Procedural feat at Nortel trial

Complex and unique logistics for the joint proceedings in the Nortel Networks Corp. bankruptcy case are in the works as the Ontario Superior Court gets set to hold its first simultaneous trial with a U.S. counterpart.

The May 12 trial will take place in Toronto and Wilmington, Del., with a live streaming feature to allow the two proceedings to go ahead simultaneously. The procedural feat will involve double the legal counsel, two judges sitting in both cities, and witness testimony from both Toronto and Wilmington.

For the court reporters in charge of capturing it all, the upcoming proceedings are both exciting and challenging. In Toronto, a team from Neeson & Associates Court Reporting and Captioning Inc. will type up everything said in Courtroom 8-1 at 361 University Ave. as well as in a courtroom in Wilmington through the help of audio and video streaming.

In Wilmington, another team of court reporters will do the same and the two groups will work together to fill in whatever each is missing, says Kim Neeson of Neeson & Associates.

“It’s never been done before,” says Neeson.

“You can develop all the protocol in the world but now you got to get in the trenches and really see how this works.

“We’ve got a lot of pressure on us to get those certified transcripts out that same night. But you’ve got the added challenge of a different jurisdiction, so it’s not like I can tap somebody at lunch and say, ‘What’s that case you referred to?’ I’ll have to rely on my counterparts in Delaware.”

Meanwhile, counsel will be able to speak to their colleges across the border via a private chat during the proceedings and Superior Court Justice Frank Newbould, the new judge on the case, will be chatting online with his American counterpart during the trial as well, says Neeson.

Last year, Delaware bankruptcy Judge Kevin Gross and Ontario Superior Court Justice Geoffrey Morawetz agreed a simultaneous proceeding would be the best way to arrive at a decision on how to divide the dwindling cash reserves from the liquidation of Nortel despite concerns from some quarters that a two-way proceeding might be chaotic.

Linc Rogers, a partner at Blake Cassels & Graydon LLP, says the two judges were right.

“The technology is there. . . . It’s going to be stable, reliable, and efficient,” he says.

Even if there are minor glitches, it’s unlikely they’ll get in the way of conducting a smooth trial, he adds. “It’s not going to lead to chaos or anarchy of any sort; it can be entirely manageable.”

At the helm of both courtrooms will be senior judges who are capable and have lots of experience, Rogers adds.

“That’s the most important thing: having leadership and guidance in which all the stakeholders can have confidence. And the technology is really a secondary issue and it will work to serve the greatest goals because the counsel and the judges know what they’re doing.”

The technology at the heart of the proceeding is Live Deposition, says Neeson, whose company has previously covered live-streamed hearings.

Following the decision to hold a simultaneous trial in the Nortel case, some observers said the arrangement might prove problematic in case the two judges decide differently with no appeal court to bind them.

But that’s more of a substantive concern, notes Rogers. Despite the risk of contradictory decisions, he expects the judges will work to arrive at the same conclusion.

There has been added judicial pressure on counsel lately to embrace technology, particularly electronic trials. Superior Court Justice David Brown recently warned the courts will become “irrelevant museum pieces” if they continue to lag on technology.

In Bank of Montreal v. Faibish, Brown said he had asked counsel to conduct an electronic trial but noted “some counsel (I will not indicate whom) communicated a desire to work in paper.”

“Why should we be able to expect that treating courts like some kind of fossilized Jurassic Park will enable them to continue to provide a most needed service to the public in a way the public respects?” Brown wrote in his April 4 case conference memorandum.

“How many wakeup calls do the legal profession and the court system need before both look around and discover that they have become irrelevant museum pieces?”

Rogers agrees on the need to embrace technology. He feels the courts should be more willing to work creatively with technology even if it’s not always in this specific format. “Embracing technology is something we should do more of in the future in order to provide more efficient access to courts and service,” says Rogers.

In the Nortel case, the alternative to the joint proceeding would have been an out-of-court arbitration hearing. Several mediation efforts aimed at resolving the dispute over what’s owing to Nortel creditors around the world have already failed. In the meantime, the pot of cash available has shrunk as professional fees mounted. Mississauga, Ont., independent financial analyst Diane Urquhart says the latest disclosures indicate payments of $1.3 billion in professional fees since the telecommunications giant declared bankruptcy in 2009.

In a matter separate from the May 12 proceedings, Nortel employees on long-term disability have launched a class action against two administrators of their health funds. They’re seeking $60 million in punitive damages for alleged breach of trust. None of the allegations have been proven in court.

Urquhart says that according to the 104th report released in March by court monitor Ernst & Young LLP, the professional fees in the Nortel bankruptcy for the Canadian unit alone will total $469 million by October.

For more, see "Nortel workers decry fees paid to lawyers."

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