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Issue 35 | September 2015


This newsletter includes information to help lawyers reduce the likelihood of being sued for malpractice. The material presented is not intended to establish, report, or create the standard of care for lawyers. The articles do not represent a complete analysis of the topics presented, and readers should conduct their own appropriate legal research.
Risk Management in the Retention Process: What Your Role as an “Officer of the Court” Does Not Assure

by Gavin Giles, QC and Sheldon Nathanson

Like it or not, your bare word as an officer of the court will rarely stand you in good stead if your dispute is with a former client over how she or he agreed to compensate you for your services. Unless you have been diligent in the retention risk management process, you may find your taxing officer, Supreme Court Justice or Small Claims Court Adjudicator siding with your former client because of some rather vague legal notions that her or his word is to be favoured over yours. It is thus the point of this article to highlight the unenviable applicable law and underscore retention risk management processes, which all of us should consider implementing universally in our respective practices.

Lord Denning described the reason underlying the rule in Griffiths v. Evans, [1953] 2 All ER 364 at 1369 (Eng. CA) as follows:

The reason is plain. It is because the client is ignorant and the solicitor is, or should be, learned. If the solicitor does not take the precaution of getting a written retainer, he has only himself to thank for being at variance with his client over it and must take the consequences.

Notwithstanding the obvious factual issues arising out of this type of analysis – that the client is always ignorant and the lawyer is often careless in attending to retention details – the “rule” has resulted in something of a strange open season on lawyers whose clients challenge them over bills or billing practices. In fact, many taxing officers apply the “rule” or something akin to it without much by way of underlying analysis. That is a risk we all unfortunately run.

In some cases, however, individual judges and adjudicators have been reluctant to embrace Lord Denning’s treatment of the “rule” and have taken – or have at least urged the taking of – a more holistic approach to the assessment of the evidence arising in any such dispute. That does not mean of course that retention risk management processes can be ignored.

A more careful review of the case law confirms that lawyers have a duty to establish the terms of their fee arrangements with clients in a written retainer (Ross, Barrett and Scott v. Simanic (1997), 163 NSR (2d) 61). This is roughly consistent with the Nova Scotia Barristers’ Society’s Code of Professional Conduct, which confirms in commentary 3 under ch. 3.6-1 that:

A lawyer should provide to the client in writing, … , as much information regarding fees and disbursements, and interest, as is reasonable and practical in the circumstances…[underlining added]

In situations where the lawyer fails to establish a written retainer and there is a conflict in the evidence of the lawyer and the client regarding a term of the retention, the lawyer will face an evidentiary disadvantage – but not a “rule” – in that “weight must be given to the version advanced by the client rather than that of the lawyer” (See: Ross (supra); Andrews et al. v. Two-in-One Gold Mines Limited, [1937] OR 482; Spiteri v. Singleton & Associates, 2009 NSSM 41; Smith v. Ward, 2009 NSSM 65). To overcome this evidentiary disadvantage, the lawyer bears a “special onus” to disprove the client’s version of events regarding the terms of the retainer including those terms regarding fee arrangements (See: Ross and Spiteri (supra)).

In weighing conflicting evidence, the Court should consider factors such as the client’s sophistication, knowledge regarding the basis and measurement of legal fees, and previous experiences with the lawyer in question or lawyers generally (See: Ross (supra)). That does not equate to the application of a “rule”, as the following analysis makes clear. 

