Earlier this year, Justice Perell approved a replacement class representative in Sondhi v. Deloitte Management Services LP on a motion for what has already been an exhausting certification process in a class proceeding.
The matter involves a class, who although technically are lawyers, have not been considered as such by their employer or the parties procuring their services. These members typically consist of younger lawyers and new graduates who have been unable to otherwise find employment as lawyers in a traditional context.
I do know many of these young lawyers. I know that they are bright and talented, and would likely make excellent lawyers in a traditional context. But they are just one of the many casualties of the changing legal market, where downward pressures for cost, and increase ability to make demands on otherwise unemployed or underemployed labour supplies.
There’s nothing particularly nefarious about what the defendant was doing here, which was taking advantage of the fact that there has been unemployment in the Canadian legal market for the past decade, particularly pronounced among young lawyers. If anything, they are providing them with opportunity, and some limited experience, which may otherwise help them in their careers down the road.
The majority of these young lawyers are engaged in document review. Not particularly glamorous work, but not unknown to young associates and articling students in large firms across the country. What some firms have realized is that they can outsource this less desirable work to a third-party, and potentially save money in doing so.
Several firms have experimented with conducting this outsourcing overseas, particularly in common law jurisdictions such as India, where the savings are even more significant. Repatriating this work to Canada has been possible given the changes in our domestic job market, and also based on the inevitably superior product often provided by lawyers who are educated and trained in this jurisdiction, with English as their first language.
What gives rise to the class action is that these individuals are characterized as independent contractors, and thereby benefits under the Employment Standards Act such as vacation pay, public holiday pay, overtime, and compensation for improper remittances. Although lawyers would fall under the exclusions for overtime and some of the other protections under the Act, this arrangement was apparently more financially beneficial for the employer because they could provide compensation well below the going rates for junior associates in law firms.
My understanding is that they are also required to obtain their own insurance and maintain good standing with the law society, even though their employer claims they are not providing legal services. This has understandably given rise to critiques that this approach has really been an attempt to circumvent the regulator, apparently with much success to date.
Justice Belobaba described the case in the following terms in the replacement representative ruling last year,
 Like many unemployed lawyers in the Toronto market who are between jobs or pursuing other careers, Shireen Sondhi earned extra money as a document reviewer. As already noted, document reviewers are hired by a document review company as independent contractors to work on discrete projects. They decide which projects to work on and they work on their own schedule, docketing their time and earning about or just under $50 per hour.
He did not find the proposed representative plaintiff appropriate because she had never worked overtime, one of the key claims for the class, and had abandoned the practice of law entirely, moving to British Columbia. She had effectively “opted out” of working in the profession entirely, one of the unfortunate outcomes we already see for far too many young lawyers.
However, these types of facts around a representative plaintiff are rather rare in class proceedings, and the plaintiffs were provided an opportunity for a replacement plaintiff, which was reviewed by the judgment released this year.
What makes this more recent motion interesting is that the defendants attempted to disqualify the new representative plaintiff on the basis of a conflict of interest, which is a basis for disqualification under s. 5(1)(e) of the Class Proceedings Act, 1992. The basis for the alleged conflict was that it appeared that the majority of the proposed Class Members do not even want to be determined to be employees. Doing so would likely make the consulting business non-viable, likely leading to a termination of their relationship and complete unemployment for this proposed class.
To put it more bluntly, some young lawyers may be so desperate for work, which is not surprising given rising tuition, that they would rather opt out of protections that all employees normally have than to face the prospect of being unemployed. Those who think that lawyers cannot be a vulnerable group could look to this case as evidence to the contrary.
Of course class members can opt out of an action or a settlement, thereby preserving their right to pursue an action independently. However, the Defendants claimed that the proposed class here could not opt out because s. 5(1) of the Employment Standards Act, 2000 forbids any contract or waiver that would abridge an employee’s rights under the Act.
 Deloitte’s argument that the putative Class Members’ rights to opt out or to not opt into a settlement are illusory, however, is mistaken. The fallacy of the argument follows from the legal fact that the determination of the common issues is only binding on the class members who do not opt out.
 Under the Class Proceedings Act, 1992, there are no positive or negative issue estoppels with respect to class members that opt out. A person who has opted out is not bound by the judgment on the common issues, and a person who has opted out cannot claim the benefit of a judgment against the class action defendant. In the case at bar, both Deloitte and the putative Class Members that opt out are lawfully entitled to carry on as independent contractors.
 In the case at bar, for the class members that opt out, there will be no determination whether or not they are employees, which is a prerequisite for s. 5(1) of the Employment Standards Act, 2000, to operate. There will be no declaration of the status of the persons who opt out, be that status employee or independent contractor. Thus, the premise of Deloitte’s conflict argument is false, and this argument is a not a reason to disqualify Mr. Phillips. The general rule is that it is not a conflict for the representative plaintiff that some of the class members may not desire to pursue the claim applies.
That doesn’t mean that if a large number of young lawyers opt out of the action it entirely irrelevant. Although a large number of opt outs is not a basis for decertifying a class action under s. 10 of the Class Proceedings Act, 1992, Justice Perell clarified that it may reveal that the class action no longer satisfies certification criteria. More importantly, the potential for a high level of opt outs is not a reason for denying the certification of a class action in the first place.
The costs decision for this motion, released last week, awarded the plaintiffs a whopping $353,790.88.
Certification of this action under the new representative plaintiff means that the business model of using consultants to conduct routine work historically provided to young associates and articling students may no longer be financially viable. Instead, we may see the growth of what some other firms in Canada have already started experimenting with, in hiring law graduates to do this type of work in-house, but not as lawyers. They have no access to the partnership track or equity in the firm, typically are paid quite a bit less than associates of the same year of call, and sometimes are not treated or considered as comparable lawyers to the rest of the firm.
Those lawyers may still just be happy to be employed. The concern arises where document review lawyers disproportionately consist of racialized young lawyers, or female lawyers who demand greater constraints on work hours. Even though work-life balance, and family care needs, should be an issue shared by both genders, we still find that women – even female lawyers – bear this burden unequally in their private lives.
Creative employment relationships themselves have a limited expiry date for practice management considerations of the future, as these routine tasks will likely be the first targeted by technology and automation. Perhaps those underemployed young lawyers should invest in those innovative strategies in the interim, preparing themselves for the the changes to come and positioning themselves to be leaders in these areas.
With enough alternatives, young lawyers may opt out of the traditional big firm model entirely.