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communication-errors

Representing a public interest group can be risky for lawyers. Such a group may, for example, be the target of a SLAPP (strategic litigation against public policy) lawsuit, with enormous costs consequences that its members did not anticipate.

Lawyers are sometimes even named as defendants in such lawsuits. In one case, a lawyer who represented a municipality also acted for ratepayers who opposed a real estate development. They authorized the lawyer to make an offer to buy a property that the developer was trying to acquire. The property owner used this offer to leverage more money out of the developer, which wound up paying substantially more to purchase the property than it had initially offered. The developer sued the municipality and the lawyer, among others, alleging that he was part of a conspiracy to injure the developer’s economic interests. The lawyer had to stop acting for the municipality.

Lawyers who act for public interest groups may find themselves the targets of costs applications. In Kimvar Enterprises Inc. v. Nextnine Limited (Jan. 30, 2009), a developer sought to have the Ontario Municipal Board award costs of about $3.2 million jointly and severally against a residents’ association and its lawyers after an eight-year battle over plans to build a marina on Lake Simcoe.

The developer claimed that the association and its lawyers had unnecessarily extended the length, complexity and expense of OMB hearings. The board dismissed the application, stating “costs should never be used as a threat or a reason to dissuade public participation.”

A public interest group may look on its lawyer as a knight on a white charger, but when things go wrong, the group may quickly turn on the lawyer. Scattering for cover, the group’s members may point fingers at the lawyer, saying “had you properly advised us, we wouldn’t have tilted at this particular windmill.”

To protect themselves, lawyers should obtain clear written instructions from the client before taking any major steps. They should not encourage false hopes and unrealistically high expectations. They should warn clients in writing about the potential risk of adverse cost awards and SLAPP suits. They might suggest the group confirm that it has insurance that would respond to such a claim. If the group plans to issue a public statement, the lawyer should consider consulting an expert in defamation law. The prudent lawyer will want to document any advice given.

Lawyers should also clearly establish at the outset who is actually retaining and instructing them. Does the person who is giving instructions have authority to do so? Is the public interest group a corporation or association? Are there bylaws? Is there some kind of structure – or is the group just an amorphous ad hoc committee?

As in other areas of practice, excess insurance is a valuable risk management tool for lawyers who represent public interest groups.