The lawyer’s duty to establish the terms of her or his fee arrangements in a written retainer and the court’s practice of preferring the client’s version of the fee arrangements where the lawyer has not fulfilled this duty is longstanding and has been repeatedly recognized by case law. In Re Eccles and Carroll, Solicitors, [1857-1866] 6 UCCP 516, the Court held that:

It is the practice of this court that where a retainer is asserted by a solicitor and denied by the alleged client, to give weight to the denial of the client as against the solicitor. It is very careless of solicitors not to take a written retainer from clients, as they render themselves liable at any moment to have their claim for costs disputed, especially where the party sought to be charged is not the party to the suit; if solicitors are so incautious as not to take a written retainer, they must submit to the loss

Case law offers various rationales this duty and corollary rule. Although Own v. Ord, 3 C & P 139 involved a dispute concerning the person liable to pay the lawyer’s bill of costs under an unwritten retainer, the Court’s reasons remain applicable to disputes concerning fee arrangements. The Court held that the requirement to obtain a written retainer protects clients’ interests by preventing them from being subject to legal fees not reasonably contemplated at the commencement of the retainer. Moreover, it protects the lawyers’ interests by better enabling them to prove the terms of their fee arrangements. The relevant portions provide:

I think it right to state, that every respectable attorney ought, before he brings an action, to take a written direction from his client for commencing it; and he ought to do this both for his own sake and for the sake of his client. It is much better for him, because it gets rid of all difficulty about proving his retainer; and it would also be better for a great many clients, as it would put them on their guard, and prevent them being drawn into law suits without their own express direction. (Cited in Scribner v. Parcells (1890), 20 OR 554 at para 16)

With respect to risk management, the implications of the lawyer’s duty to establish the terms of her or his fee arrangements in a written retainer and the Court’s practice of preferring the client’s version of the fee arrangements where the lawyer has not fulfilled this duty, implies very clearly that lawyers should incorporate all aspects of the fee arrangements with clients in a written retainer.

Moreover, where a lawyer provides a client with an estimated cost of legal services, the lawyer is under an obligation to advise their clients on an ongoing basis regarding how costs are being incurred in relation to the original estimate of legal fees given (See: Atlantic Nurseries Ltd v McInnes Cooper and Robertson (1991), 103 NSR (2d) 381). The Nova Scotia Barristers’ Society’s Code of Professional Conduct confirms this requirement:

A lawyer should confirm with the client in writing the substance of all fee discussions that occur as a matter progresses, and a lawyer may revise an initial estimate of fees and disbursements. (Nova Scotia Barristers Society, Code of Professional Conduct, Halifax: Nova Scotia Barristers' Society, 2012, ch 3.6-1, Commentary [4])

In practical terms, the starting point for any analysis is Ross (supra), where the Court held, with some irony, in favour of the law firm. From the law firm’s perspective, the retainer provided for compensation based on recorded time at standard rates. From the former client’s perspective, the retainer provided for compensation based on a contingency fee. 

Moir J.’s resulting survey of the applicable law is comprehensive and bears close attention:

The controlling law on this issue is the basic law of contract and a special rule. Lawyers have a duty to establish their retainers with clarity and to reduce the contract to writing. A rule has developed because of that duty: where there is no written retainer, and there is a conflict in the evidence of the lawyer and the client as to a term of the retention, weight must be given to the version advanced by the client rather than that of the lawyer.

This is sometimes called a "rule of practice". It is not a rule of contract or of fiduciary obligation by which one party's version of the contract always prevails. The first part of Lord Denning's formulation is wrong. He said ‘...the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it. On the contrary, the ordinary rules of contract apply to a contract for legal services.  The terms are to be found in the ordinary ways: by finding the intention of the parties through their contracting expressions understood in context, or by finding terms through implication according to the law of implied terms. The difference in this class of contract is that the lawyer asserting an unclear, parol retention is under an evidentiary disadvantage on account of his or her failure in duty. The lawyer bears a ‘special onus’.

The ‘rule of practice’ preferring a client's version of an unclear, parol retention was referred to by the Ontario Court of Appeal in these words:

     Other things being equal, weight is to be given to the denial of the client as against a solicitor. I do      not think the rule goes any further than that.

