets, and instill confidence moving forward.
Review company policies, procedures, and guidelines
Every position in any organization, large or small, should adhere to policies, procedures, and guidelines. Policy and procedures training should also be re-current training. When everyone is doing their job to the letter, the risks for lawsuit-causing mistakes are reduced greatly.
Records and documentation
Maintain all records, documents, contracts, and agreements in an organized manner, and back them up. If your organization involves any kind of chain of custody, maintain it to the highest standards. Consider it “Another day, another dollar, and another excellently maintained paper trail.”
Due diligence
Thoroughly checking the references of potential new hires, credit histories of potential new customers, reputations of suppliers, etc. will stop a bad situation from even starting should any red flags appear.
Enough liability insurance coverage
The increasing cost of litigation signals its time to review your insurance coverage with your insurance advisor and make necessary adjustments to your policy to keep up with changing times. When you protect you and your business with commercial liability insurance, you are also protecting your staff, your customers, and even your suppliers.
Safeguarding information technology
Consider cyber risks to businesses. Every size and type of business uses some form of network, cloud technology, and computing systems which are exposing companies to new and emerging cyber threats. Unfortunately, data breaches are on the rise, and the fall-out can be financially devastating, with costs related to first and third parties, branding and reputation damage, legal costs, and notification expenses to your customers. Cyber Insurance protection should never be an afterthought.
Environmental liability insurance: protect your business and our planet
Government regulations and compliance guidelines have become more stringent, so it’s essential to understand and address environmental liability and pollution liability exposures. A wide range of pollution exposures could shut down your business, cause damage to third parties, and expensive and time-consuming cleanup costs. Contractors, take note: coverage is also available for construction contractors who perform work on third party premises where they may be in jeopardy of causing an environmental incident. This is referred to as contractor’s pollution insurance.
Protection against legal liability: Products
Product liability insurance protects your business against legal liability for claims for bodily injury or property damage arising out of those products. It’s designed to help protect your business by ensuring that you don’t have to pay legal, court costs, or compensatory damages.
Commercial General Liability Insurance
Protect your business from financial loss should you be liable for property damage, bodily injury, personal and advertising injury caused by your services, business operations, or your employees. Simply put, a CGL policy casts a wide net of protection for you and your business.
As the intricacies of living life and conducting business become exceedingly more complex with each passing season, commercial liability insurance policies must be as unique as the needs of the business. From the ever-evolving risk assessment perspective, your business will benefit from consulting with Reliance Insurance experts in commercial liability. Because facing a lawsuit funded by a deep-pocketed third party would be a daunting prospect.
Resources
Reliance commercial liability insurance
CBC News: Tim Horton’s proposed settlement
Canadian Lawyer Magazine: Third-party litigation funding win
Superior Court of Justice Ontario: Litigation funding approval
