Joe Groia is feeling beseiged. On an overcast Friday in July, sitting at the battered oak table that dominates his law firm’s boardroom, he ponders whether he has baited the wrong set of bears. Bay Street traffic murmurs through the bay windows as he toys with an after-work glass of Pinot. “I didn’t go quietly or gently into the night,” Groia says, defiantly. “I willingly went into the slaughterhouse because this is an important issue for me and I’m prepared to stand up and fight about it.” The “issue” is a lawyer’s right to be combative in court while defending a client.
At age 56, Groia should be resting on his laurels. He is, after all, Bay Street’s most sought-after securities lawyer, the go-to guy whenever a CEO or corporate executive is accused of white-collar crime. Renowned for his scrappiness and bottomless knowledge of securities law, Groia runs a Toronto-based boutique law firm, Groia & Company. He’s been in the middle of front-page financial scandals including YBM Magnex, Cinar, Hollinger, Philip Services and Portus. Among his current clients are executives of Sextant Strategic Opportunities Hedge Fund, who vaporized about $20 million of investors’ money between 2006 and 2009, and businessman John Lauer, whose conviction for defrauding a PEI high-tech company Groia had overturned. “Joe has a brilliant legal mind,” says Groia’s most famous client, John Felderhof, the former vice-chairman of Bre-X Minerals Ltd., whom Groia got acquitted for insider trading in 2007. “He’s never fazed and knows how to control a trial.”
But in an ironic twist, Groia now finds himself in hot water, his own reputation on the line and his livelihood under grave threat. He faces trouble on two separate fronts.
In August, the Law Society of Upper Canada began hearings into Groia’s conduct during Felderhof’s trial, accusing the lawyer of professional misconduct for behaving in a rude and uncivil fashion. The hearings riveted Canada’s tight-knit corporate legal community, not only because of Groia’s audacity at challenging his profession’s powerful governing body—Groia rejected an offer by the law society to settle the matter—but also because the stakes involved are enormous for all corporate lawyers. “Everyone is aware of the case,” says Jim Douglas, national leader of securities litigation at Borden Ladner Gervais, one of Bay Street’s pre-eminent law firms. “Depending on the findings, it could restrict the ability of counsel to mount as vigorous a defence as a client deserves, especially when their liberty is squarely at risk.”
Groia turned down the law society’s offer because he felt their terms were unfair. This is a gamble: If the law society upholds any of the charges, Groia’s licence to practise could be in jeopardy. It’s costing him $1 million to defend his cause, including the fees to hire the veteran Bay Street barrister Earl Cherniak to make his case. “These hearings are lights-on or lights-off results,” says Groia. “It has already affected my ability to practise in other provinces. …So when I went into this process I knew, it was bet the house.”
The other peril nipping at Groia’s heels stems from his defence of Ronald Weinberg, the former co-CEO of Cinar Corp. This past winter, Weinberg was arrested after disembarking from a plane at Montréal-Trudeau airport and charged by Quebec police with defrauding the Montreal-based animation company. Groia is being sued by Cinar’s new owners, who accuse him of helping Weinberg move money out of Quebec so they couldn’t access it, and with breaking a court injunction that had frozen Weinberg’s bank accounts.
Groia denies any wrongdoing. But he faces damages of up to $500,000 if the case goes against him—and another prospect of a dent in his reputation as the saviour of executives in trouble.
In the cautious, buttoned-down world of Bay Street’s legal fraternity, the tall, cerebral, bearded Groia is a lone wolf. Indeed, Groia feels his current travails would not be lapping around his knees if he worked at one of the so-called Seven Sister corporate law firms that dominate the Street. “I sometimes say to myself that if I was a senior litigation partner at Torys this wouldn’t be happening,” he muses. Those familiar with the legal profession’s power structure don’t disagree with him. “I think Joe’s probably got enemies out there,” says Jim Middlemiss, a Toronto-based legal journalist. “He’s a pretty outspoken guy and sometimes when you don’t have the best of friends and you do something where your flank is exposed, people go after that.”