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Tag: Herman v. Ian Sisett Law Corporation

Hiring Multiple Lawyers Means Paying Multiple Lawyers

As previously discussed, if you are unhappy with your representation in an ICBC claim and are considering changing lawyers a key consideration to take into account is the amount of legal fees you will need to pay.  Hiring multiple lawyers typically means paying multiple lawyers.  This was demonstrated in reasons for judgement released today by the BC Supreme Court, Vancouver Registry.
In today’s case (Herman v. Ian Sisett Law Corporation) the Plaintiff was injured in a 2004 motor vehicle collision.  She hired the Defendant law firm to represent her.  She did so on a contingency basis and the contract contained some of the typical provisions dealing with fees in the event the relationship terminated prior to settlement.
In the course of representation a conflict of interest became apparent and the lawyer could no longer represent the Plaintiff.  She hired a second lawfirm who gave an undertaking to protect the fee of the first firm.  The Plaintiff then changed lawyers again hiring a third firm.   The third firm gave no undertaking to protect the account of the first firm.
Ultimately the claim settled while the third firm represented the plaintiff and she paid their account.  The first firm then sent the client a final account of $62,500 for services rendered.   The parties could not agree on payment and the first lawyer brought an application for the third lawyer to produce their full file.  Mr. Justice Burnyeat found that this was an appropriate order to make to help determine a fair amount to be paid to the first lawyer.  In doing so the Court provided the following reasons:

[18] Here, there was no undertaking provided by Mr. Gordon that the fees of Sisett would be protected.  In that regard, the only undertaking to Sisett came from Becker Mathers.  Even though there was no such undertaking available to Sisett, I am satisfied that it would only be possible for Sisett to set a statement of account which was reasonable if the total amount of the settlement, any contingency fee arrangement in effect, and an outline of what work had been undertaken by Mr. Gordon was available.

[19] I am satisfied that this approach is in accordance with the decision in McQuarrie, Hunter v. Lord Estate (1983) 41 B.C.L.R. 123 (C.A.) where the trial judge ordered the Defendants to pay to the original firm the sum calculated on a quantum meruit basis immediately after taxation and where the Defendants appealed the ruling of the trial judge.  The question which was before the Court was described as follows:

The essential point at issue before us, therefore, is whether a solicitor who has been discharged without cause from a contingency fee contract is entitled to recover his fees on a quantum meruit basis prior to the conclusion of the action in which he was originally retained (at para. 6).

The question then arises: What compensation, if any, is the discharged solicitor entitled to, and at what time? (at para. 13).

[20] The Court concluded that the first firm would have to wait until after the disposition of the action.  On behalf of the Court, Nemetz C.J.B.C. stated in this regard:

While an obligation to pay arises on discharge, the client and solicitor await the completion of the lawsuit, and the result obtained becomes a factor in determining the value of the services of the original solicitor.  On this approach, no money is due until the value of the services has been determined.

I prefer this approach because of the historic recognition of the solicitor-client relationship as a very special one.  It is a relationship based on confidence and trust.  The dignity and integrity of the legal profession demand that the interests of the client be fully protected.  The relationship is such that the client is justified in seeking to dissolve it whenever he ceases to have absolute confidence in his solicitor.  The fact that the solicitor has rendered valuable services under his employment, or that the client is indebted to him for these services does not deprive the client of this right.  If, however, the client were to become liable to pay the reasonable fees of the solicitor at the time of discharging him, the client would be forced to choose between continuing the employment of a solicitor in whom he has lost faith or, in some cases, discontinuing his action.  This would defeat the underlying rationale of contingency fees.  In addition, if responsibility to pay reasonable fees were to accrue immediately upon discharge and the subsequent damage award to the client were substantially less than that anticipated, a financial disaster for the client may occur.  The risk of success or failure would have been shifted entirely to the shoulders of the client.  It is more consistent with the special relation between solicitor and client and the underlying rationale of a contingency fee agreement to have both parties await the happening of the contingency.  The interests of both parties can then be balanced in light of the outcome of the litigation.

Another reason for preferring this approach is that it does not require the taxing officer either, on the one hand, to tax the solicitor’s account as if the contingency was irrelevant, or, on the other hand, to hear the evidence that would be led in the principal action so that he can anticipate the contingency and assess the fee that the solicitor would have received if he had not been discharged.

Knowing the amount of the award, determined either by the Court or by settlement, the Registrar will be able to settle the amount of the bill of the contracting solicitor in the light of the recovery obtained by the client.  If nothing is recovered or the amount recovered is a modest one, the Registrar may nevertheless award the contracting solicitor some amount for his work.  If, on the other hand, a client, who sees success coming up, discharges his solicitor on the eve of the trial, the lack of any risk remaining in the contingency will be of very great significance.

(at paras. 13-16)

[21] In order to prepare a fair and reasonable bill on a quantum meruit basis, Sisett was entitled to have the information that it had requested:  the details of the settlement; the details of the contingency arrangement that was in effect between Ms. Herman and Slater Vecchio; the time records maintained by Slater Vecchio; any detailed account provided by Slater Vecchio; the fees and disbursements charged by Slater Vecchio; and any fees and disbursements paid to Becker Mathers for the work that they had undertaken.