TELUS v. Mason was an epic shareholder activist dispute, but it also spawned an important BC Court of Appeal business law decision and a unusual story of inter-firm teamwork. For our annual Art of the Case feature, Julius Melnitzer spoke with the key law firm lawyers – both litigators and corporate – who worked on the case, as well as TELUS’s Chief Legal Officer Monique Mercier, to get a behind-the-scenes look at how it all unfolded.
Law firm lawyers and in-house counsel alike will be interested to know why Mercier decided to take the unusual step of retaining three law firms for the proxy fight:
Looking back, Mercier has no regrets that she engaged three law firms. “It was the right thing to do because each law firm added unique value,” she says. “Osler had historically represented TELUS on corporate matters, and it made a lot of sense for them to lead the charge on corporate law and proxy circular matters. Farris provided critical expertise on BC law – the niceties of which are extremely complex – and experience before the BC courts. And Norton Rose brought the hedge fund expertise. It was a great team that worked very well together, always keeping the desired end result in sight.”
The story also has fascinating insights from counsel on both sides about how the “teamwork” dynamic really unfolded, the interplay between the litigators and the corporate lawyers, the aggressive tactics of both Mason and Telus, and the key role of in-house counsel like Mercier:
The process demonstrated that clients need the perspectives of corporate and litigation specialists every step of the way, particularly because proxy battles involve the type of technical corporate arguments that do not typically emerge in the courtroom.
-Walied Soliman, Norton Rose Fulbright Canada LLP
These kinds of cases have extraordinary timelines. A lot of material has to be digested and produced, and important decisions made in very real time. They are also cases where counsel usually have to answer to the highest levels of senior management.
-Geoff Gomery, Nathanson, Schachter & Thompson LLP
Looking back on the case, Geoff Gomery [of Vancouver’s Nathanson, Schachter & Thompson LLP, part of Mason’s legal team] and I were stunned at how many times we were in court, sometimes twice a week and on very little notice. There were even times when we were finalizing the argument an hour before we got into court.
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None of the external counsel on the TELUS team was used to having their strategy challenged, let alone having others outrightly disagree with it.
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From the client’s point of view, it makes sense to bring in firms that have a particular expertise, to keep them focused and to filter the process. If you ask me, that’s the way of the future.
-Robert Anderson, Farris, Vaughan, Wills & Murphy LLP
Mason and its legal team were tough, smart, extremely clever adversaries who put TELUS through the paces by advancing very aggressive positions that were cutting-edge in terms of corporate law.
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There were daily conference calls for at least six months, and TELUS’s internal legal team was in on every one. They participated in every debate among the three law firms representing them, and made all the tough decisions when consensus could not be reached.
-Orestes Pasparakis, Norton Rose Fulbright Canada LLP
This ranks as one of the most intense and challenging files in which I have been involved during more than 20 years of practice. It involved almost daily calls, innumerable late nights, and weekend after weekend of conference calls and drafting.
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It took time for the whole process to come together, but at the end of the day everybody understood the higher purpose, which was for TELUS to come out of this successfully and with the reputation of its directors intact.
-Robert Yalden, Osler, Hoskin & Harcourt LLP
Quite apart from the share structure proposal, I had to familiarize myself with BC company law and the foreign-ownership rules that applied to telecoms. It was a baptism by fire, the first time I had ever been in a fight with a hedge fund.
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What I learned is that strategy in litigation is critical, and that with the right strategy you can win even when other things do not favour you.
Mason has a specialty in dual-class structures and a very strong, principled belief that voting rights to shares have real economic value. They’re not typically an activist fund, but where they see that a principle that they care about is at stake, they get involved.
-Iain Scott, McCarthy Tétrault LLP
Our position in the Court of Appeal was that empty voting was neither the answer nor the real issue. We asked them to deal with the real legal issues and that’s what they did.
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On the fairness hearing, Mason was treated to the same kind of attack it had to endure on the hearing before Savage. In the end, the empty-voting issue percolated throughout [British Columbia Supreme Court Justice Shelley] Fitzpatrick’s judgment.
-Stephen Schachter, Nathanson, Schachter & Thompson LLP