There it was said, as I would here, ‘...the very case of the client tells strongly in favour of the solicitors' understanding of the bargain.’  [underlining added]

Moir J. has thus confirmed that the rule does not mean that the lawyer’s account of the retainer is not to be believed. Rather, it only means that “other things being equal, weight is given to the denial of the client as against the solicitor” (See: Andrews (supra)).

The implication of this evidentiary disadvantage is that in situations where the lawyer seeks to assert the terms of an unclear or an unwritten retainer, they have a “special onus” to disprove the client’s interpretation of the retainer. To do so, the lawyer may rely on ordinary contractual principles: “by finding the intention of the parties through their contracting expressions understood in context or by finding terms through implication according to the law of implied terms” (See: Ross (supra)).

In his reasons, Moir J. also emphasized the client’s sophistication as a business person and significant experience in retaining and paying lawyers. This experience supported the inference that had the client contemplated providing payment for legal services on a contingency fee basis rather than “fees for service based on time expended on behalf of the client”, he would have made such a request in clear terms:

The client understood that the contracted services would command a reasonable fee without contingency, which fee would be governed by the usual factors, with necessary time at standard rates being predominant. I make that finding upon my belief of Mr. Ross as to the initial discussions, my disbelief of Mr. Simanic as to his understanding, and my inference that Mr. Simanic was mindful of the usual compensation when he retained Mr. Ross.

Crucial to understand from a retention risk management perspective, however, is that the client in Ross was an experienced business person who had not only retained lawyers on numerous prior occasions but had retained them most often on the basis of time charges and hourly rates. To the extent that not all clients have that experience, the prudent lawyer should undertake that basic assessment, and if in any doubt, should reduce the retention agreement to writing. 

In Spiteri, the Court also held in favour of the lawyer. The lawyer maintained that he had provided his then client with an estimate of legal costs, but also advised the client of his hourly rate. The client maintained that he had been provided with a fixed fee quote of $1,000.00 if the matter was dealt with outside of Court or $2,500.00 if there was a need for a hearing. The client also acknowledged being provided with a quoted hourly rate.

The issue before the Court was the terms of an unwritten contract for legal services. Adjudicator Casey applied Ross: in the following terms:

In Ross … the Court held that the onus is on the lawyer to establish that the client’s version is mistaken where there is a difference in recollection.

Additionally, Adjudicator Casey interpreted Ross as placing:

... a heavy onus on a lawyer to disprove the client’s version of events where a conflict exists and there is no written retainer

Adjudicator Casey went on to find that the lawyer had discharged this “heavy onus”:

Spiteri was not an unsophisticated consumer of legal services. He understood the concept of a retainer. He understood the cost of legal services. He knew the range of the hourly rate that Singleton was going to apply (he thought it was $325.00 per hour). It was unrealistic for him to expect that this case with the complexity of issues involved could competently be resolved out of Court in three hours or so of Singleton’s time. He knew or should have known that this would not be possible. His expectations were unrealistic. Also, it is not clear how he could believe that there was a fixed quote and yet at the same time, an hourly rate would be applied to the services being rendered.

Noteworthy is that the sophistication of the client once again played a significant role in the findings in favour of the lawyer (see also: Smith v. Ward, 2009 NSSM 65 wherein the Court again favoured the claimant lawyer on the basis that the lawyer was found to have discharged its “special onus” to prove his version of retainer).

In conclusion, the lawyers in the cases cited above were “saved” by the sophistication of their respective clients or by rather stark evidence that these clients had been in fact aware of the precise basis upon which the lawyers proposed to charge their fees. But many lawyers do not address retention risk from such perspectives. Instead, many lawyers leave it virtually to chance that if there are future disputes with their clients regarding fee arrangements, their word will be sufficient evidence for them. In short, those lawyers are incorrect, and leave themselves open to the finding that they have not met their “special onus” to disprove their clients’ positions.

It is as such that the far better course is for lawyers to adopt standard retention risk management processes and to clarify in writing with each of their clients the basis upon which their fees will be charged.